Bangladesh is navigating one of the most challenging economic periods in recent years. The latest Independent Review of Bangladesh's Development (IRBD) FY2025-26 by the Centre for Policy Dialogue (CPD) paints a troubling picture of mounting fiscal, financial and social pressures that demand urgent policy attention and structural reform.
The government's revenue mobilisation remains deeply inadequate. Revenue growth reached only 6.9 percent during July-March FY26 against a target of 29.3 percent, while the National Board of Revenue (NBR) fell short by Tk 104,533 crore. Meeting annual targets would require implausibly high growth rates in the remaining months, exposing weaknesses in tax administration and policy. At the same time, Annual Development Programme (ADP) implementation stood at only 35.4 percent, limiting the government's ability to stimulate growth through public investment.
To finance the widening deficit, the government has increasingly relied on bank borrowing, which reached Tk 102,442 crore by March FY26. This risks crowding out private sector credit at a time when investment is already weak. Private sector credit growth fell to a record low of 4.72 percent, reflecting a sluggish business environment and diminished investor confidence.
Inflation continues to erode household purchasing power. Consumer prices rose 9.04 percent in April 2026, while non-food inflation climbed to 9.57 percent. The Strait of Hormuz blockade further intensified pressures, driving significant increases in fuel and LPG prices. Rising costs of essentials have disproportionately burdened ordinary citizens, while supply chain inefficiencies continue to inflate prices of key food items.
The banking sector remains a major source of concern. The capital adequacy ratio has fallen to a historic negative 2.93 percent, while specialised banks recorded an alarming negative 87.9 percent. Although non-performing loans have declined on paper, CPD correctly notes that this largely reflects loan rescheduling and restructuring rather than genuine improvements in asset quality. Proposed regulatory relaxations, including higher single-borrower exposure limits and the possible return of former owners to distressed banks, could further undermine financial stability.
The external sector offers mixed signals. Strong remittance growth and a balance of payments surplus have provided temporary relief, but exports declined by 2.02 percent, with the ready-made garments sector losing ground in major markets. Meanwhile, external debt servicing costs have more than doubled in five years, raising concerns about long-term sustainability.
Beyond macroeconomic indicators, the human cost is significant. Factory closures have left up to 300,000 workers unemployed, real wages continue to decline, labour unrest is increasing, and workplace fatalities remain high. The devastating Haor floods and the deadly measles outbreak have further exposed weaknesses in disaster management and public health governance.
CPD's message is clear: macroeconomic stabilisation alone will not secure Bangladesh's future. Expanding the tax base, strengthening banking governance, improving public expenditure efficiency, enhancing energy security and ensuring institutional accountability are no longer optional. Bangladesh's recovery depends on credible reforms that restore confidence, protect livelihoods and build resilience for the future.
