Qatar on Monday suspended its Liquefied Natural Gas (LNG) production following attacks on key operating facilities by Iran.

This suspension means Bangladesh, which has a long-term agreement with Qatar to supply LNG, will not get its much-needed fuel in this lean season. As a result the country will face heavy load shedding, since a significant portion of its gas-based power generation will not have adequate supply.

Bangladesh is heavily dependent on imported fuels to meet its energy needs. It imports various fuel oil, coal, LNG, and liquefied petroleum gas (LPG) worth around $5 billion annually because domestic gas and coal resources are very limited.

Lost opportunity

Bangladesh could have fared differently and better had the Yunus-led government not cancelled 31 renewable power projects totalling 3,300 megawatt capacity, mostly solar, with around 300MW wind and a small 25MW waste-to-energy project.

By now, around one third of these projects could have been generating electricity, reducing the impact of load shedding caused by impending LNG supply shortfall.

However, they were cancelled in September 2024, just one month after Muhammad Yunus assumed office. The government argued that these projects, signed under the Awami League through the controversial Quick Energy Supply (Special Provision) Act 2010, had not been awarded through competitive bidding.

The power tariffs under these projects ranged between 9.7 cents and 10.6 cents per kilowatt hour. The Transparency International Bangladesh (TIB) and the investors criticised the cancellation, and the government's decision was challenged at the High Court. The court ruled that the projects had been signed in good faith and could therefore be condoned with a review option.

With Letters of Intent (LoIs), the power companies had already purchased or were in the process of purchasing lands for their projects. Land acquisition is the most difficult part for any such ventures.

Costly mistake

When companies were expecting final agreements, the then-energy adviser Fouzul Kabir Khan pushed for the cancellation of all LoIs. The government subsequently floated fresh tenders for renewable projects totalling more than 5,000MW.

Although these tenders drew bids with lower tariffs at between 7 and 8 cents, the participation was weak, and the government secured deals for only about 900MW. If these bidders prove competent, their project may come online in 2028 or later but not before.

Cancelling the 31 deals was a costly mistake. Bangladesh remains far behind its renewable energy targets. The more energy it imports, the more vulnerable it becomes to global market volatility, geopolitical conflict, and foreign currency depletion. Building renewable capacity is essential for long-term energy security.

Renegotiation was better

Instead of outright cancellation, the Yunus government could have renegotiated the bids for these 31 projects.

Dozens of bidders told TBS in 2024 that the tariff offered by these solar projects ranges between 9.7 cents and 10.6 cents per kilowatt hour. These offers were made more than a year ago during which time solar modules price dropped by 20%. Since solar modules account for 35% of the project costs, the government could have renegotiated tariffs down by at least 1 cent and up to 1.5 cents bringing them into the 8-9 cents range.

The Yunus government also significantly reduced import duties on solar panels to 1% for the 2025-26 fiscal year to promote renewable energy. Additionally, a 10-year tax holiday (100% for 5 years, then 50% for 3, 25% for 2) is available for eligible renewable energy projects, with proposals to exempt VAT and stamp duty.

This prompted some of the cancelled bidders to offer even more cuts in their tariffs. But the government did not respond, a couple of bidders said.

Solar module prices decline almost every year globally. This was confirmed when the bids in 2025 under the Yunus government came in at 7-8 cents.

These 31 cancelled projects could have replaced $820 million worth of fossil fuel imports while providing direct jobs to 10,000 people.

Bangladesh had set a target of generating 15% of its electricity from renewable resources by 2030 and 40% by 2040. Yet, current achievements hover around just 3%.

Cancelling projects is easy because it requires doing nothing. But prudently executing them demands foresight, effort, and the intellectual capacity to secure the nation's future.

After the interim government took over, Ahsan Mansur was perhaps one of the few people who carried out some substantial and visible work. Those of us who closely observed and evaluated his actions tend to agree on one point: during the interim period, the economic sector was the only area where meaningful steps were taken. Compared to other sectors, this one saw concrete reform initiatives, particularly from the central bank.

If we look at the record, significant reforms were introduced in the banking sector. Changes were made to the boards of directors of several banks, and restructuring efforts began. The exchange rate situation improved, foreign reserves showed signs of recovery, and remittance inflows increased. These are not minor developments. I would suggest that during Dr Ahsan H Mansur's tenure, the economic sector experienced notable progress.

