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Planning Adviser Dr Wahiduddin Mahmud on Wednesday said the foremost challenge for the next government will be rebuilding human capital and strengthening governance, alongside preserving fragile macroeconomic stability following years of structural decline and a series of economic shocks.
“For many years we have failed to improve our human resources, rather the situation has deteriorated,” he said while speaking at a seminar titled “Macroeconomic Stability and Challenges for the Next Government.”
The seminar was held at the auditorium of National Insurance PLC and organised by the Economic Reporters’ Forum (ERF), UNB reports.
Dr Wahiduddin said Bangladesh has experienced a prolonged deterioration in human resource development which is now clearly reflected in weak administrative capacity and poor governance outcomes.
“That decline first emerged at the primary and secondary levels and then spread to universities, and eventually entered public administration, as graduates from a weakened education system began running state institutions,” he said.
He stressed that merely restoring past standards would be insufficient in today’s global context.
“We cannot simply return to where we were. Our administration must become far more efficient than before. This, in my view, is the single biggest challenge,” he added.
He emphasised that Bangladesh’s most valuable asset remains its demographic dividend, with the largest share of the population aged between roughly 20 and 35–45 years.“These young people are our future. If we fail to train and skill them, no amount of infrastructure or policy reform will put Bangladesh on a sustainable path of economic and social development.”
He said such deep-rooted problems cannot be resolved within a year or eighteen months, regardless of whether the government is interim or elected.
Turning to macroeconomic conditions, he said Bangladesh has recently achieved a degree of stability, though at a significant and largely invisible cost.
“There is what I would call a hidden cost of stabilisation – an unseen burden that does not immediately show up in headline figures,” he said, urging journalists to look beyond surface-level indicators.
He said efforts to prevent a collapse in the banking sector required large-scale recapitalisation, including the printing of substantial amounts of money by the central bank.
“This is one of the reasons interest rates have had to remain high and credit growth constrained, both of which impose costs on the wider economy,” he said.
Dr Wahiduddin argued that many of these costs stem indirectly from extensive capital flight and financial mismanagement in previous years.
Despite these challenges, the planning adviser said there are tentative signs of economic recovery. While expressing limited confidence in headline GDP growth figures, he said other indicators suggest stabilisation and a modest turnaround.
He noted that GDP growth stood at around 4 percent in FY25 and is projected to approach 5 percent this year and more importantly, imports of industrial raw materials have increased in the first four months of the current fiscal year, indicating that factories are operating. Capital goods imports have also recovered, despite weak investment sentiment, he added.
Exports, he said, have remained resilient amid global uncertainty, growing by about 18 percent in the first four months, similar to last year. Foreign exchange reserves have stabilised and are gradually rising, prompting Bangladesh Bank to resume limited dollar purchases, he added.
Dr Wahiduddin said point-to-point inflation has declined from around 11 percent to close to 8 percent, but warned that inflation expectations remain entrenched.“Wages have already adjusted upwards. The economy has moved to a new equilibrium, and returning to the previous price level is no longer realistic,” he said.
Small and medium enterprises, he said, are bearing the brunt of high interest rates, especially in financing working capital.
On energy, Dr Wahiduddin said shortages remain a major constraint on growth, leaving 30–40 percent of power generation capacity idle and limiting industrial output. He said delays in gas exploration and development over the past 15 years have compounded the problem.
While acknowledging the high cost of imported LNG and environmental concerns related to fossil fuels, he said renewable energy, particularly solar power, offers a viable alternative.
He noted recent legal reforms allowing private producers to sell surplus solar power to the national grid, a move that could significantly expand clean energy supply in the coming years.
On public finance, he described Bangladesh’s revenue mobilisation as critically weak, at only 7–8 percent of GDP, among the lowest in the developing world.
“Without raising revenue, no development strategy is viable,” he said, adding that much of current revenue is absorbed by recurrent expenditure, while development spending in sectors such as education and health is increasingly financed through debt.
He said the revised budget for FY26 includes a deficit of around Tk 2 trillion, largely financed through domestic borrowing, with foreign loans playing a smaller role.
He cautioned against excessive reliance on external borrowing for social sectors, noting that no successful middle-income country has developed by financing education and health primarily through debt.
Dr Wahiduddin also highlighted governance reforms, particularly changes to public procurement rules.
East Coast Group Chairman Azam J Chowdhury, National Insurance Chairman Tofazzal Hossain, The Financial Express Editor Shamsul Haque Zahid, BRAC Bank Acting Managing Director and CEO Syed Abdul Momen, Islami Bank Additional Managing Director Dr M Kamal Uddin Jasim, and Mutual Trust Bank Deputy Managing Director Md Samsul Islam attended the event as special guests.
ERF President Doulot Akter Mala and ERF Secretary Abul Kashem also spoke at the seminar.