Fragile economy, low investment top challenges for new govt: Citizen’s Platform for SDGs
The civil society platform emphasised that addressing these structural bottlenecks is critical for stabilising the economy and steering it back toward sustainability.
The newly sworn-in government faces a daunting economic landscape characterised by fragile macroeconomic stability, stagnant private investment, and a shrinking fiscal capacity, according to the Citizen's Platform for SDGs, Bangladesh.
The observations were shared at a media briefing titled "Starting Point of the New Government: An Economic Review," held at the BRAC Centre Inn, Dhaka today (19 February) where Towfiqul Islam Khan, additional research director at the Centre for Policy Dialogue (CPD), presented the findings.
The civil society platform emphasised that addressing these structural bottlenecks is critical for stabilising the economy and steering it back toward sustainability.
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Towfiqul highlighted that despite a decline in global inflation, domestic levels remain stubbornly high.
The 12-month average inflation rate reached 8.77% in January, significantly exceeding the central bank's target of 7%.
Slow-paced wage growth
Towfiqul noted that while food inflation showed slight signs of easing, non-food sectors provided little relief.
Furthermore, the slow pace of wage growth continues to erode the real income of the working class, worsening the cost-of-living crisis.
The event also pointed out that while a relatively stable exchange rate and a modest rise in foreign exchange reserves have reduced some pressure on the balance of payments, other risks remain.
The government's heavy reliance on bank borrowing to finance the budget deficit, combined with Bangladesh Bank's foreign currency collection from the open market, is contributing to an increased money supply.
The ongoing stagnation in private investment has also led to a decline in employment.
According to a presentation shared during the event, approximately 21 lakh jobs were lost during the first half of the 2025 fiscal year.
New loans to repay old
Highlighting the shrinking fiscal space, Towfiqul stated that internal revenue collection is no longer sufficient to cover recurring expenditures, leading to an increasing trend of taking out new loans to repay existing debt.
Weak revenue collection and pressure of expenditures outside the Annual Development Programme (ADP) are further constricting policy options.
Notably, according to the CPD researcher, ADP spending in fiscal years 2025 and 2026 has dropped to historically low levels.
In light of these challenges, the platform recommended the adoption of an economic stabilisation plan, including strict budget ceilings for the remainder of the current fiscal.
It also urged the formulation of a realistic budget framework for the next fiscal, the formation of a multilateral development forum, and the implementation of a reform roadmap with specific timelines.
Citizen's Platform for SDGs, Bangladesh states that achieving macroeconomic stability will be difficult without a clear LDC graduation strategy and a medium-term plan based on realistic targets.
