Turning mandate into momentum: Economic priorities for the new government

With an electoral mandate secured, the newly elected government of Bangladesh now faces a defining test: transforming campaign commitments into credible economic outcomes. Elections inspire hope; governance demands discipline. The coming months will determine whether political promises translate into sustainable economic momentum.

Bangladesh's development journey has been remarkable. Over the past decades, the country has achieved steady GDP growth, expanded infrastructure, increased life expectancy, and significantly reduced poverty. Yet the current economic landscape presents undeniable challenges — persistent inflation, pressure on foreign exchange reserves, stress within the banking sector, limited fiscal space, and growing employment concerns among the youth population.

The path forward requires prioritisation, sequencing, and institutional reform. Not all objectives can be pursued simultaneously. Strategic focus will determine success.

Stabilise first, reform second             

Macroeconomic stability must be the government's immediate priority. Inflation has eroded purchasing power across households, disproportionately affecting middle- and lower-income families. Exchange rate volatility has complicated import planning, while businesses remain cautious amid uncertainty.

Restoring price stability through coordinated fiscal and monetary policies is essential. Managing subsidies more efficiently — while protecting vulnerable groups through targeted support — will help reduce fiscal strain without triggering social hardship. Strengthening foreign exchange reserve management and encouraging export diversification can further restore confidence.

Without stability, development initiatives risk losing effectiveness before they begin.

Restore confidence in the financial sector

A resilient banking system is the backbone of economic expansion. However, rising non-performing loans, governance weaknesses, and uneven regulatory enforcement have dampened public trust.

The new administration must strengthen regulatory oversight, enforce loan recovery mechanisms, and improve governance standards — particularly in state-owned institutions. Transparent reporting, accountability, and prudent credit allocation will ensure that financial resources flow to productive sectors rather than speculative or politically influenced activities. A disciplined financial sector sends a powerful signal to investors: that economic growth will be based on sound fundamentals.

Expand fiscal space through revenue reform

Ambitious election pledges — whether on infrastructure, social protection, or employment programmes — require fiscal sustainability. Bangladesh's tax-to-GDP ratio remains modest compared with peer economies, limiting the government's capacity to invest without increasing debt.

Expanding the tax base, modernising revenue administration through digital systems, and reducing dependence on indirect taxation should be central to reform efforts. Formalising parts of the informal economy and improving customs efficiency can further enhance revenue collection.

Fiscal reform is not merely about raising funds; it is about building institutional strength and policy credibility.

Employment: The political and economic imperative

A large segment of Bangladesh's population is young. This demographic reality represents both opportunity and risk. Job creation must move to the centre of economic policymaking.

Encouraging labour-intensive industries, facilitating access to SME financing, and aligning vocational training programmes with market demand can generate employment at scale. The digital economy — particularly IT-enabled services and freelancing — also offers substantial potential for young entrepreneurs. Economic growth that does not generate employment risks widening inequality and social frustration. Growth must be inclusive to be sustainable.

Diversify to build resilience

Bangladesh's export strength has long been anchored in ready-made garments. While this sector remains globally competitive, overdependence on a single industry exposes the economy to external shocks. Policy incentives should support diversification into pharmaceuticals, agro-processing, light engineering, ICT services, and other emerging sectors. Special economic zones must offer regulatory clarity and reliable infrastructure to attract long-term investment. Trade diplomacy can help secure new market access as Bangladesh prepares for its eventual transition from least developed country status.

Energy and infrastructure with discipline

Energy security remains a pressing concern. Rising import costs and supply bottlenecks have weighed on industrial productivity. A balanced energy strategy — combining domestic resource development, renewable expansion, and efficiency improvements — will reduce vulnerability to global price swings.

Infrastructure development should continue, but with strict cost–benefit evaluation and transparent procurement processes. The objective must be economic productivity, not merely physical expansion. Prudence in infrastructure spending will safeguard fiscal sustainability in the long term.

Governance as the unifying factor

Underlying all these priorities is the question of governance. Investors, entrepreneurs, and citizens alike seek predictability. Clear regulatory frameworks, efficient dispute resolution, transparent public procurement, and policy continuity will significantly enhance investor confidence.

Institutional reform may not always generate immediate headlines, but it creates the foundation for durable progress.

Sequencing for success

Effective governance requires sequencing. The government's first phase should focus on stabilisation — controlling inflation, strengthening reserves, and reinforcing financial discipline. The second phase can emphasise revenue reform and employment generation. The final phase should pursue deeper structural transformation — diversification, human capital development, and innovation-led growth. Such an approach aligns short-term stabilisation with long-term vision.

The measure of leadership

The electoral mandate offers political capital. The real challenge lies in deploying that capital wisely. Difficult reforms — particularly in banking discipline, subsidy rationalisation, and revenue mobilisation — may carry short-term political costs. Yet avoiding them could impose long-term economic consequences.

Bangladesh has repeatedly demonstrated resilience in the face of adversity. The country's next chapter depends on disciplined policymaking, institutional strengthening, and inclusive growth.

If the new government can align its manifesto with a pragmatic, prioritised economic strategy, it will not merely fulfil campaign promises — it will strengthen the foundations of sustainable prosperity.

The moment calls not only for ambition, but for economic stewardship.

Rajib Kumar Saha, FCA is the Group Chief Financial Officer at NITOL–NILOY GROUP

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.