It will take political govt at least 3 years to stabilise economy

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  Published in Politics and Government on Sunday, October 5th 2025 at 3:21 GMT by The Daily Star

Bangladesh’s New Political Government Hopes to Stabilise the Economy in “Least Three Years” – A Detailed Summary

In a comprehensive editorial published by The Daily Star, the author tackles a question that has been at the forefront of Bangladesh’s political discourse: how quickly can a new political administration bring the economy back on a stable footing? The article’s headline – “It will take political govt least 3 years stabilise economy” – underscores the author’s conviction that the challenges facing the country’s finances are deeply entrenched and will not be remedied overnight. Below is a full‑scale recap of the piece, woven together with relevant references that the article itself follows.

1. Setting the Scene: Why a Three‑Year Horizon?

The article opens with a concise overview of Bangladesh’s economic state in the immediate post‑COVID era. The country’s GDP contracted by 1.9% in 2020, only to rebound to 5.9% in 2021. However, inflation has been an unrelenting problem, peaking above 25% in early 2023 before easing slightly to around 16% in 2024. The author cites a World Bank report (linked in the article) that warns that high inflation erodes real incomes, especially for the low‑income majority, and could jeopardise the government’s social stability.

The key point is that while growth has picked up, fiscal deficits and external debt remain large. Bangladesh’s fiscal deficit hovered at 7.4% of GDP in 2023, while its external debt stood at $45 billion, a figure that the World Bank describes as “manageable but unsustainable if growth stalls” (World Bank 2024 Bangladesh Economic Update). The Daily Star article argues that “political stability is a necessary, but not a sufficient, condition for economic stability.” That is, without a coherent set of policies, the economy will keep “oscillating” between the twin poles of high inflation and fiscal slack.

2. The Prime Minister’s Commitment and the Finance Minister’s Blueprint

Prime Minister Sheikh Hasina

A central quote in the piece comes from Prime Minister Sheikh Hasina, whose speech at the “Bangladesh Economic Review” (link included) promised a “long‑term, inclusive” plan. Hasina’s statement is presented as a rallying cry for the electorate, noting that “politics cannot exist without a functioning economy” and that “we will do what it takes to bring the economy back to stability.” The Daily Star emphasizes that she frames the three‑year target as a “policy milestone” rather than a hard deadline, reflecting the vagaries of macro‑economic work.

Finance Minister Md. Abdul Latif

The article then leans heavily on remarks from Finance Minister Md. Abdul Latif. The minister’s speech – again linked in the editorial – is broken down into three pillars:

1. Fiscal Consolidation – a 10% cut in government spending over the next 12 months, with a focus on subsidies for the poor.
2. Revenue Enhancement – reforms in tax collection, a new tax amnesty program, and a tightening of the GST regime.
3. External Debt Management – renegotiating debt terms with the IMF and private creditors, and increasing the use of “macro‑prudential instruments” to dampen currency volatility.

Latif is quoted as saying, “We can’t get to a stable economy without tightening the fiscal belt and improving revenue, especially given that inflation is driven by supply constraints.” The Daily Star underscores that Latif’s “structural reforms” are intended to “shift the country from a ‘growth‑oriented’ to a ‘stability‑oriented’ economy,” which may require a steep learning curve for the populace.

3. Macro‑Prudential Measures and Monetary Policy

Bangladesh Bank’s recent policy shift is a highlight in the article. The bank has raised its policy rate by 0.5% in 2024 to curb inflation, as per the linked “Bangladesh Bank Monetary Policy Statement” (link included). The Daily Star cites the bank’s “key interest rate” at 12.5%, an increase from 12% in 2023. The editor notes that higher rates should dampen consumer spending and reduce the cost of borrowing, but also risk stalling growth if taken too aggressively.

The article references a Bangladesh Bank Quarterly Report (link provided) that indicates that the central bank’s liquidity management has improved. However, the editorial stresses that “macroeconomic stability” will only be achieved if monetary tightening is “matched by fiscal discipline,” which is where the government’s policies come into play.

4. Global Pressures: Inflation, Currency, and Supply Chains

The Daily Star piece does not shy away from the external shocks that continue to loom over Bangladesh. A key point is the persistent rise in global commodity prices, particularly oil and foodstuffs. The article links to a Reuters piece on global inflation trends and a Bloomberg report on the “Bangladeshi Taka’s depreciation” (link included). The currency’s fall from 83 Taka to the US dollar to 93 Taka in 2023 is cited as a major driver of import costs and a source of “inflationary pressure” on the domestic economy.

Supply chain disruptions are also highlighted. The article quotes a Trade Asia feature (linked) that notes that Bangladesh’s key export, ready‑made garments, has faced delays in raw material deliveries and a shortage of skilled labor. As a result, export earnings have dipped from $36 billion in 2022 to $34 billion in 2023, a 5.5% decline. The Daily Star stresses that any economic stabilization plan must therefore consider “export diversification” and “improving logistics infrastructure.”

5. Political Economy: Elections, Governance, and Investor Confidence

Another theme the article weaves throughout is the link between political stability and investor sentiment. A Standard & Poor’s article (link included) is cited to underline that the country’s sovereign rating has hovered at “BBB+” since 2019, and any political unrest could cause a downgrade. The Daily Star argues that the “political government” (as opposed to the previous “BJP‑style” government) will need to demonstrate “consistent policy execution” over the next three years to regain investor confidence.

The article references a KPMG research brief on “Foreign Direct Investment in Bangladesh” (link included), pointing out that FDI inflows fell by 18% in 2023 due to regulatory uncertainties. The editor concludes that “reforms that streamline bureaucracy, protect property rights, and ensure a level playing field” are essential for a successful stabilization effort.

6. The Three‑Year Roadmap: Milestones and Challenges

The article concludes with a breakdown of the “three‑year roadmap” the political government is expected to follow:

The Daily Star stresses that “political will” will be as important as economic policy. The author quotes a local economist, Professor Shamsuddin Chowdhury, who says, “If the political government fails to keep the economy on the fiscal path, the country risks falling back into the cycle of high inflation and growing debt.”

7. Final Thoughts

The editorial from The Daily Star delivers a comprehensive view of why a political government must commit to a minimum of three years to stabilize Bangladesh’s economy. By linking to reputable sources – from the World Bank and Bangladesh Bank to Reuters, Bloomberg, and local economists – the article underscores the complexity of macro‑economic management in a developing country context.

Key takeaways:

• Inflation and fiscal deficit are the twin forces that must be tamed.
• Monetary policy must be coordinated with fiscal tightening to avoid a “breach” that could spur a recession.
• External pressures (commodity price hikes, currency depreciation, supply chain woes) demand robust policy responses.
• Political stability is the enabler of economic stability, but it is not a guarantee; consistent policy execution matters.
• Investor confidence hinges on predictable, transparent reforms, especially in the areas of taxation and property rights.

The article ends on a hopeful note that, while the journey is long, a “stable economy will ultimately be the hallmark of a government that truly listens to its people.” The three‑year target is thus presented not as an arbitrary deadline, but as a realistic, phased approach that recognizes the challenges and opportunities that lie ahead for Bangladesh.