That said, it is also true that despite his goodwill and intentions, some reforms could not be completed.
For example, we cannot claim that full monetary discipline was established. Nor can we say that a strong structure of accountability, transparency, and responsibility was fully institutionalised. Still, leaving those limitations aside, I would argue that his tenure left behind considerable achievements.

Now, the question is why he had to leave so abruptly. When a political government is elected, it certainly has the authority to appoint a new governor. It can reshuffle ministries and bring in people it considers more suitable or capable. That is not unusual. What surprised many of us, however, was the manner in which Dr Mansur's departure took place.

As far as we know, he did not receive a formal termination letter. He reportedly learned about his removal through news channels. To me, this indicates that proper institutional due process was not followed. When he left, there was agitation among central bank staff, and he had to leave amid that unrest.

A newly elected government has every right to bring in new leadership, but there is also a matter of institutional etiquette. A proper and respectful transition would have reflected better on the system.

If we think about the monetary and banking reforms initiated during this period, important groundwork has been laid. Discussions had also begun on recovering embezzled funds that were laundered abroad. These were serious steps.

I would like to highlight three concerns about what might happen in his absence.

First, regarding reforms: Many of the recent monetary and financial reforms were undertaken on our own initiative. In the past, such reforms often came in response to directives from institutions like the IMF. This time, however, there was an effort to act proactively. Don't we want a financial sector that operates under a proper system? Don't we want transparency and accountability? Don't we want structural changes that strengthen the sector? Of course we do. These reforms had begun to move in that direction, and many of us appreciated that.

Second, we now have a newly elected government with many pressing political priorities. There are pending bills left by the interim administration, the referendum issue, implementation of the July Charter, and several other political commitments.

My concern is how high financial sector reform will rank among these priorities. There is always the possibility that some regulatory frameworks could be rolled back. Much will depend on how seriously the new government chooses to prioritise economic and financial reform.

Third, and perhaps most importantly, just before the interim government's tenure ended, the issue of granting full autonomy to Bangladesh Bank resurfaced. Dr Mansur raised the matter and placed it before the interim administration, leaving it for consideration by the newly elected government.

The future of many reforms depends heavily on this question of autonomy. Without real independence, the central bank risks functioning more as a department of the finance ministry rather than as the state's monetary authority. In such a scenario, vested interests could exert influence, and reform efforts could stall.

Ultimately, the future of banking and monetary reform in Bangladesh will depend largely on whether the central bank is allowed to operate as a truly autonomous institution. Without that foundation, sustaining meaningful reform will be extremely difficult.

Selim Jahan is a Professorial Fellow at the BRAC Institute of Governance and Development.

The ruling by the Supreme Court of the United States limiting President Donald Trump's use of emergency powers to impose sweeping tariffs should modestly ease policy uncertainty for Bangladesh's apparel exporters.

Bangladesh had been subject to a 19% "reciprocal" tariff under the recent US-Bangladesh trade arrangement, so the invalidation of those IEEPA-based duties reduces the risk of sudden, across-the-board tariff hikes imposed under emergency authority.

For Bangladesh's garment sector - highly dependent on the US market - predictability is almost as important as the tariff rate itself.

Although Trump has announced a new 10% global tariff under a different legal provision, its uniform application across countries effectively restores a more level playing field in the short term, compared to the differentiated reciprocal regime.

In terms of immediate order flows, I would not expect a sharp spike right away. US buyers typically place apparel orders months in advance, and sourcing strategies are shaped by longer-term considerations related to cost, compliance, and logistics.

However, the court decision could improve buyer sentiment by reducing legal uncertainty and the prospect of retroactive duties. Some American retailers may briefly pause to assess the evolving policy environment, especially given Trump's signal that he intends to pursue tariffs under alternative legal authorities.

If the new 10% tariff proves more stable and predictable than the earlier emergency-based regime, it could gradually support steadier order volumes from US importers.

However, I am concerned that a new set of restrictive trade measures from the US administration may be forthcoming, which could continue to disrupt the global trading system.

