Roadmap to economic revival

The long-awaited election is over, followed by the formation of a new government carrying enormous hope from the people. However, it has taken charge of an economy that is deeply dented. Setting emotions aside, the past 18 months have been suffocating for many citizens and businesses. Inflation remained stubbornly high, investment dried up, factories closed, unemployment rose, revenue collection weakened, SME entrepreneurs struggled and felt ignored, and the banking sector appeared fragile with a large stock of non-performing loans. Public confidence collapsed while debt and external obligations mounted. Research from the World Bank and the International Monetary Fund (IMF) highlights slowing private investment, weak revenue mobilisation and declining investor confidence as major risks to growth.

History shows that moments of deep crisis often carry the seeds of restoration. The new government has a rare opportunity not merely to manage the economy but to reset it. Economic recovery begins with confidence. Before policies, circulars or targets, confidence must return.

The immediate priority of the new government should be restoring law and order and engaging business leaders, exporters, SMEs, bankers and foreign investors through structured dialogue. Listening is not a weakness. It is economic intelligence. A clear and honest national address acknowledging the pain, outlining constraints and presenting a credible recovery plan could itself rebuild confidence. Investors do not expect miracles. They expect clarity and consistency.

A sound strategy to stabilise inflation without choking growth is essential. High inflation is hurting households, while excessively tight policies are squeezing businesses. Elevated interest rates have significantly slowed credit growth. The government must work closely with the central bank to strike a better balance, gradually easing rates for productive sectors while maintaining discipline against speculative borrowing. Targeted support for food supply chains, logistics and energy imports could reduce cost pressures more effectively than blanket tightening. Inflation is not only a monetary issue. It is also a supply-side challenge.

A fragile banking system with weak governance cannot support recovery. Official data show non-performing loans at alarming levels, while capital adequacy ratios in several banks are under strain. The new administration must act decisively. Without meaningful banking reform, other reforms will falter.

Over the past 18 months, businesses large and small felt neglected. Many businesses postponed investment, not because of a lack of funds but because of uncertainty. The government should announce a time-bound roadmap for tax rationalisation, ensure faster VAT refunds for exporters and simplify compliance for SMEs with smoother access to finance. Special working capital windows, similar to the pandemic stimulus packages, could support distressed yet viable enterprises. Factories do not reopen because of political speeches. They reopen when cash flow improves, and rules become predictable.

Growth without jobs will deepen social tensions. Public works programmes, SME financing, agricultural value chains and labour-intensive manufacturing must be prioritised. Every major policy should face a simple test: will it create or protect jobs? Ignoring employment is not an option.

The national treasury is under strain, yet imposing higher taxes on the same taxpayers will not solve the problem. The focus should instead be on widening the tax net, reducing leakage and digitising enforcement. A fair system raises more revenue with less resistance. When citizens perceive fairness, compliance improves.

Foreign investors and development partners will watch closely. Clear commitments to governance, transparency and reform can unlock concessional financing, budget support and investment flows that Bangladesh needs.

The new government has inherited a wounded economy, but also a remarkable opportunity. If it chooses courage over caution, reform over delay and partnership over isolation, Bangladesh can move from stagnation to recovery and from survival to sustainable growth. Economic revival is about building a stronger, fairer and more resilient tomorrow.

The writer is a senior banker