Play store
Bangladesh’s economy and governance have failed to show the expected turnaround during the first six months of the BNP-led government, with 19 of 31 key indicators deteriorating despite progress in 12 areas, including remittances and foreign exchange reserves, the Centre for Policy Dialogue (CPD) said on Monday.
The assessment was presented by CPD Distinguished Fellow Dr Debapriya Bhattacharya at a media dialogue titled “Six Months of the Government: A Performance Review” in Dhaka.
The CPD’s assessment, based on 362 observations across nine areas, found that the overall performance remained mixed, with negative trends predominating and many of the weaknesses being structural. The assessment considered only concrete government actions, excluding announcements and pledges that had not translated into action.
“The public had two major expectations from the new government: that the economy would recover and that good governance would be established. After six months, neither has produced reassuring progress,” Debapriya said.
He said the government inherited a fragile economy marked by a shortage of funds, a troubled banking sector, non-performing loans, capital flight and a revenue deficit. However, he said the pace of recovery had fallen short of expectations.
Growth and investment remain weak
According to the CPD, GDP growth continued to weaken, with quarterly growth falling from 4.96 per cent in Q1 of FY26 to 3.03 per cent in Q2 and 2.22 per cent in Q3. The third quarter, partly under the new government, recorded the weakest quarterly growth of FY26 and less than half the growth recorded in the same quarter a year earlier.
Industrial production growth fell to zero from 3.4 per cent, while manufacturing growth also dropped to zero from 3.5 per cent. Net foreign direct investment declined to $594 million from $662 million, while private-sector credit growth slowed to 4.5 per cent from 6 per cent.
Prolonged gas and power shortages in the industrial sector have also discouraged new investment, the CPD said.
Inflation, however, showed some improvement. Headline inflation declined to 8.3 per cent in July from 9.1 per cent in February, while food inflation fell to 7.2 per cent from 9.3 per cent. The wage rate index improved marginally to 8.2 per cent from 8.1 per cent, although real wage growth remained negative.
Revenue shortfall poses major risk
Revenue mobilisation emerged as one of the government’s biggest challenges. NBR revenue growth declined from 12.4 per cent during July-February FY26 to 11.1 per cent during March-May, while total tax growth plunged from 12.3 per cent to 4.9 per cent.
The CPD warned that achieving the FY27 revenue target of Tk6.95 trillion would require revenue growth of around 42 per cent. It estimated a possible revenue shortfall of Tk1.30-1.40 trillion, equivalent to around 19-20 per cent of the annual target.
The think tank recommended that the government prepare for such a shortfall rather than rely on unrealistic revenue assumptions. Under existing practices, it warned, the adjustment could fall heavily on the Annual Development Programme and affect development spending.
External sector shows mixed picture
Exports improved, moving from a 3.2 per cent contraction to 3.5 per cent growth, while imports rose 18.1 per cent. Remittance growth, however, slowed from 21.4 per cent to 11.8 per cent, while average monthly overseas employment fell sharply from 95,521 to 51,235.
The trade deficit widened to $10.4 billion from $6.7 billion, while the current account moved from a $1.3 billion surplus to a $0.6 billion deficit. The balance-of-payments surplus narrowed by around 30 per cent to $3.2 billion.
Foreign exchange reserves provided one of the positive developments, rising to $32.3 billion from $30.1 billion.
Banking and energy crises persist
The CPD highlighted several developments in the banking sector, including the consolidation of five troubled Islamic banks and implementation of the Bank Resolution Act 2026 for five non-viable non-bank financial institutions.
At the same time, it raised concerns over central bank independence and governance in financial institutions.
The prolonged gas crisis was also identified as a major obstacle to industrial recovery. Technical disruptions at the Moheshkhali LNG terminals, difficulties in securing replacement LNG cargoes and problems with cargo acceptance disrupted supplies to gas-dependent industries, including textiles, steel, paper and ceramics.
Governance commitments fall short
On governance, Debapriya said the government had pledged to curb corruption, extortion, land grabbing, syndicates and mob violence, but the situation remained different from those commitments.
He criticised the appointment of politically affiliated individuals to senior positions despite pledges to ensure merit-based recruitment.
Mob violence, he said, had continued despite the government’s “zero tolerance” stance, while attacks on women, children and minority communities had not received an adequate visible response.
Debapriya also raised concerns about weaknesses in laws addressing enforced disappearances and protecting human rights, particularly provisions that could create conflicts of interest by involving alleged violators in investigations.
He said the government had not prepared a comprehensive document detailing the economic and administrative crises it inherited. Although officials frequently refer to the challenges they faced, he said, there is a lack of consolidated data to substantiate those claims.
CPD acknowledges some positive steps
The CPD fellow acknowledged several government initiatives positively, including lawmakers’ decision not to take official cars and plots, the swift trial of the Ramisa murder case, the use of artificial intelligence in traffic management and an increase in the tax-free income threshold in the national budget.
However, he stressed that reviving the economy would require more than isolated or short-term measures.
The CPD called for an integrated reform package covering energy security, banking reform, NBR restructuring, public expenditure, rationalisation of the Annual Development Programme, logistics, digitalisation and implementation of the wage commission.
It also recommended a shorter-term “core budget” for October 2026 to June 2027 based on real-time data and a credible fiscal framework.
The organisation urged the government to use September as a critical month to present its reform action plan and key economic issues to parliament, including pay-scale implementation, banking-sector restructuring, power-sector reform and broader institutional reforms.
“The change required is structural, not about people only,” the CPD said, calling for reforms in cabinet architecture, appointment practices, coordination mechanisms and the capacity of economic institutions to deliver.