An economy asking for help

Highlights:

• Businesses flag stalled investments due to gas shortages
• Inflation above 9% for nearly four years is eroding purchasing power and raising poverty
• Private sector credit growth has slowed sharply
• Economy faces a policy balancing act between social protection, business incentives and tight fiscal space as the budget is announced

Somewhere in the city, a young man with a master's degree from a public university has spent five years looking for decent work.

He is not alone. Last year, 42.57 lakh applications were filed for just 2,400 banking and financial sector jobs, according to the bdjobs.com portal. Another 52.18 lakh applications were filed for 11,342 positions in the garment sector. Millions of young people are now looking to the BNP government's first budget in two decades for answers. They want jobs, opportunities and a pathway out of an increasingly competitive labour market.

The reason lies partly on the other side of the economy.

City Group invested nearly Tk11,000 crore more than six years ago to build six large industrial units. The factories remain idle today because they have yet to receive gas connections. Now, businesses demand energy security and policy certainty from the budget.

These are not isolated stories. Together, they capture the unprecedented challenge confronting the BNP government as it prepares to unveil the budget for the fiscal 2026-27 at a time when the government is under pressure to fulfil its political commitment of reviving growth, creating jobs and easing the cost-of-living crisis, even as its fiscal resources remain severely constrained.

Rarely has a government prepared a budget under such circumstances. Today, weak investment, energy shortages, banking sector fragility and persistently high inflation have become domestic constraints, preventing a meaningful economic recovery.

For almost four years, inflation has remained stubbornly above 9%, steadily eroding household purchasing power. Wage growth has failed to keep pace, leaving millions of families struggling to maintain living standards. The result is visible in the poverty data, which has risen to 21.2% in 2025 from 18.7% in 2022. That is increasing pressure on the government to expand social safety-net programmes, raise tax-free income thresholds and provide relief for low-income households.

"Containing inflation will be the government's biggest challenge, and the budget will have to address that," said Fahmida Khatun, executive director of the Centre for Policy Dialogue.

According to her, households have already adjusted to a more restrained way of life, cutting back spending and prioritising only basic needs. For the poorest segments of society, she argues, the immediate priority should be the expansion of social safety-net programmes and wider beneficiary coverage.

The strain extends well beyond households.

Private sector credit growth fell to as low as 4.75% in April, increasing calls from businesses for tax incentives, easier access to finance and faster infrastructure and energy support in the budget.

Businesses find themselves trapped between rising costs and weak demand. The cost of financing remains high, utility disruptions persist, and consumers have less money to spend. For many enterprises, especially small and medium-sized ones, survival has become as important as expansion.

"Only rhetoric cannot attract investment; it needs the energy supply," said Azam J Chowdhury, chairman of East Coast Group.

Industries that are active and contributing to the economy should be given energy on a rationed basis as an immediate measure, he said. His second priority is a functioning capital market capable of providing long-term financing to industry. "Without it, further industrialisation and scale-up will remain aspirational."

Mohd Khorshed Alam, managing director of Little Group, which operates several spinning mills, made the point about energy even more precise. "I want an energy supply policy for at least 10 years so that I know how much energy I will get and how much I have to manage alternatively," he told TBS. Uncertainty, he said, is the real investment killer, not the shortage alone.

Khorshed, who also heads the Bangladesh-China Chamber of Commerce and Industry, raised a separate concern: duty-free imports under the bonded warehouse facility are undercutting local textile mills. If bond facilities are extended to more industries without safeguards, he warned, Bangladesh risks becoming a trading nation rather than an industrial one.

The government faces an equally difficult balancing act.

The poor need stronger social protection. Low-income earners need relief from rising living costs. The middle class is looking for respite after years of shrinking real incomes. Businesses want incentives to invest and create jobs.

But the government's room for manoeuvre is limited. Revenue collection remains weak, debt-servicing costs are rising, subsidy burden is mounting and the government is being forced to spend more on social protection while simultaneously supporting businesses and maintaining development spending. Every additional taka of relief now comes with difficult trade-offs.

Finance Minister Amir Khosru Mahmud Chowdhury will announce the budget today (11 June) at a time when households want relief, businesses want certainty and young people want jobs. Yet, the government's resources are limited and the economy remains fragile.

The challenge is no longer identifying the problems. Bangladesh knows them well. The question is whether this budget can begin solving them.