Loan defaulters have become entrenched within Bangladesh’s political system, creating structural obstacles to reform, said Centre for Policy Dialogue (CPD) Chairman Rehman Sobhan.
Speaking at a discussion titled “The Illusion of Reform: Bangladesh’s Story” on Sunday, he said reform should be viewed as a continuous process, starting with legislation, followed by institutional arrangements, implementation, and ultimately evaluation of outcomes.
The session marked the closing day of the three-day 9th South Asian Network on Economic Modelling (SANEM) Annual Economists’ Conference.
It was moderated by Selim Raihan, with the keynote presented by CPD Distinguished Fellow Debapriya Bhattacharya, and former CAG Mohammad Muslim Chowdhury acting as a discussant.
Sobhan questioned the depth of political commitment behind reform pledges, noting that while political parties often make ambitious promises during elections, their resolve to implement those commitments remains uncertain.
He said successful reforms have historically depended on strong public backing, citing the Six-Point Movement as an example of a widely supported reform agenda.
In contrast, he observed that current political engagement lacks such mass mobilisation, and even party members are frequently unfamiliar with their own manifestos.
Highlighting implementation gaps, Sobhan argued that reforms often falter at the execution stage rather than in policy design.
He suggested that outcomes at the grassroots level, such as whether institutions actually change behaviour, should be the benchmark for evaluating reform success.
He also pointed out that many reform initiatives supported by international financial institutions have been discussed for years but remain weakly implemented, as governments prioritise short-term compliance for funding, while development partners focus on disbursement.
Turning to fiscal and institutional reforms, Sobhan said long-standing proposals, including performance-based budgeting and integration of development and revenue budgets, have yet to be realised.
He also raised concerns over inefficiencies in health and education spending, where allocated funds are often underutilised despite persistent claims of inadequate resources.
Comparing Bangladesh with India, he said that major reforms there were driven by strong civic movements, whereas Bangladesh’s civil society remains fragmented and unable to generate unified pressure for systemic change.
He emphasised that both the government and opposition share responsibility for ensuring accountability, adding that credible elections remain the ultimate test of democratic governance and reform outcomes.
Meanwhile, Debapriya Bhattacharya said that although reform is frequently discussed, it has increasingly become a “fashionable” term lacking genuine political commitment and institutional preparedness.
“If resources are limited, efficiency must compensate, and that is precisely why reform is necessary,” he said.
Debapriya further said that while designing reform agendas is relatively straightforward, implementation remains the core challenge.
Weak political will, coordination failures, vested interests, and accountability gaps often undermine even well-conceived initiatives, he added.
He highlighted Bangladesh’s long reform trajectory since independence, including institutional development, privatisation, VAT introduction, exchange rate adjustments, social protection programmes, digitalisation, and the national ID rollout, but said progress has slowed in recent years.
According to him, this slowdown stems from a “predatory legacy” characterised by corruption, misuse of public resources, weak institutions, and collusion among political, bureaucratic, and business elites.
Reforms are typically driven by crises such as inflation, inequality, and governance failures, but many initiatives lose momentum after initial progress, he added.
On addressing rising non-performing loans, Debapriya called for politically difficult but necessary decisions, including reducing political interference in banks, strengthening the autonomy of Bangladesh Bank, increasing revenue mobilisation, rationalising subsidies, and improving the quality of public spending.
He also criticised growing political interference in institutions and the politicisation of administration.
Referring to the interim government, he said it lacked electoral legitimacy, coordination, and a clear economic vision.
Debapriya further pointed to the bank resolution ordinance introduced during that period, under which five Islamic banks were consolidated.
Subsequent amendments allowed former owners to return, reflecting the influence of oligarchic interests and raising questions that warranted clear political explanation, he added.
