Several challenges are anticipated for the Bangladesh economy in 2025, including the issue of rising non-performing loans in the financial sector, as reported by local media. The Bangladesh Bank’s options are limited due to heavy reliance on high-cost borrowing from the banking sector. Debt defaults persist, impacting banks’ ability to provide new credit, according to The Daily Star in Dhaka.
High interest rates are deterring capable entrepreneurs from making new investments, with major banks opting for high-yield government treasury bonds instead of lending to the private sector. The interim government has largely maintained the status quo in public financial management, leading to a lack of new models for budget allocation and fiscal policy. Revenue reforms have been slow, hindered by legacy issues within the civil bureaucracy, the report notes.
Investment levels are low, and there is a need to generate quality jobs for the youth. Effective management of inflation through market oversight and supply-side measures is crucial in a developing economy like Bangladesh. The report emphasizes the importance of enhancing domestic revenue mobilization through tax digitization, capacity building, anti-corruption measures, reduced VAT leakages, and improved income tax collection. Additionally, close monitoring of the exchange rate is deemed essential.
Ensuring a conducive law and order environment is deemed imperative for Bangladesh’s progress, requiring active engagement with global investors, trade partners, and development agencies by the new government. Stable political conditions and peaceful production zones are necessary for growth, supported by lower energy and food prices and resilient global supply chains. Export growth has slowed, underscoring the need to reduce business costs, enhance operational efficiency, and improve industrial zone management.
Despite discussions on diversifying products and markets, progress has been limited. As Bangladesh prepares to transition from the LDC category, a sharper focus and decisive actions will be essential, according to the report.
