'Two tough years ahead': Khosru warns of painful economic fix

Finance Minister Amir Khosru Mahmud Chowdhury today (30 April) said it would take at least two more years for Bangladesh's economy to recover from its current fragile condition, warning that the period ahead would be challenging and require difficult policy decisions.

"We need cushions to support the economy for two years. The next two years will be difficult. We will have to make many decisions and take measures that may not be popular," he said while participating in the discussion on the motion of thanks on the president's address in parliament.

He sought cooperation from the opposition, saying that all sides must work together in the national interest to overcome the economic challenges.

The minister said that although the task would not be easy, Bangladesh would be able to recover from the current situation through collective effort.

He emphasised the need to curb unnecessary expenditure, noting that the country could no longer afford to spend beyond its means.

Khosru also highlighted ongoing reform initiatives, saying that various changes, including reforms and deregulation measures, had already been undertaken, while additional steps were in progress.

He said that implementing necessary reforms would be essential to restore the economy to its previous state or to take it to a stronger level.

Presenting a bleak picture of the economy, the minister said Bangladesh's tax-to-GDP ratio has fallen below 7%, making it the lowest in South Asia and among the lowest globally.

He said the ratio had been around 10% in the financial year 2005–06 and had shown a rising trend during earlier administrations led by the Bangladesh Nationalist Party (BNP).

He said the poverty rate had increased from 17.18% in 2022 to 20.5% in 2024 and reached 29.93% in 2025, according to estimates by the Bangladesh Bureau of Statistics.

Private sector credit growth, which is crucial for investment, production, and employment, has declined sharply to around 6%, compared with 18.27% of GDP in FY2005–06, he said.

The minister said that export growth has also turned negative, falling by 2.6%, whereas it had recorded around 14% growth when the BNP left office in 2006.

He expressed concern over the rising volume of non-performing loans, saying it has exceeded 30%.

"When non-performing loans go beyond 30%, the economy almost comes to a standstill," he warned, noting that the figure had been around 13% in 2005.

He also pointed to mounting fiscal pressures due to large subsidies in the power and energy sectors, saying the government is currently providing around Tk36,000 crore in power subsidies and may need to allocate an additional Tk20,000 to Tk30,000 crore.

Responding to remarks by Opposition Chief Whip Md Nahid Islam that many ruling party lawmakers are loan defaulters, the finance minister said loan rescheduling is a common global banking practice and not something newly introduced by any political party.

He said many BNP-linked businesspeople had faced obstacles over the past 17 years, including difficulties in accessing bank loans and continuing business operations.

In some cases, even approved loans were not disbursed, repayment periods were not extended, and administrative barriers were created, forcing businesses to shut down.

Khosru said that some businesspeople were unable to remain in their homes, while others went into hiding or were imprisoned, making loan repayment extremely difficult.

The minister said the BNP does not own any banks, while alleging that other political parties have banking interests that allow them to protect their members from becoming defaulters.

Referring to recent debates in parliament, he stressed the importance of respecting constitutional institutions, including the office of the president.

"The president is an institution, not an individual. If we believe in constitutional democracy, we must respect institutions," he said.