In this context, the hastily concluded trade agreement between Bangladesh and the United States - signed by the interim government just days before the national election - is already being questioned. Under this agreement, Bangladesh's interests appear to be significantly underrepresented. Moreover, the future of the agreement remains uncertain in light of the evolving legal and policy landscape.

On competitiveness, Bangladesh could see a relative advantage if higher country-specific tariffs on major competitors - particularly China - remain constrained or face legal scrutiny.

If the tariff gap between Bangladesh and higher-cost suppliers widens or becomes more predictable, US brands may accelerate diversification toward Bangladeshi factories.

However, competitiveness will still hinge on productivity, lead times, compliance standards, and infrastructure - not just tariffs.

In the bigger picture, the ruling reinforces constitutional limits on executive trade authority, which may lead to more congressional involvement in future tariff decisions.

For Bangladesh, a more rules-based US trade environment would likely be preferable to abrupt, executive-driven shifts.

Dr Selim Raihan is the executive director of the South Asian Network on Economic Modelling (Sanem).

The Supreme Court's recent ruling has altered the economic foundation of Bangladesh's trade arrangement with the United States. The reciprocal tariff mechanism that once justified a set of demanding obligations has been struck down. The administration has responded with a temporary 10% global tariff that applies to all countries alike. By statute, this tariff can remain in place for no more than 150 days unless Congress authorises an extension.

As a result, the tariff burden tied to the bilateral deal has fallen sharply. It is natural to ask why we should continue to carry obligations that were tied to a benefit that no longer exists in the same form. The instinct to demand renegotiation is understandable, and the desire for fairness is real. But the moment calls for clear judgment.

The case for patience
When circumstances shift abruptly, the impulse is to act quickly. Yet this is precisely when restraint becomes a strategic asset. The United States is navigating a politically sensitive moment: a legal setback, a hurried policy adjustment, and an uncertain path forward. Pressing for renegotiation now risks being seen as taking advantage of a partner at a vulnerable moment. That perception, even if unintended, can trigger reactions that are not strictly economic — regulatory scrutiny, administrative slowdowns, and other measures that fall outside the tariff framework. These tools remain fully available to Washington today.

Equally important is the uncertainty surrounding the status of the bilateral deal itself. The Supreme Court ruling removed the tariff instrument, but it did not automatically void the agreement. The obligations Bangladesh accepted do not rest on the same legal foundation as the reciprocal tariff. Assuming the deal has collapsed would be a serious misreading of the situation. Such an assumption could lead to missteps — provoking confrontation or relaxing compliance too soon. Until the United States clarifies its position, Bangladesh must proceed on the basis that the deal remains in force, even if its economic logic has weakened.

There is also a more structural risk that must be acknowledged. Bangladesh could find itself placed under the "unfair trade practices" category, a designation that allows the United States to impose tariffs under a different statute — tariffs that can reach levels far higher than the current 10%. Bangladesh is exposed on several fronts — labour standards, environmental compliance, and supply-chain transparency. None of these issues are new, but in a tense political climate they can be invoked to justify punitive measures. This is not a reason to retreat from seeking a fairer deal; it is a reason to choose the moment carefully.

Bangladesh can reduce its exposure with steady, practical steps. Strengthening labour-inspection systems, improving documentation of workplace conditions, and ensuring credible third-party verification of compliance would help close the gaps that often invite scrutiny. Environmental reporting can be made more transparent, especially in sectors where buyers already demand traceability. And coordination with industry to maintain consistent standards across factories would make it harder for isolated lapses to be framed as systemic failures. None of this guarantees immunity, but it places Bangladesh on firmer ground if allegations arise.

A better moment will come

The broader strategic logic still favours patience. When the environment is unsettled, the value of time increases. The United States will need to rebuild its trade architecture in the wake of the ruling. It will have to decide whether to craft new bilateral arrangements, adjust the temporary tariff, or seek congressional authority for a more durable framework. In that period, Bangladesh will not be approaching a wounded partner but engaging one ready to redesign. That is when our voice will carry more weight, and our demands will be seen as part of a forward-looking conversation rather than a reaction to a moment of weakness.

