In memory of Khaleda Zia: Resolute leadership for reforms and economic transition
Over more than a decade in power, she presided over critical political transitions and economic shifts at moments when the country faced acute economic, political, and development challenges
Over roughly 11 years across three tenures, the Bangladesh Nationalist Party (BNP) governed the country under the leadership of Khaleda Zia.
Thrust into politics by personal tragedy, she chose public duty and went on to become Bangladesh's first female prime minister, winning three general elections in a fiercely competitive political landscape. Over more than a decade in power, she presided over critical political transitions and economic shifts at moments when the country faced acute economic, political, and development challenges. As we bid farewell to the country's first woman prime minister, and a beacon of democracy who always put her country and people first, let us revisit a few of her notable contributions that helped transform the nation beyond the dismissive label of a basket case to a pioneer of development success.
One of the most consequential phases of Begum Khaleda Zia's leadership began in the early 1990s, when her government moved decisively to liberalise the economy while maintaining fiscal discipline. A key step in this process was the introduction of value-added tax in 1991, a difficult but transformative reform that permanently expanded the government's revenue base. At the same time, the banking sector began shifting away from rigid controls, creating the conditions for a more competitive and market-oriented financial system. Together, these measures laid the institutional foundations that successive governments would continue to build upon.
This reform momentum also extended to trade and industrial policy. In 1991, the government announced a new industrial policy that fundamentally changed Bangladesh's approach to investment by allowing 100% foreign ownership and encouraging joint ventures without restrictive barriers. Customs duties at the import level were reduced as part of a broader trade liberalization effort, helping integrate Bangladesh more deeply into global markets. These changes not only improved investor confidence but also led to a historic rise in foreign exchange reserves, reinforcing the shift toward a private-sector-led growth model.
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The Financial Sector Reform Programme (FSRP), initiated in the early 1990s during Begum Khaleda Zia's tenure, marked a major effort to modernise Bangladesh's financial system with support from the World Bank, the Asian Development Bank, and bilateral development partners. The Programme pursued a wide range of reforms, including interest rate liberalisation, the introduction of uniform accounting standards and loan classification, improved provisioning practices, capital restructuring, and more rigorous risk analysis. It also focused on strengthening the central bank, enhancing the legal framework for recovering overdue loans, and reinforcing regulatory oversight. Over time, these reforms produced visible improvements, particularly in disclosure standards, debt classification, capital adequacy, product diversification, and competition among private sector banks, while also enhancing the supervisory role of Bangladesh Bank.
Complementing these reforms seeking financial deepening, her government established the Bangladesh Securities and Exchange Commission (BSEC) in 1993 under the Bangladesh Securities and Exchange Commission Act. The creation of the commission provided a formal regulatory framework for the capital market, with a mandate to protect investors, promote orderly market development, and set rules governing securities transactions. Together, the FSRP and the establishment of BSEC strengthened the foundations of Bangladesh's financial architecture and contributed to a more transparent and resilient financial system.
Begum Khaleda Zia's governments placed sustained emphasis on improving the systems that govern the economy. Customs administration began moving toward digitisation with the introduction of the ASYCUDA system in 1993, improving efficiency and transparency in trade processes. At the same time, broad-based reforms were undertaken under the Financial Sector Reform Programme to modernize banking and financial oversight. In later years, further initiatives, including tariff rationalisation, the introduction of performance budgeting under a medium-term framework, and the adoption of a floating exchange rate depended on these reforms. Together, these measures modernized economic management and helped strengthen macroeconomic stability.
The expansion of VAT to the production and import stages during the 1993-94 fiscal year further strengthened public finances by creating a more reliable revenue stream. Parallel to this, the government pursued reforms in state-owned enterprises. The establishment of the Privatisation Board in 1993, later replaced by the Privatisation Commission in 2000, led to the sale or restructuring of dozens of enterprises across sectors such as jute, textiles, steel and banking. These steps aimed to reduce fiscal losses and encourage private investment, reflecting a broader shift away from direct state control of commercial activity.
The Jamuna Multipurpose Bridge, initiated during Begum Zia's tenure, fundamentally altered Bangladesh's economic geography by connecting the north and northwest with the capital and port cities. This single project reduced transport costs, accelerated trade, and ended decades of regional isolation.
In 1996, Begum Khaleda Zia made a decisive contribution to resolving a prolonged political stalemate by initiating the 13th Amendment to the Constitution, which provided for a neutral caretaker government to oversee parliamentary elections. The amendment was adopted unanimously by parliament, after which the House was dissolved, and executive authority was transferred peacefully. This orderly transition helped restore political stability at a critical moment and underscored her role in upholding constitutional processes.
Over the course of her leadership, Begum Khaleda Zia guided Bangladesh through important phases of reform and transition at critical moments in the country's history. The policies pursued under her governments helped shape economic institutions, strengthen governance frameworks, and address longstanding structural challenges in finance, trade, and public administration. Many of these reforms laid foundations that continued to influence policy direction beyond her tenure. In remembrance, these contributions stand as a lasting record of her public service and her role in Bangladesh's evolving political and economic journey.
The write-up is based on a conversation with the author over the phone.
