The first three months of the fiscal year, or one quarter, have ended. The government’s revenue collection and spending during this period, the amount it has borrowed from banks, and the extent to which the private sector has received loans all provide an indication of where the economy may be headed.
These figures are not relevant only to economists and policymakers. People’s incomes and livelihoods are directly linked to inflation, employment, business credit, government spending and the foreign-exchange situation.
There is also a legal obligation to conduct quarterly reviews of budget implementation. The Government Finance and Budget Management Act 2009 states that the finance minister must review revenue collection and expenditure trends on a quarterly basis against the budget targets.
A report on the findings of the review and the necessary measures must be presented at the next session of parliament.
During the previous government, however, we saw the assessment of the first three months sometimes being presented in parliament six months later. Towards the end, the regular presentation of such reports also stopped. At least this time, we hope that will not happen.
Even without waiting for the government’s review, however, it is possible to get some idea of the direction of the economy. Much of the economic data is now readily available.
Bangladesh Bank publishes 19 economic indicators every week on its website, in just two pages. If the reports published on 28 June and 27 September this year are placed side by side, they provide a preliminary picture of which indicators improved over the quarter, which deteriorated and where new risks emerged.
There is no scope here to analyse all the indicators. Not all the data have been updated for the full three-month period. Overall, however, it can be said that there is no indicator that is in particularly good shape. Rather, it appears that a further decline has been prevented, but there are no clear signs of recovery.
An analysis of the indicators inevitably raises five questions. Has inflationary pressure really eased? How much has government borrowing increased? Why is private-sector credit growth so low? Is the money supply growing too rapidly? And how sustainable is the improvement in the foreign-exchange and reserve situation?
For today, however, I would like to discuss two of these questions: the growth of government and private-sector borrowing from the banking system. The annual growth in government borrowing stood at 30.37 per cent on 28 June; three months later, it had risen to 34.11 per cent. Over the same period, private-sector credit growth fell further, from 4.75 per cent to 4.62 per cent.
The two figures are deeply concerning. Private-sector credit growth is now at its lowest level in 33 years. This makes an unpleasant picture of the economy clear. Credit growth in the banking system is increasingly being directed towards the government, while private-sector lending remains stagnant.
We know that the government’s revenue is far too low, while expenditure continues to rise. As a result, the government is having to rely increasingly on bank borrowing. At the same time, it is not simply that the private sector is receiving less credit because the government is borrowing more.
In reality, the private sector is not taking loans because of uncertainty surrounding investment. Loans are not cheap either, given the high interest rates. As a result, businesses are not approaching banks unless they really need to.
The energy crisis is one of the major obstacles at present. Some point to high interest rates as well. But historical data from Bangladesh do not support the argument that high interest rates alone are the main reason for the lack of investment.
There is an organisation under the Ministry of Finance called the Institute of Public Finance. In 2025, two joint secretaries of the Ministry of Finance, Abdul Mannan and Asif Iqbal, published a study in its journal.
The central argument of their research is that when the economy performs well and grows, private investment increases subsequently as a result. If businesspeople do not see the potential for markets and the economy to expand, it is difficult to significantly increase investment simply by lowering interest rates or providing incentives.
That is where the problem lies. Our average economic growth has fallen to almost half its previous level. Wages are rising more slowly than inflation. People’s purchasing power has declined. This has reduced overall demand. No one knows when the energy crisis will be resolved. If this is the situation, then who will invest?
For the past four years, the economy’s worst indicator has been high inflation. Setting that aside, the most worrying indicators are perhaps private-sector credit growth and the government’s continued borrowing from banks.
This is because bank credit is increasingly being directed towards government financing rather than the productive private sector. This may allow the government to keep spending for some time, but it will not generate sustainable growth or create employment.
Unless this is addressed quickly, today’s weak credit growth will translate into lower investment, fewer jobs and slower economic growth in the future. Combined with high inflation, that would make for a dangerous picture.
*The author is Prothom Alo’s Head of Online.
* This piece has been translated by Farjana Liakat for Prothom Alo English Online