Bangladesh should prepare its position now — identify which clauses are unacceptable, articulate the imbalance created by the new tariff reality, and build a coherent case for a fairer arrangement. But preparation is not the same as provocation. The wiser course is to maintain a calm, neutral posture while the United States clarifies its next steps.

When Washington begins shaping its post-ruling trade strategy, Bangladesh can then make a principled, confident case for revisiting the terms. At that moment, renegotiation will not be an act of pressure but an act of alignment.

The public's desire for a fairer deal is legitimate. The government is right to prepare for one. But the country will gain more by choosing the right moment than the loudest one. The cost of moving too early is far greater than the cost of waiting. Bangladesh must choose timing over impulse — leverage over noise.

Zahid Hussain is a former lead economist of The World Bank, Dhaka Office

With 209 seats on its own and an expected 212-seat bloc with allies, the Bangladesh Nationalist Party (BNP) has secured a decisive parliamentary majority. Voter turnout stood at 59.44%, and the Election Commission's announcement of results has formally closed a chapter of political uncertainty.

For the business community, that certainty matters.

But economists caution that electoral legitimacy, while necessary, is not sufficient to restore macroeconomic momentum. 

The new government inherits slowing private investment, persistent inflationary pressures, a stressed banking sector and a weak revenue base. The mandate is clear. The economic road ahead is less so.

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From uncertainty to confidence

Professor Mustafizur Rahman, Distinguished Fellow at the Centre for Policy Dialogue (CPD), describes the election outcome as a "necessary condition" for recovery — but not a guarantee.

 
"A peaceful and credible election has removed uncertainty and marked the beginning of a renewed democratic journey — an undeniably positive signal for the country's trade, commerce and overall economy. This was a necessary condition for boosting investment, as the private sector was reluctant to undertake new investments or expand existing businesses amid prolonged uncertainty," he said. 

"However, a credible election alone is not sufficient to inject dynamism into the economy or to rebuild investor confidence. To translate this political development into tangible investment outcomes, several additional enabling factors must be addressed. Most important among them are improvements in law and order and the assurance of good governance," Mustafizur added. 

 
At the same time, appropriate fiscal policy must be pursued. The ease of doing business needs to be enhanced, and the cost of doing business reduced. Necessary reforms across key economic sectors must be implemented, institutional efficiency strengthened, and overall macroeconomic stability ensured.

 
If these measures are put in place, confidence among both domestic and foreign investors will grow, leading to higher investment flows, the economist noted.

Mustafizur cautioned, "Investment will not surge from day one simply because these steps are initiated. However, they will send a strong positive signal to the market. As confidence gradually strengthens, investment will follow."

 
The emphasis is clear: Political stability must now translate into administrative predictability. For investors, law and order is not merely a security issue — it is a cost variable. Contract enforcement, customs clearance, dispute resolution and regulatory consistency all shape capital allocation decisions.

The first 100 days: Credibility on the line

For Jyoti Rahman, director of International Affairs at the Sydney Policy Analysis Center, the government's early actions will define its economic trajectory.

Ramadan is approaching — historically a period when prices of essential commodities rise. That seasonal inflation will be the administration's first credibility test.

"When a new government takes office, if it fails to immediately build confidence and credibility, that failure will have downstream effects later on."

He added, "Now consider the current moment. If the BNP government comes to power just as Ramadan begins — or right before it, since Ramadan is set to start next Wednesday or Thursday — we face a familiar and unfortunate pattern in Bangladesh: prices of essential commodities tend to rise during Ramadan. It may be onions, eggplants, or other staples. We have seen this before. Sheikh Hasina once even dismissed public concern by suggesting that people could simply avoid eating onions or eggplants. Such remarks damaged public trust.

"If the new government cannot manage the supply chain from day one, the impact on confidence and credibility will be severe. That erosion of trust will hurt the government later when it confronts larger macroeconomic challenges. As a macroeconomist, what I expect from the new government is clear: it must take supply chain management very seriously as an immediate confidence-building measure. In the long run, credibility is everything," Jyoti further said.

Second, he added, the budget is obviously critical. The interim government essentially operated with an interim framework — it did not introduce major new programmes or projects but simply kept things running.

"The new government, however, must now manage the debt legacy left behind by Hasina."  

