Business leaders and economists have called for an urgent reduction in lending rates, warning that Bangladesh’s private sector will struggle to recover unless borrowing costs are lowered and broader structural challenges are addressed. They argued that persistently high inflation, elevated interest rates, heavy tax burdens and energy shortages have created an unfavourable business climate, discouraging fresh investment and slowing economic activity.
The observations were made during a discussion on the proposed national budget for the 2026–27 fiscal year, organised by the Bangladesh Economic Association at the Institution of Diploma Engineers, Bangladesh (IDEB) auditorium in Kakrail, Dhaka. The event brought together policymakers, academics, economists and business representatives to assess the proposed budget and the country’s broader economic outlook.
While participants welcomed several initiatives contained in the proposed budget, including the creation of an incentive fund to help reopen closed factories, they stressed that preserving existing industries should receive even greater attention. According to the speakers, keeping operational businesses afloat is essential to sustaining employment, production and investment at a time when private sector growth has weakened.
Finance Minister Amir Khasru Mahmud Chowdhury attended the event as the chief guest. The session was chaired by Mahbub Ullah, Convener of the Bangladesh Economic Association’s interim committee, while Member Secretary Mohammad Helal Uddin moderated the discussion.
Addressing the gathering, the finance minister said the government had sought to reshape the country’s fiscal strategy by promoting what he described as the “democratisation of the economy”. He said the objective was to create broader opportunities so that all citizens could participate more meaningfully in economic development.
“We have tried to change the budget model. We have spoken about democratising the economy so that everyone can participate in it,” he said.
The minister also criticised what he described as a patronage-driven economic system that had benefited a limited group over many years.
“Unfortunately, the economy had become one based on patronage, where a particular group enjoyed most of the opportunities and accumulated considerable influence. We are trying to move away from that model,” he added.
A significant part of the discussion focused on the difficult macroeconomic conditions facing Bangladesh. Economists noted that inflation has remained elevated for an extended period, increasing business costs and reducing consumers’ purchasing power. At the same time, higher policy interest rates, introduced to contain inflation, have made borrowing substantially more expensive for businesses seeking to expand operations or undertake new investments.
Seven research papers were presented by university academics and economists, examining different aspects of the proposed budget and the wider economy.
Mohammad Abdur Razzaque, Chairman of the Research and Policy Integration for Development (RAPID), observed that the government appeared to be pursuing three objectives simultaneously: economic recovery and stabilisation, institutional restoration and long-term restructuring.
He argued that restoring macroeconomic stability should remain the immediate priority.
“The economy is facing multiple challenges. It must first be stabilised before deeper reforms can succeed. Otherwise, inflationary pressures could intensify once again,” he said.
Sharmind Neelormi, a faculty member in the Department of Economics at Jahangirnagar University, welcomed the proposal to recognise women as household heads under the government’s family card programme. She acknowledged that the proposed monthly assistance of Tk 2,500 might not generate significant additional consumer demand but described the policy as an important step towards recognising women’s economic role within households.
Saima Haque, a lecturer in the Department of Economics at the University of Dhaka, praised the decision to increase allocations for the education sector. She argued, however, that greater emphasis should be placed on improving educational quality alongside infrastructure development. She also called for more effective measures to address youth unemployment, skills mismatches in the labour market and barriers limiting women’s participation in the workforce.
Additional research papers were presented by Bangladesh Institute of Development Studies (BIDS) Research Director Mohammad Yunus, economist Kazi Iqbal and Bangladesh University of Engineering and Technology (BUET) academic Nazmul Islam.
Lower borrowing costs emerged as one of the strongest themes of the discussion.
Abu Ahmed, Chairman of the state-owned Investment Corporation of Bangladesh (ICB), said achieving the government’s projected GDP growth target of 6.5 per cent would be impossible without stronger private sector participation.
“The government alone cannot achieve this target,” he said. “Policy interest rates in India remain considerably lower, while Bangladesh’s are close to 10 per cent. As a result, private sector credit growth has fallen to its lowest level in around two decades.”
He urged policymakers to reduce lending rates across the banking sector, arguing that businesses with the capacity to invest would resume expansion once financing became more affordable.
Mohammad Nurul Amin, Chairman of Bangladesh Krishi Bank, welcomed the budget’s commitment to protecting depositors. He said restoring public confidence in the banking sector should be treated as an immediate priority because confidence remains fundamental to financial stability and sustainable economic growth.
Business leaders also highlighted several structural barriers beyond financing.
Anwar-ul-Alam Chowdhury, President of the Business Initiative Leading Development (BUILD), said uninterrupted energy supplies were essential for industrial growth and investment. He argued that energy insecurity continued to discourage manufacturers and investors from expanding production.
He also criticised inefficiencies within the National Board of Revenue (NBR), saying administrative weaknesses had reduced institutional effectiveness. According to him, meaningful tax administration reform would improve the business environment and encourage greater domestic and foreign investment.
Other speakers included Professor Emeritus A.T.M. Nurul Amin of the Asian Institute of Technology (AIT) and Imran Matin of the BRAC Institute of Governance and Development (BIGD), who also shared their assessments of the proposed budget and Bangladesh’s economic challenges.
By the end of the discussion, participants had reached broad agreement that restoring investor confidence would require a combination of lower lending rates, improved energy security, banking sector reforms, efficient tax administration and continued efforts to maintain macroeconomic stability. They argued that unless these issues are addressed together, the private sector is unlikely to regain the momentum needed to support higher investment, stronger employment growth and sustainable long-term economic development.