Originally posted in বাংলাদেশ প্রতিদিন on 27 January 2026
A tough economy ahead for new government
After the 13th National Parliamentary Election, the biggest reality awaiting the new government as it assumes office is an economy under pressure.
Although the situation may appear somewhat stable from the outside, many deep-seated problems have accumulated internally. Almost every sector of the economy is experiencing stagnation, uncertainty, and a lack of confidence, which could pose major challenges for the new administration.
In particular, several reform initiatives in the financial sector that began during the interim government period remain unfinished. Completing these reforms will be the responsibility of the elected government, but the task will not be easy. At the same time, the new government will have to manage high inflation, a weak banking sector, a revenue shortfall, sluggish investment, and mounting pressure from rising public expenditure.
In addition, after a long time, a proposal for a new pay scale for government officials and employees has been introduced. It recommends significant increases, including doubling basic salaries. Economists warn that this could put substantial pressure not only on public finances but also on the private sector.
Dr. Fahmida Khatun, Executive Director of the Centre for Policy Dialogue (CPD), said, “At present, the biggest problem facing the country’s economy is the decline in investment. Without investment, jobs are not created, production does not increase, and the economy remains under pressure for a long time. If policy continuity and good governance are not ensured in the post-election period, it will be difficult to restore investor confidence.”
She added, “Financing required for long-term investment in the industrial sector is now in severe crisis. Entrepreneurs face high interest rates and various risks when seeking bank loans. The elected government is taking charge at a time when private investment has nearly come to a halt. Implementing a new pay scale for government employees amid a revenue deficit will also be challenging. Overall, the elected government is inheriting a very difficult economy.”
Meanwhile, CPD noted in a study that the state of development spending offers little comfort for the new government. In the first few months of the current fiscal year, the implementation rate of the Annual Development Programme (ADP) has been very low. As a result, the expected demand stimulus in the economy has not materialized. Slow progress in development projects is also affecting the private sector. Low spending on education, health, and human resources could harm future productivity.
Moreover, many factories have been shut down for over a year, leading to job losses for hundreds of thousands of people. With employment not increasing, ordinary people’s incomes are also not rising, which is directly affecting living costs. Added to this reality are the pressures of the month of Ramadan and Eid-ul-Fitr. Immediately after taking office, one of the most urgent challenges for the new government will be controlling the Ramadan market. However, this market situation is not merely a seasonal issue. It stems from prolonged high inflation, a weak supply system, low investment, and limitations in market management.
The condition of the banking sector is another major headache for the new government. Despite political changes, customer confidence has not fully returned. In many cases, bank loans have become a burden rather than support for industry. Increased government borrowing from banks to cover budget deficits is creating a credit crunch for the private sector.
Inflation is making daily life even more difficult for ordinary people. While food prices have stabilized somewhat, non-food prices remain high. According to Dr. Khatun, this is no longer a temporary problem but has become a structural one. Inflation cannot be controlled solely by raising interest rates; reforms are needed in the supply chain, stock management, and market monitoring.
The new government will also face a tough situation in revenue collection. In the first half of the current fiscal year, the revenue deficit has already grown significantly. Without increasing the number of taxpayers, reducing unnecessary tax exemptions, and ensuring discipline in the tax system, this deficit may widen further. CPD has warned that the tendency to cover deficits through additional bank borrowing could further constrain the investment environment.
In addition, Bangladesh is set to graduate from the list of Least Developed Countries (LDCs) in November, which has sparked considerable discussion. Business groups have long demanded a delay of 3–5 years in LDC graduation, but the government has made its position clear: Bangladesh will graduate in November. As a result, several benefits currently received from developed countries will be reduced, which analysts say could create additional pressure for the new government.
Overall, the economic path ahead for the new government will not be easy.