At the same time, the new government must fulfil its campaign promises — the mandate it received from voters. So it faces a threefold challenge: servicing past debt, delivering on electoral commitments, and maintaining a sustainable fiscal framework. This will be extremely difficult. The budget is not merely a technical exercise; it is a strategic priority that requires strong communication with the public.

"Third, the government must articulate a long-term development plan. We speak of becoming a $3,000-per-capita economy, but sustaining that level requires around 10% growth and structural reform. What is the mission? What is the long-term strategy? These questions must be addressed now," Jyoti Rahman said. "The upcoming budget will therefore be more than a financial statement — it will be a declaration of intent."

The revenue question

That intent, economists argue, must include deep institutional reform — starting with the National Board of Revenue (NBR).

Zaidi Sattar, chairman of the Policy Research Institute (PRI), is blunt in his assessment, "One of the major obstacles to Bangladesh's economic progress is the institution known as the National Board of Revenue. If the new government genuinely wants to advance economic development, this institution must be thoroughly overhauled and restructured."

Reforming the NBR could unlock significant benefits for the economy. In many ways, it is the key to growth and progress. If this key is not turned properly, the entire system remains stuck. This is not a minor issue — it is a serious structural bottleneck.

He said, "In my view, the NBR is one of the most critical institutional stumbling blocks to Bangladesh's economic advancement. It must therefore be treated with the highest level of priority. Comprehensive reform — administrative, structural and governance-related — is essential if the country is to achieve sustained and inclusive economic growth."

Bangladesh's tax-to-GDP ratio remains persistently low. A narrow tax base and complex compliance regime discourage formalisation. Without reform, fiscal space will remain constrained — limiting infrastructure spending, social protection and debt management capacity.

For a government seeking to move the economy towards higher-middle-income status, revenue reform is not optional, he said.

Lessons from the past

Economists also underline what the new administration must avoid. Jyoti Rahman outlined it neatly.

"First, macroeconomic orthodoxy must be restored and protected. Political interference in banking supervision and directed lending under previous administrations weakened financial discipline. Depoliticising the banking sector and strengthening regulatory autonomy are critical," he said.

He added, "Second, fiscal populism carries risks. Large-scale projects without transparent cost-benefit analysis strain public finances and crowd out private investment.

"Third, inequality must be addressed through opportunity creation, not merely redistribution. Expanding transfer programmes without improving labour productivity, education quality and SME access to finance risks entrenching dependency rather than growth," he added.

"Finally, communication matters," he said, "Markets respond not only to policy but to signalling. Transparent engagement with the business community and development partners can anchor expectations and reduce volatility."

A narrow but decisive window

The election has delivered a stable parliamentary arithmetic. But stability must now be converted into reform momentum.

The priorities, economists agree, are immediate supply stabilisation, law and order improvements, credible budgeting, NBR reform and banking sector discipline. None are politically easy. All are economically necessary.

Investment will not surge overnight. Growth will not rebound instantly. But early, coherent steps can reset expectations. The mandate is strong. The structural constraints are real. Whether the new government can bridge the two will define Bangladesh's next economic chapter.

Bangladesh’s economy is showing signs of stabilisation, yet risks and uncertainties remain, and long-term challenges require urgent attention, Planning Adviser Wahiduddin Mahmud has cautioned.

“Inflation, while easing slowly from 11 percent to around 8 percent, is unlikely to drop quickly due to continued high price expectations. Wages are adjusting to inflation, showing the economy has moved into a new phase,” he said, speaking at a seminar yesterday.

Titled “Economic Stability and the Challenges of the Next Government”, the seminar was organised by the Economic Reporters’ Forum (ERF) at the National Life Insurance Auditorium in Dhaka. The ERF Scholarship Award 2026 ceremony was also held.

“GDP growth may reach 5 percent this fiscal year, but I don’t see it as the most reliable indicator. Other markers like imports of industrial raw materials, capital machinery, exports, reserves, and exchange rate give a clearer picture,” the adviser added.

On monetary policy, he noted that the current 10 percent policy interest rate may be unnecessarily high as credit growth remains weak. “SMEs are struggling while RMG exporters are benefiting from a favourable exchange rate,” he added.

Mahmud criticised the hidden costs of stabilisation, including bank recapitalisation using printed money, calling them “invisible but long-lasting consequences” of previous economic mismanagement.

