Utilise the upcoming budget as a strategic instrument for reviving economic growth and restoring macroeconomic stability, economists urge the government as they find Bangladesh's economy under "significant strain".
Speaking Thursday, they said the country's macroeconomic situation continued to be fragile -- inflation remaining persistently high, private-sector-credit growth falling to a record low, and concerns mounting over a potential fiscal shortfall.
The observations were made at an event by the Policy Research Institute of Bangladesh (PRI) to launch Monthly Macroeconomic Insights, prepared by PRI's Centre for Macroeconomic Analysis (CMEA).
Dr Fahmida Khatun, Executive Director, the Centre for Policy Dialogue (CPD), attended as chief guest the event held at the PRI office with PRI Chairman Dr Zaidi Sattar in the chair.
Dr Nasiruddin Ahmed, Former Chairman of the National Board of Revenue (NBR), and Shams Mahmud, former President of Dhaka Chamber of Commerce and Industry (DCCI), shared their views on the keynote paper presented by PRI Principal Economist Dr Ashikur Rahman.
"The economy now stands at a crossroads. Growth has slowed significantly, investment momentum has weakened, inflation remains elevated, and vulnerabilities in the fiscal, financial and energy sectors continue to constrain policy space," said Zaidi Sattar in his opening remarks.
He opines that macroeconomic stabilisation alone would not be enough to restore high and sustainable economic growth, arguing that Bangladesh now needs a new phase of productivity-enhancing reforms.
To address the challenges, he proposes a series of structural reforms, including rationalising the country's "gargantuan" tariff regime, enhancing trade openness, improving the investment climate, reforming the energy sector, restructuring state-owned enterprises, promoting foreign direct investment (FDI), and increasing investment in critical infrastructure.
Dr Fahmida Khatun stresses the need for effective reforms to prevent the re-emergence of "mafia-style" dominance in key sectors such as banking, power, energy and infrastructure.
She says implementing such reforms would pose a major challenge for the government as reform processes are inherently painful and often face resistance from vested-interest groups benefiting from the existing system.
"Although they are small in number, they are highly influential. They control the state and, in many cases, are more powerful than the state itself," she told the audience in an implicit reference to oligarchs.
Referring to the budget worth Tk 9.3 trillion under consideration for the next fiscal year, she calls for a realistic and implementable fiscal framework, emphasising that budget formulation should prioritise execution capacity and efficiency rather than an expansion in size alone.
She cautions that the government must carefully assess the limited fiscal space, the inflationary and private-sector crowding-out effects of bank borrowing, and the future repayment burden associated with rising external debts.
Fahmida Khatun also recommends that the government expand development expenditure in line with the rising trend of revenue expenditure, ensuring a more balanced and sustainable fiscal structure.
Dr Ashikur Rahman says a disciplined budget anchored in macroeconomic stability, combined with sustained productivity-enhancing reforms, remains most credible pathway for restoring Bangladesh's growth momentum in the current environment.
"The next budget should prioritise policy credibility through stronger revenue mobilisation, realistic expenditure management, rationalisation of inefficient subsidies, and reduced reliance on bank financing," he says.
He also notes that medium-term growth recovery will depend increasingly on productivity-enhancing structural reforms rather than stimulus-led demand expansion. This requires a decisive policy shift toward improving economic efficiency, competitiveness, and resource allocation across the economy.
Dr Nasiruddin Ahmed stresses separating tax-policy formulation from tax administration, saying that combining the two functions within the same institution creates a "clear conflict of interest".
He also calls for the introduction of a simplified tax regime for small service providers, including bike riders, while also urging an end to harassment faced by ordinary taxpayers.
Shams Mahmud deplores that a small group of "influential oligarchs" had effectively controlled the banking sector, extracting low-cost loans and engaging in capital flight, for over a decade.
As a result, he notes, ordinary businesses are now struggling under the pressure of high interest rates and tight liquidity conditions in the financial system.
He further calls for long-term and affordable financing solutions to help the private sector navigate the challenges of LDC graduation and sustain competitiveness.
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