Reviving the wheels of the country's fragile economy and restoring relief among the people is a formidable challenge for the present government. At the same time, overcoming investment stagnation, generating employment, bringing export earnings back to a normal trend, and stabilizing the market for essential commodities are also major tasks.
After assuming office, the new Prime Minister and his government have no alternative but to address these challenges with skill, prudence, and urgency in order to provide relief to the people. In particular, overcoming weak investment, sluggish job creation, high inflation, slow credit growth in the private sector, and uncertainty in domestic and foreign investment will be extremely challenging for the new government and the new Finance Minister.
It is noteworthy that almost every sector of the economy is experiencing stagnation, uncertainty, and a lack of confidence-posing a serious challenge for the new administration. Moreover, several reform initiatives begun during the interim government remain unfinished. The responsibility of completing these reforms now rests with the elected government. However, this task is difficult because the new government must simultaneously manage high inflation, a weak banking sector, revenue shortfalls, stagnant investment, and rising government expenditure.
Currently, the country's biggest economic problem is declining investment. Without investment, employment cannot be generated, production does not increase, and the economy remains under long-term pressure. People suffer, and purchasing power declines. Therefore, swift action is essential.
On the other hand, long-term financing for industrial investment is now in serious crisis. Entrepreneurs face high interest rates and various risks when borrowing from banks. The elected government is taking office at a time when private investment has nearly stalled. Implementing a new pay scale for government employees amid a revenue deficit may also be problematic. Furthermore, if implemented, it could negatively impact the market, adding extra pressure on millions of citizens outside government employment.
The condition of inherited development expenditure is also not reassuring. In the first few months of the current fiscal year, the implementation rate of the Annual Development Programme (ADP) has been very low. As a result, the expected demand stimulus in the economy has not materialized. The slow pace of development projects is also affecting the private sector. Reduced spending in education, healthcare, and human resource development may harm future productivity.
Over the past year and a half, many factories have closed, leaving hundreds of thousands unemployed. With limited job creation, ordinary people's incomes have not increased, directly affecting their cost of living. This reality is compounded by the added pressure of Ramadan and Eid-ul-Fitr. Immediately after taking office, one of the government's most urgent challenges will be controlling the Ramadan market. However, the market situation is not merely seasonal; it reflects prolonged high inflation, weak supply chains, low investment, and shortcomings in market management.
The condition of the banking sector remains a major concern. Despite political changes, customer confidence in banks and financial institutions has not fully returned. In many cases, bank loans have become burdensome rather than supportive for industries. Due to heavy government borrowing from banks to finance budget deficits, the private sector is facing a credit crunch.
Inflation continues to make life more difficult for ordinary citizens. Although food prices have somewhat stabilized, non-food items remain expensive. This is no longer a temporary issue but has evolved into a structural problem. Raising interest rates alone will not control inflation; reforms in supply systems, inventory management, and market monitoring are necessary.
The new government also faces difficulties in revenue collection. In the first half of the current fiscal year, the revenue deficit has grown significantly. Without expanding the tax base, reducing unnecessary tax exemptions, and ensuring discipline in tax administration, the deficit may worsen. Excessive reliance on bank borrowing to finance the deficit could further constrain the investment climate.
At the end of the 2024-25 fiscal year, total public debt from domestic and foreign sources stood at approximately Tk 22.5 trillion. In the first six months (July-December) of the current fiscal year alone, the government borrowed more than Tk 74,000 crore, bringing total debt to around Tk 23.25 trillion by December 2025. Borrowing from the banking sector grew significantly, reaching about 32 percent in 2025-exceeding the target. While the central bank's monetary policy aimed for government credit growth of around 20.5 percent, the actual figure reached nearly 29 percent.
In contrast, private sector credit growth did not increase as expected. By December 2025, it stood at only 6.1 percent, below the target. High interest rates-policy rates at 10 percent and lending rates rising to 14-15 percent-have discouraged new investment. As a result, employment has declined and unemployment has increased. Economists describe this situation as "crowding out," where excessive government borrowing reduces funds available for the private sector. This pressure is now clearly visible in the economy.
Bangladesh is scheduled to graduate from the Least Developed Country (LDC) category next November. Discussions are ongoing, and the government is expected to seek a three-year extension in response to business community demands for a delay of 3-5 years. For now, this may provide some relief. Additionally, if properly implemented, plans to introduce "Family Cards" for low-income groups and "Farmers' Cards" for farmers may help stimulate economic activity.
In this context, the significant responsibility of overcoming the country's multidimensional economic crisis has been entrusted to Amir Khasru Mahmud Chowdhury, a standing committee member of the Bangladesh Nationalist Party (BNP). With extensive political experience and active involvement in economic affairs, he is well known in both political and economic circles. By assuming responsibility for the Ministry of Finance and Planning, it is expected that greater momentum will be brought to macroeconomic management, budget formulation, development programme implementation, and financial sector reform-restoring confidence and relief among the broader population.
He has previously served as Commerce Minister and is regarded as a dedicated, courageous, and committed politician. There is public expectation that he will successfully address the accumulated economic challenges and fulfill the hopes of the people.
Moreover, the outgoing economic adviser's document titled "Bangladesh's Overall Economic Situation, Risks and Policy Priorities" emphasizes that controlling inflation, increasing revenue collection, and reforming the banking sector must receive top priority to stabilize the economy. Strengthening ongoing reforms rather than launching entirely new initiatives may prove to be the most effective strategy. These recommendations are expected to guide the new Finance Minister in the days ahead.
The writer is Editor, Climate Journal24.com and General Secretary, Bangladesh Climate Change Journalist Forum