On governance, he remarked, “This is an exceptional government -- neither fully political nor an NGO model. It came out of a mass uprising and is trying to uphold constitutionalism. We’ve never seen this kind of government before.”

He stressed that without major investment in education and skills, the country risks wasting its demographic dividend. He also highlighted progress in public procurement reforms and solar power integration, but cautioned that corruption and inefficiency must be addressed for reforms to succeed.

Azam J Chowdhury, chairman of East Coast Group, stressed the need for broader engagement in economic policymaking, including participation from all political parties and the private sector, to ensure future macroeconomic stability in Bangladesh.

He said discussions around macroeconomic challenges should involve political leaders from across the spectrum. “They must be aware of the current state of the economy and what challenges await in the future,” he noted.

The businessman pointed out that while Bangladesh has adopted some of the IMF’s recommendations, key structural reforms remain pending.

He highlighted inefficiencies and harassment in the business environment. “Even after paying taxes and submitting documents, importers face delays due to unnecessary bureaucracy and interference. These are micro-level operational issues that need urgent simplification,” he urged.

On the energy crisis, Chowdhury said, “There’s no LNG, no LPG, no infrastructure. The interim government has not engaged with the private sector or given clear policy directions. When the next government takes power, how will it manage this?”

Tofazzal Hossain, Chairman of NLICL, called for ethical reform and integrity in Bangladesh’s financial sector, warning against politically motivated bank licensing and poor governance.

Shamsul Haque Zahid, editor of The Financial Express, said the interim government inherited a fragile, near-collapsing economy which it managed to stabilise -- but true recovery remains distant.

He pointed to persistent high inflation, low private investment, and weak job creation, and cautioned that the next elected government will face these issues as legacy burdens.

“The new government may struggle in its first two to three years before achieving stability and growth,” Zahid estimated.

Daulat Akhter Mala, president of ERF, chaired the event, and Abul Kashem, general secretary of ERF, moderated the event. Among others, Syed Abdul Monem, acting managing director of BRAC Bank, and M Kamal Uddin Jasim, additional managing director (AMD) of Islami Bank Bangladesh PLC, also spoke at the event.

On some days, Dolon simply stops taking her medicine. Not because her condition has improved or doctors advised her to. She stops because she is exhausted mentally, financially and emotionally.

Almost all her salary now disappears into medication and treatment. Every few months, prices rise again — quietly but relentlessly — outpacing her income and shrinking her choices.

"This is one of the reasons I don't even think about getting married," she said. "When I think about children, I feel scared. I can barely manage my own life."

However, for Saiful Islam, a thyroid cancer patient, daily medication is non-negotiable. Missing a single day once landed him in emergency care, with doctors fearing a relapse. But inflation has meant that life is shrinking inch by inch.

"I must undergo Tg, anti-Tg, serum calcium, scans, FT3 and FT4 tests every three months. Once the reports stabilised after a year, the tests became mandatory every six months. I must take three Thyronorm 50 tablets daily. Missing even one day causes complications. When I first started the medication, one strip cost Tk120. Then it became Tk180, and now it is Tk240. I have no choice but to take it," Saiful said.

"Earlier, I used to buy shirts worth Tk1,000; now I buy ones priced at Tk600. Where I once ate two kilograms of fish per week, I now eat one. This is how I am adjusting. There is no alternative," he added.

Since inflation accelerated after 2022, illness has become not just a health crisis in Bangladesh but a financial one. Families are cutting back on food, clothing, travel — even dignity — selling homes, skipping doses, and delaying treatment just to survive rising medical costs amid a broader cost-of-living squeeze.

Skipping doses, selling homes, taking loans

Bangladesh today bears one of the heaviest private healthcare burdens in the world. According to official data from the National Health Accounts, 68.5% of medical expenses were paid out of pocket in 2020, rising to around 73% in 2021. Only war-torn Afghanistan fares worse. The World Health Organization recommends a maximum of 20%.

Behind these numbers are people like Dolon and Saiful, recalibrating their lives around pills, test reports, and medical bills.

In Rajshahi, Nadim Abdullah runs a small shop that supports his father, younger sister, wife, and himself. When someone in the family falls sick, the business grinds to a halt.

