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Bangladesh Bank Governor Dr Ahsan H Mansur on Monday ruled out any immediate cut in interest rates, saying persistently high inflation leaves no room for monetary easing.

Speaking at the launch of the Bangladesh State of the Economy 2025 and SDG Progress Report 2025, he said inflation remains too sticky, while deposit rates continue to hover near 10 per cent. “This trend may not change within a year or even a year and a half. So, reducing the policy rate now is not possible,” he noted.

He added that acknowledging the severity of current challenges is essential: “If we do not acknowledge the problem, we would not be able to recover from the troubles.”

Debt pressure rising

National Board of Revenue (NBR) Chairman Md Abdur Rahman Khan delivered an equally stark message, warning that Bangladesh has effectively entered a “debt trap” and must accept the reality.

He said interest payments have risen so sharply that they now exceed allocations for agriculture and education. The tax-to-GDP ratio has also slipped—from above 10 per cent a few years ago to roughly 7 per cent now.

The NBR will soon undergo a major restructuring, he said, splitting into two divisions under separate secretaries.

NPLs and banking reforms

Addressing the troubled banking sector, the BB governor said the true volume of non-performing loans (NPLs) has now been disclosed. “NPL has increased to about 35 per cent from 25 per cent in earlier calculations. We have not manipulated the data—only made it transparent,” he said.

He expects some positive developments within December, adding that bankers responsible for bad loans will be held accountable.
He also highlighted governance reforms, including appointing half of bank board directors from open competition instead of family networks.

On the merger of five weak banks, he said deposit-insurance coverage has been doubled to Tk 200,000, and refunds may start within weeks. The newly merged bank could return to profit within two years, benefiting around 7.6 million families.

Five banks have already merged under the bank-resolution framework, while nine NBFIs are in the pipeline. “It will take four to five years to see comprehensive results,” he said.

He also disclosed efforts to recover assets siphoned abroad, saying certain banks have been tasked with tracing stolen funds.

Economists call for discipline

Several economists at the event cautioned that Bangladesh risks borrowing simply to repay old loans unless fiscal discipline is restored. They stressed the need for stronger tax mobilisation and coordinated reforms, especially ahead of LDC graduation.

The Chief Adviser’s Special Assistant for the Ministry of Finance, Dr Anisuzzaman Chowdhury, said improved exchange-rate stability, easing inflationary pressures and stronger remittance inflows have revived confidence. “Bangladesh absorbed several shocks without slipping into negative growth,” he said.

Former World Bank economist Dr Zahid Hussain said the economy is clearly stressed but has avoided a deeper breakdown thanks to social resilience, calmer political conditions and early reform efforts. However, he cautioned: “This stability may not hold without uninterrupted elections and steady policy action.”

Former Dhaka University professor Mahbubullah pointed to deeper structural weaknesses, arguing that decades of rent-seeking and uneven wealth distribution have suffocated productive investment. He warned that inflation, weak investment and dependence on a narrow export base will persist unless the economy shifts toward production-led growth.

Business criticism and reform push

Shafiqul Alam, Press Secretary to the Chief Adviser, criticised parts of the business community for sending “mixed signals” and not publicly supporting reforms such as port modernisation—despite being its main beneficiaries.

He accused some business leaders of distorting data and undermining public understanding of the economy. Misrepresentation of issues like gas shortages and port delays, he said, has overshadowed significant progress made in the past year.

Despite resistance, he described the recent turnaround under Chief Adviser Prof Muhammad Yunus as “historic”, adding that the current macroeconomic team “may be the strongest since the reform periods of the late 1970s and early 1990s.”