The government has prepared a roadmap to steer Bangladesh’s fragile economy towards higher growth, lower inflation, stronger investment and a more robust revenue structure within the next five years.
The outline was presented at a National Economic Council (NEC) meeting chaired by Prime Minister Tarique Rahman on Monday.
Under the plan, Bangladesh’s economy is projected to move towards a trillion-dollar trajectory by 2031, with gross domestic production (GDP) growth rising to 8.5 per cent, investment climbing to 40 per cent of GDP, the tax-GDP ratio reaching 11 per cent and inflation falling to 5 per cent.
Economists caution that the strategy is highly ambitious given the ongoing banking sector crisis, fragile revenue system, and stagnant investment climate.
The document, titled “Five-Year Economic Reform and Development Strategy (July 2026-June 2031),” says the new framework was prepared in the context of the end of the Eighth Five-Year Plan, a fragile economy, the banking sector crisis and the failure to implement previous development plans.
It also explicitly states that the government’s election manifesto would be translated into implementable economic measures.
The plan projects real GDP growth to accelerate from 3.5 per cent in FY2026 to 8.5 per cent by FY2031.
The investment-to-GDP ratio is expected to climb from 29.6 per cent to 40 per cent. Inflation is forecast to fall from 10 per cent to 5 per cent, while revenue collection should rise from 8 per cent of GDP to 11 per cent. Meanwhile, the debt-to-GDP ratio is projected to remain steady at around 39 per cent.
Economists say achieving all four targets simultaneously will be the biggest challenge. Typically, periods of rapid growth and large investment expansion increase inflation, import pressure and fiscal stress.
In an economy with weak institutions like Bangladesh, reducing inflation, increasing revenue collection and sharply accelerating growth at the same time would be extremely difficult, they said.
“At this stage, it is an ambitious target. There are international conflicts and a fuel crisis. Key economic indicators are under pressure. Private investment remains weak and the debt burden is also increasing,” Rumana Huque, professor of Dhaka University Economics Department, told TIMES of Bangladesh.
However, she expressed hope that “if the government can work in line with its election manifesto and planned reforms, it may be possible to come close to achieving the target.”
Former planning adviser to the interim government Wahiduddin Mahmud said governments tend to place excessive emphasis on ambitious GDP growth targets in their development plans.
“Instead of overemphasising growth targets, greater importance should be given to implementing the policies adopted under the plan,” he said.
The five-year strategy says Bangladesh will be placed on a trillion-dollar economic trajectory, driven primarily by private investment, industrialisation, human capital development and productivity growth. The government has also set a target to raise foreign investment to 2.5 per cent of GDP.
Investors, however, say the country’s biggest problem at present is the crisis of confidence. At the same time, the plan offers no clear answer to how large-scale investment will arrive amid banking sector weakness, frequent policy shifts, energy uncertainty, weak law and order and a fragile tax administration.
Although the five years plan document acknowledges the banking sector crisis as part of the economy’s fragility, it provides no clear roadmap for recovering defaulted loans, recapitalising weak banks, taking action against influential defaulters or implementing bank resolution measures.
Dhaka University Finance Professor Mahmood Osman Imam said that the financial sector is now in a position where there is no clear roadmap explaining how it can be made sustainable.
“Reforms are essential. We need direction. A proper roadmap would at least show which path the economy is taking towards recovery,” he added.
According to Bangladesh Bank data, defaulted loans in the country now exceed Tk5.5 lakh crore. At the same time, the central bank has increased large loan exposure limits, expanded policy support for defaulters and relaxed loan rescheduling rules.
Economists say high-growth targets will not be sustainable without meaningful banking sector reforms under such conditions.
“To achieve the government’s targets, the banking sector must be strengthened. The right people must be placed in the right positions. Institutional reforms and proper enforcement of laws must also be ensured,” said Professor Rumana Huque of Dhaka University.
Analysis of the strategy shows the government wants to increase the revenue-GDP ratio from 8 per cent to 11 per cent over the next five years. To achieve that, the plan proposes tax reforms, administrative restructuring, digital integration, reduction of tax exemptions and the development of a “tax culture.”
But the reality is that Bangladesh has been making similar promises on tax reforms for years. VAT automation, expansion of the income tax net, action against major tax evaders and freeing the tax administration from political influence have all failed to make meaningful progress.
Experts say failure to increase revenue collection would put the entire financial structure of the plan under pressure. In that case, the government would either have to borrow more or rely on bank financing, reducing credit flow to the private sector and increasing inflationary pressure.
The strategy proposes increasing development expenditure from 2.8 per cent of GDP to 6.9 per cent. It also promises higher spending on health and education. Diversification of the rural economy, agricultural transformation, SME financing, family cards, farmers’ cards, rural tourism, the blue economy and renewable energy have all been identified as priority sectors.
Economists say this part of the strategy is politically significant because it is directly linked to the government’s election promises. But they also point out that in the past, large portions of subsidised refinancing schemes, low-cost loans and special funds in Bangladesh were ultimately damaged by irregularities, political influence and loan defaults.
The strategy also places strong emphasis on export diversification. Beyond garments, agro-processed products, jewellery, ICT and electronics have been identified as new growth drivers.
Experts say the diversification target will be difficult to achieve without major changes in infrastructure, skilled labour, technology, trade diplomacy and industrial policy.
Similarly, the strategy says the debt-GDP ratio will remain stable and debt servicing pressure will gradually decline. But questions remain over how realistic that projection is amid high development spending, politically driven low-interest projects, subsidies and slow revenue growth.
The latest Eighth Five-Year Plan had also set ambitious targets for growth, employment, export diversification and investment expansion. But dollar shortages, banking sector weakness, defaulted loans, inflation and policy instability eventually triggered wider economic disruption.
Prime Minister’s Finance and Planning Adviser Rashed Al Mahmud Titumir said at an event on 14 May that previous development plans had effectively turned into “dead documents.”
He said the previous government implemented unrealistic projects through political patronage, excessive spending and weak planning, pushing the economy into crisis.