"Sometimes we are supposed to take seven days' medicine, but we stretch it over three days," he said. "If I take medicine properly, the shop's cash will be gone."

Loans followed. NGO installments piled up. Eventually, Nadim sold his house.

"My wife has been suffering from gynaecological problems for four years," Nadim explained. "I can't afford proper treatment. I bring home homeopathic medicine just to give her some comfort. It doesn't work. This July, I sold my house. Over more than a decade, my inability to sustain and manage my business led me to accumulate debts of Tk5–7 lakh. I sold my house to repay them."

According to a 2022 survey by the Bangladesh Institute of Development Studies (BIDS), approximately 18% of the households face catastrophic health expenditures and more than 6.13 million people were pushed below the poverty line due to healthcare costs. Households cope by borrowing, selling assets, or simply avoiding treatment altogether.

My wife has been suffering from gynaecological complications for four years. I can't afford proper treatment. I bring home homeopathic medicine just to give her some comfort. It doesn't work. This July, I sold my house.
Nadim Abdullah, shopowner, Rajshahi

Rumana Huque, professor of Economics at the University of Dhaka and a public health specialist, believes that the crisis cannot be separated from the post-pandemic economy.

"Since Covid-19, people have been under immense pressure," she said. "Add to this the Ukraine–Russia war, the overall economic slowdown, and Bangladesh's political situation.

"What we see in labour force surveys is rising unemployment, especially among women. In this context, the macroeconomic situation is directly affecting people's ability to pay for healthcare from their own income," Rumana added.

Women's unemployment has risen the fastest, even as healthcare costs climb. For many families, women quietly absorb the shock — cutting their own needs first.

Medicines: The biggest drain

The largest share of out-of-pocket spending in Bangladesh goes to medicines. According to BIDS, 54.4% of the cost was spent on purchasing medicines, while the diagnostic cost is 27.52%, 10.31% for consultation and 7.77% for transport cost.

Rumana Huque said Bangladesh's medicine prices are unusually high compared to neighbouring countries.

"If we compare with India, Nepal or Pakistan, medicine prices in Bangladesh are relatively higher. This is often disputed by pharmacists, but comparative data shows clearly that prices here are significantly higher."

The absence of a structured referral system worsens the problem. Patients can buy many drugs over the counter without prescriptions. Self-medication rises. Costs spiral.

"People end up buying medicines on their own," Rumana explained. "That increases out-of-pocket expenditure even further."

In theory, essential medicines are free at public facilities. In reality, supplies dry up fast.

"In many upazila health complexes, medicines run out within 15 to 20 days. After that, patients must buy from their own pocket."

Shoayeb Mahmud from Manikganj knows this well. His mother's diabetes medication costs Tk3,600–4,000 a month. His father's medicines cost another Tk1,600. Their child's skin infection has already drained Tk20,000.

"We borrow from relatives for treatment," he said. "Still, we can't recover."

Doctors often prescribe medicines outside the Essential Drug List, even at public hospitals. Those drugs must be purchased privately, at market prices.

"This creates additional pressure," Rumana Huque mentioned. "Even when people go to government facilities, they still end up paying."

Urban patients face a different trap. Public hospitals are overcrowded and under-resourced, forcing people into private clinics.

"There is no prepayment mechanism, no insurance," Dr Huque said. "In urban areas, people depend heavily on private providers. That pushes costs much higher."

Even within cities, prices vary wildly between clinics. Medicines are often sold under brand names rather than generics, creating confusion and inequality.

"There is disparity between urban and rural areas," she said. "But also disparity within cities themselves."

A system stretched thin

According to the World Bank, financial hardship drops sharply when out-of-pocket spending falls below 20%. Bangladesh is nowhere near that threshold. The root problem lies in chronic underinvestment.

Bangladesh allocates around 1% of GDP to health, far below the WHO-recommended 5%. While health budgets have grown nominally, much of the money goes to salaries and routine expenses. A significant portion remains unspent due to weak implementation.

The result is a system where people with means seek treatment abroad — in India, Thailand, or Malaysia — draining foreign currency, while those without means delay care or fall into poverty.

Professor Rumana argued that the pharmaceutical industry and government both have roles to play.

