People do not want to pay a penalty; they want relief

Within the space of a week, the World Bank and the International Monetary Fund (IMF) have published two assessments of Bangladesh’s economy. Both reports describe the current economic situation and offer forecasts for the coming fiscal years. Neither paints a reassuring picture, nor does either offer much hope of an improvement in the near future.

They predict slower growth and further increases in inflation. This means people will become poorer, the middle class will find it harder to make ends meet, a lack of investment will hold back job creation, businesses will remain sluggish and people’s real incomes will fail to grow.

Over the past seven years, the global economy has weathered a series of shocks, including the Covid-19 pandemic, supply chain disruptions, the wars in Ukraine and the Middle East, rising commodity prices and trade barriers.

Yet, despite all these challenges, economic activity has not ground to a complete halt. Employment has held up in many countries, financial systems have avoided major crises and inflation has retreated from its previous peaks. These are among the points made in the IMF’s global report published on Tuesday.

Why, then, is Bangladesh missing from the list of countries performing well? The country’s economy has been on a sustained downward trajectory since 2022. The Awami League government was responsible for this decline.

After its departure, the interim government managed to halt the slide in some areas in 2024. But the current government has a five-year mandate. Simply preventing further decline cannot be its sole task. People want to see a recovery, yet the forecasts suggest that the economy will deteriorate further.

The BNP government must now prove the two development partners’ forecasts wrong. It is true that the finance minister asked for time in the budget for the current fiscal year. Ordinary people are willing to give the government time, but only if they see it adopting genuinely effective policies. In many areas, however, we are witnessing the opposite.

Government revenue is extremely low, yet expenditure continues to rise. Fiscal austerity exists largely on paper and has all but disappeared in practice. Salaries and allowances for government employees have been increased.

Aircraft purchase agreements have been signed in what appears to be a competitive race to buy planes. Large sums are being committed to projects, including the construction of major buildings. The government is also borrowing record amounts from the banking system.

Much of this borrowing has gone towards recurrent expenditure rather than investment that would boost production. At the same time, private-sector credit growth has fallen to its lowest level in 33 years.

The increase in the supply of money through government spending is having adverse effects across the economy. The World Bank has largely attributed the current rise in inflation to the government’s increased spending on unproductive sectors.

Before the election, the BNP published a manifesto containing numerous promises on the economy. The relevant section was titled “Rebuilding and recovering the fragile economy”.

It pledged to give the highest priority to job creation, establish a business-friendly environment, introduce one-stop services, ensure an uninterrupted supply of electricity and gas to industry, establish a reform commission for the financial sector, abolish the Financial Institutions Division of the Ministry of Finance, take action against those responsible for defaulted loans and put an end to secret agreements.

The manifesto also contains a fine-sounding promise: “democratisation of the economy”. In other words, the economy would be “inclusive, participatory and open to all”.

Perhaps the governor sought to take an initiative in that direction. He said the public would have to pay a “penalty” of Tk 600 billion every year for the next five to eight years to overcome the damage suffered by the country’s banking sector.

Making everyone pay to rescue banks that have been looted will presumably become the greatest example of an inclusive and participatory economy.

In other words, influential people will loot the banks, the money will not be recovered from them and they will repeatedly be granted concessions. Ordinary citizens, meanwhile, will pay the bill through this supposedly “participatory” process.

The government has now turned to international development partners for assistance. This will require reforms in many areas. One of the most painful aspects of Bangladesh’s experience is that reforms which should be undertaken on our own initiative, because the country needs them, are often implemented only under pressure from donors. In the process, the donors attach a range of conditions of their own, making matters even more difficult.

Banking-sector reform, for example, was already promised in the BNP’s election manifesto. Tax administration reform was also included. Yet there has been little tangible progress in either area. And without such progress, the situation will not improve.

The first three months of the 2026–27 fiscal year have already passed. The Public Money and Budget Management Act requires the finance minister to assess the economy’s performance over the first three months and present the assessment to parliament.

The finance minister and the Bangladesh Bank governor are currently in Bangkok to attend the annual meetings of the World Bank and the IMF. They are holding discussions with development partners and have an opportunity to learn from the experiences of other countries. This should also help them assess the direction in which Bangladesh’s economy is heading.

People expect them to return, review the economy as a whole and explain what needs to be done to put it back on track. The public does not want to pay a penalty. It wants to know what relief the government can offer and where it can ease people’s burdens. That is what the government must explain.

It is true that nearly eight months is not a long time. Nevertheless, people want to see a good start. They want reassurance that the government is genuinely committed to making things better.

Finally, the IMF’s report published on Tuesday concludes with a common recommendation for policymakers in every country. The Fund says each government needs a credible plan to bring the situation under control.

So, present a credible plan. The public will have confidence in it, and that confidence can help steer the economy towards recovery.

* Shawkat Hossain is head of online at Prothom Alo.