Bangladesh Inherited a Fragile Economy

The World Bank, the International Monetary Fund (IMF), the US Treasury Department and other multilateral development agencies and international partners have acknowledged that Bangladesh inherited a fragile economy. They have also expressed confidence in the government’s economic recovery and reform strategy, according to Dr Rashed Al Mahmud Titumir, the Prime Minister’s Adviser on Finance and Planning.

He made the remarks while speaking to the media on Wednesday on the sidelines of the annual meetings of the IMF and World Bank Group in Bangkok. Mr. Titumir said discussions with international partners had established clear agreement on three issues. First, the government inherited a fragile economy and is working to restore stability through transparency and accountability rather than concealing the problems. Second, international partners trust the government’s strategy to manage fresh pressure on fuel and essential commodity prices caused by the Middle East crisis. Third, they consider the government’s programmes for economic recovery, banking sector reform and poverty reduction realistic.

“We are addressing the problems with transparency and accountability instead of sweeping them under the carpet. We have our own strategy, and international partners have developed confidence in it,” the adviser said.

Social protection to ease inflationary pressure

Mr. Titumir said protecting ordinary people from inflation was a major government priority alongside economic recovery. Rising fuel prices due to the Middle East crisis could increase transport and production costs, eventually pushing up the prices of essential goods.

He said the government had taken steps to contain inflationary pressure and help low-income people manage their living costs. Social protection programmes, including the Family Card and Agriculture Card announced by the Prime Minister, had received praise from international partners. These initiatives are expected to support families and farmers affected by rising prices.

Raising revenue without increasing tax rates

The adviser said a key objective of the government’s reform programme was to increase the tax-to-GDP ratio without raising tax rates. According to him, patronage and oligarchic practices in tax administration under the previous government had prevented revenue collection from reaching the desired level, leaving the tax-to-GDP ratio below 7%.

The current government is working to make the tax system more transparent, less burdensome and technology-driven. Digital transformation is underway across different stages of tax administration, and early signs of improvement in revenue collection are emerging, he said.

Plans to restore discipline in the banking sector

Mr. Titumir said the government had a clear plan to restore discipline in the banking sector, reduce non-performing loans and strengthen banks’ financial positions. Time-bound measures are being taken to rebuild the financial foundations of banks weakened by past irregularities.

He added that customers of Sammilito Islami Bank had begun receiving their money back. The government had also taken steps to reduce potential financial pressure on depositors.

Coordinating monetary and fiscal policies to boost investment

Responding to a question about central bank independence and the effectiveness of monetary policy, Mr. Titumir said the government was focusing on coordination between fiscal and monetary policies rather than directly interfering in Bangladesh Bank’s operations. He said creating an environment that supports investment and production was as important as controlling inflation.

The government has planned a special financing package worth around Tk 60,000 crore to reopen closed factories and increase credit flows to the private sector. The initiative is expected to boost investment, revive productive activities and create employment opportunities.

Government to retain ownership of reforms

Mr. Titumir said the reform programme was based on Bangladesh’s own needs and the government’s political commitments. The election manifesto had outlined plans to reform taxation, banking, investment and economic governance. “We want the ownership of reforms to remain in the hands of our political authorities. Reforms are not something to be imposed from outside; we have determined our own strategy according to the needs of the country,” he said.

US assures support for economic stability

The US Treasury Department has assured Bangladesh of cooperation and support in maintaining economic stability, according to Mr. Titumir. He said discussions with US Treasury officials covered debt management, bilateral relations and other key issues. Referring to Bangladesh’s expectations of US support, he said Bangladesh had not received much from the United States in the past, but recent progress in bilateral relations should lead to greater cooperation.

“The most important thing is that international partners have developed confidence in how we are working to recover and rebuild the economy. They consider our strategy realistic and are advancing discussions on financing,” he said. Titumir expressed hope that ongoing discussions and negotiations would produce progress on necessary financing within the next two to three months. This, he said, would help advance economic recovery, implement reforms, increase investment and strengthen social protection programmes.

Bangladesh seeks joint investment with China instead of loans

Meanwhile, Finance Minister Amir Khasru Mahmud Chowdhury said Bangladesh wanted to reduce its reliance on loans and gradually shift towards joint ventures and direct investment in its economic cooperation with China. Speaking to journalists after lengthy discussions with China’s Exim Bank on Wednesday, he said Bangladesh was emphasising investment based on partnerships rather than debt for future initiatives.

He said the discussions focused on changing the financing structure by making greater use of existing economic cooperation and investment opportunities between the two countries. Bangladesh needs to move away from its reliance on sovereign and other debt-based financing and increase equity investment, he added.
The discussions also explored opportunities to strengthen bilateral partnerships through joint ventures and foreign direct investment.

“We are moving away from loans and gradually towards greater investment. We have held lengthy discussions with China’s Exim Bank. We hope there will be a change in this regard,” the finance minister said.

Government inherited debt exceeding Tk 23 lakh crore

The current government took office facing a public debt burden of more than Tk 23 lakh crore. Government borrowing from the banking sector also grew by more than 32% in 2025, creating a major economic challenge from the outset of the BNP-led administration.

According to Bangladesh Bank data, total government debt from domestic and foreign sources stood at Tk 22,50,904 crore at the end of the 2024–25 fiscal year. During July–December of the last fiscal year, the government borrowed Tk 61,148 crore from the banking sector. It also received net foreign loans worth $1.074 billion, equivalent to Tk 13,103 crore at an exchange rate of Tk 122 per dollar.

The government therefore borrowed Tk 74,251 crore from domestic and foreign sources during the first six months of the fiscal year. By December, total government debt had reached Tk 23,25,155 crore.

Record $2.05 billion in foreign debt repaid in five months

The BNP-led government repaid a record $2.0476 billion in foreign loan principal and interest during its first five months in office, from March to July this year. The amount was equivalent to around Tk 25,163 crore. Updated statistics from the Economic Relations Division (ERD) show that this was the highest amount of foreign debt repayment recorded in any five-month period.

During the same period last year, foreign debt repayments stood at $1.8971 billion, or around Tk 23,310 crore. The latest figure represents a year-on-year increase of $150.4 million, equivalent to approximately Tk 1,849 crore.