In the 55 years since Bangladesh’s independence, the processes of state-building, political transformation, and economic reconstruction have been deeply interconnected. During this period, the country has passed through multiple political turning points, each of which has had a profound impact on the nation’s economic direction and institutional framework. Within this long history, Begum Khaleda Zia’s tenure represents a significant chapter, particularly in terms of economic reforms and policy restructuring.
Firstly, Khaleda Zia’s leadership came at a time when Bangladesh was gradually moving away from a state-controlled economic structure toward a market-based, export-oriented development model. This was not merely a period of policy change; it was a critical phase of restructuring the interrelationship between the state, the market, and society. To properly assess Khaleda Zia’s economic role, it must be viewed within the broader context of national evolution and as part of an ongoing process of transformation.
Secondly, the country had just transitioned from military rule to a democratic system when her party BNP came to power in 1991. At that time, the economy was still burdened with limited productive capacity, a weak revenue structure, and restrictive regulatory policies. In this context, Khaleda Zia’s government chose a different path, one that recognised the private sector as the primary driver of development.
This approach was not an abrupt transformation but a gradual, step-by-step process. Its core philosophy was to expand the role of the market, create an investment-friendly environment, and position the state as a supportive force rather than a direct regulator. From this period onward, the foundations for long-term growth in Bangladesh began to take shape.
Thirdly, the most visible aspect of Bangladesh’s economic transformation was the rise of the ready-made garment (RMG) industry. Although the industry had its beginnings in the mid-1980s, it received structural support during the 1990s. The government provided effective assistance to exporters through measures such as bonded warehouse facilities, back-to-back letters of credit, cash incentives, and trade facilitation policies.
These policies were not part of any ambitious industrial strategy but rather practical solutions to real problems. As a result, Bangladesh quickly established a significant position in the global garment supply chain. This success continued to drive the country’s growth in the following decades.
Fourthly, one of the most important initiatives of Khaleda Zia’s first term was the enactment of the 1991 Value Added Tax (VAT) law.
This represented a fundamental transformation of Bangladesh’s tax system. It aimed to replace a limited and inefficient tax structure with a modern, broad-based revenue system. Although implementation faced various obstacles and subsequent reforms were required, the initiative laid a strong foundation for revenue administration. Such structural reforms were essential for development spending, social protection, and infrastructure investment.
Fifthly, two significant changes occurred in the foreign exchange system during Khaleda Zia’s administration. In 1994, current account convertibility was introduced, which made import-export activities more dynamic. Later, in 2003, Bangladesh adopted a floating exchange rate system. This brought greater flexibility to foreign trade and monetary policy and enhanced the country’s economic integration with the global economy.
Sixthly, financial sector reform was one of the most important yet complex chapters of this period. Through the enactment of the Bank Companies Act (1991) and the Financial Institutions Act (1993), efforts were made to strengthen the regulatory framework. At the same time, with support from development partners including the World Bank, financial sector reform programmes were implemented.
The aim of these reforms was to improve banking efficiency, ensure credit discipline, and strengthen supervision. Although full success was not achieved, the structural foundations were established during this period. The formation of the Bangladesh Securities and Exchange Commission (BSEC) was also a key reform initiative, providing an institutional basis for the development of the capital market.
Seventhly, during this period, economic growth, export expansion, and remittance inflows helped create employment opportunities. From the 1990s to the mid-2000s, the poverty rate declined significantly. It should be noted that these achievements were not the result of a single government but rather a product of consistent policy. However, the policy stability under Khaleda Zia helped accelerate this process.
Eighthly, beyond the economy, Khaleda Zia’s tenure is also remembered for significant initiatives in social policy. Special emphasis was placed on expanding female education. In 1994, policies providing scholarships and support to continue education at the secondary level significantly increased girls’ school participation.
To reduce poverty, the scope of rural employment programmes, food security initiatives, and targeted assistance was expanded. Simultaneously, the coverage of social safety programmes was gradually extended to strengthen state support for vulnerable and poor populations. These initiatives helped lay the foundation for social progress.
Many such positive economic and social policies and reforms form Khaleda Zia’s economic legacy. The policies implemented during her tenure strengthened Bangladesh’s economic foundations. While these initiatives faced structural limitations and implementation challenges, they remain an important chapter in the country’s continued social development.
Even today, weaknesses in Bangladesh’s governance system persist. Lack of discipline in the banking sector, political influence, and weak enforcement mechanisms have slowed reform efforts. These problems are structural and long-term. This reality reminds us that reform is not merely a matter of policy-making; it requires political will, institutional continuity, and a coordinated long-term vision.
#Fahmida Khatun is Executive Director, Center for Policy Dialogue
*Opinions are the author’s own
*This article, originally published in Prothom Alo online edition, has been rewritten in English by Rabiul Islam