Failure to control extortion, hoarding behind high prices of essentials: CPD

Highlights: 

• CPD Executive Director Fahmida Khatun says election timeline already provided
• Says implementation of reforms would depend on next political government
• No meaningful economic reform possible without political reform
• Interim govt has failed to check extortion, hoarding, resulting in high inflation

The prices of daily essentials are high due to failure to control the extortion and hoarding, said Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD), today (29 January).

Poor-quality storage and transportation facilities, and unpredictable weather have also played a role, she added.

She made the comment while speaking at a media briefing on "Bangladesh Economy 2024-25: First Interim Review," organised by CPD, where a report titled "Bangladesh Economy 2024-25: Challenges in Meeting Expectations Amid Crisis" was presented.

At the event, Fahmida Khatun further said there is no reason to delay elections any further.

"Elections should be held as soon as possible. A timeline has been provided, and I believe the government will make its decision based on careful consideration."

On the issue of reforms, she said without political reforms, meaningful economic reform in the country will not be possible.

Adding that everyone acknowledged the importance of reforms, she said the implementation would depend on the next political government.

She expressed hope that the interim government will take immediate action, and the next political government will ensure its continuity, she added.

While presenting the report, Fahmida Khatun pointed out that investment in the country is declining, and unemployment is rising, with uncertainty, lack of confidence, and reduced consumer demand being the key factors behind this trend.

She noted that private sector investment is on a downward trend, while foreign investment remains low. "If public investment declines further, the economy could stagnate," she warned.

At the press briefing, CPD Distinguished Fellow Professor Mostafizur Rahman said the countrys tax-to-GDP ratio is very low and specific measures must be taken to address this issue.

He emphasised that the country is being forced into debt reliance due to the lack of growth in revenue relative to GDP.

He pointed out that inflation is rising at twice the rate of wage increases, which is leading to a decline in the standard of living for ordinary people.

"There was an opportunity to address income inequality. The Anti-discrimination Student Movement had created a significant opportunity," he said.

He added that political and economic reforms must go hand in hand. Internal party reforms and democratisation are essential – electoral reforms alone will not suffice.

On govt's revenue collection

The CPD report highlights that, according to the Ministry of Finance, revenue collection has increased by 3.7% as of October 2025, compared to 17.7% during the same period in the previous fiscal year. To meet the total revenue target for the fiscal year, a 45.1% growth must be achieved in the remaining months, which is unrealistic.

The government is trying to increase revenue from taxes and other sources, in line with IMF conditions. However, this impacts the living standards of low-income people, the report states.

On budget implementation

As per the report, the budget implementation rate for FY25 up to October was 18.1%, compared to 16.1% during the same period of the previous year.

However, there was a slight increase in the budget implementation rate outside of the ADP during the July-October period. Compared to the same period of the previous fiscal year, around Tk30,000 crore more was spent in non-ADP sectors. If the proposed increased allowances are implemented, the pressure on non-ADP sector spending will increase further.

On the other hand, the implementation rate of the ADP for FY25 was 17.3% as of December, the lowest in the past ten fiscal years.

In the first four months of the current fiscal year, reliance on domestic sources for financing the budget deficit has increased. This reliance on high-interest domestic sources could adversely affect future debt repayment obligations.

On LDC graduation

The CPD report states that special preparations are required for graduating from LDC status. Under the GSP+ scheme, two-thirds of products will be eligible. However, the rules of origin will change from one step to two, making GSP+ conditions significantly tougher.

This will impact the apparel sector, as several additional conditions such as labor environment and carbon emissions will be included. In line with these conditions, production and marketing preparations must be made, it said.

Meanwhile, the report suggests that Free Trade Agreements (FTAs) and Comprehensive Partnership Agreements (CPAs) could be considered. It also recommends setting up a special cell for this purpose.

The report recommends diversifying export markets. Currently, exports are concentrated in a few countries, but there is a need to expand into South and East Asia, and ASEAN member countries, it said.

While remittance flows have increased, there are concerns about their sustainability. This is because, despite the large number of people working abroad, remittance inflows do not align with the population size working overseas.

On industrial and agricultural production

The think tank said in its report that the production situation in business is showing signs of recession. A decline in production has been observed in large industries, with major factories such as Beximco, Keya, and many garment factories shutting down. Immediate action is needed to address these issues.

High tax rates, inflation, road blockades, deteriorating law and order, rising interest rates, increasing unemployment, and higher fuel prices are all major economic challenges. Urgent measures are required to tackle these challenges, it said.

While the government has initiated steps in various areas, results will take time to materialize, as per CPD.

The report further said rice and wheat production have been hindered by low yields and high costs. Aman rice production has decreased, which could lead to a shortage of rice. Increased demand is another reason for this potential shortage.

On power and energy sectors

According to the report, the power and energy sectors are trapped in a vicious cycle, plagued by poor governance. Electricity generation has declined, and fossil fuel-based power plants have remained inactive for the past six months.

There has been no progress in renewable energy, nor have any significant reforms been made in transmission and distribution, it said.

Mentioning that the sector is facing a severe financial crisis, largely due to the policies of the previous government, this growing crisis or "debt trap" poses a serious threat to the future energy infrastructure.

The CPD has recommended reassessing contracts for Independent Power Producers (IPPs) and rental power plants.

It said Petrobangla must reduce LNG imports and focus on increasing domestic gas production. Over-reliance on LNG imports could hinder the achievement of key economic targets. Financial governance in state-owned enterprises must be strengthened.

The report further said the government had previously canceled contracts for 37 solar power plants. Instead of scrapping them entirely, these projects should be reassessed and reinstated where feasible.