"The pharmaceutical industry has an important role to play. If companies were willing to reduce their profit margins, prices could come down. Many raw materials and components for medicines are imported, and reducing import taxes on these inputs could also help lower costs. At present, the cost of doing business in Bangladesh — across industries, including pharmaceuticals — is very high," she said.

"If the government were to provide targeted incentives to pharmaceutical manufacturers — such as tax relief, support through export processing zones, or other facilities — particularly for life-saving medicines, prices could be brought down to a more affordable level. This would significantly reduce the financial burden on the public."

Until then, households will continue to absorb the shock.

Bangladesh's economic success under the previous political regime rested on fragile foundations, with structural weaknesses masked by headline growth. These distortions fuelled a build-up of public debt and one of the world's highest non-performing loan ratios, estimated at 35.7 percent, reflecting deep abuse in the banking sector.

As confidence eroded, foreign exchange reserves fell by nearly 40 percent between end-2022 and mid-2024, while inflation rose to a 12-year high. An artificially low interest rate cap and aggressive monetary expansion by the Bangladesh Bank intensified price pressures, with weak data transparency obscuring the scale of deterioration and contributing to political upheaval.

The interim government has made progress in stabilising the macroeconomy. Foreign exchange reserves rebounded by more than 30 percent, supported by restrictive import policies and a recovery in remittance inflows following the shift to a market-driven exchange rate. Inflation has moderated, and initial steps have been taken to address the NPL crisis. Yet the recovery remains fragile, with GDP growth slowing to 3.69 percent in FY2025 amid weak business confidence, declining equity-related foreign direct investment and lingering political uncertainty.

Political clarity has therefore emerged as a decisive factor shaping the outlook. While uncertainty surrounding the transition to an elected government has weighed on investor sentiment, the return of Tarique Rahman after a prolonged exile has reduced electoral ambiguity. His emphasis on stability and national unity has improved expectations of policy continuity, supporting a more constructive medium-term outlook, with the IMF projecting growth to rebound to 4.9 percent in 2026.

Despite these stabilisation gains, Bangladesh's capital market continues to underperform. The DSEX remains near multi-year lows, valuations are deeply compressed and foreign participation has declined sharply, even as regional peers have rallied. This underperformance is structural, driven by a prolonged IPO drought, regulatory inefficiencies, the dominance of bank financing, elevated fixed-income yields and an underdeveloped institutional investor base. These weaknesses reinforce a cycle of low liquidity and weak participation.

Bangladesh now stands at a critical juncture. Macroeconomic stabilisation, improving reserves and emerging political clarity offer a narrow but meaningful window for capital market revival. Sustained recovery, however, will depend on a coordinated reform agenda that addresses structural bottlenecks, restores institutional credibility and realigns incentives towards long-term market development.

On the fiscal front, restoring listing incentives is essential. Expanding the corporate tax differential between listed and non-listed companies to 10 to 15 percentage points would reward transparency, while tax-free dividend income could redirect household savings towards equities.

Regulatory reforms are equally important. Streamlined, digitised financial reporting and a fast-tracked IPO process would help revive the listing pipeline, while stronger corporate governance and improved stock exchange oversight would enhance market integrity and investor protection.

Institutional strengthening remains central. Enhancing the effectiveness and accountability of the BSEC, alongside revitalising the Investment Corporation of Bangladesh, would restore regulatory credibility and provide counter-cyclical market support. Progress also depends on stronger inter-agency coordination, improved financial literacy and a better balance between bank financing and capital markets through incentives for private listings and rationalised savings instrument yields.

Sustainable capital market growth ultimately depends on building a strong institutional investor base, particularly through the development of the mutual fund industry. Greater mutual fund participation would help reduce volatility by reinforcing disciplined, long-term investment practices. Yet the sector remains underdeveloped.

Achieving durable, fundamentals-driven growth will require targeted policy support, including higher tax rebates on mutual fund investments, limited tax exemptions on dividend income, larger IPO quotas and the removal of the 15 percent bank investment cap on mutual funds. If implemented consistently, these measures could reposition the Bangladesh capital market as a credible engine of long-term economic growth.

The writer is managing director and CEO of Vanguard Asset Management Limited