Priorities for govt: governance, revenue and debt

The Daily Star on February 19, 2026, a day after the new government took office, published an article titled “New govt faces 5 early economic tests”. It identified the five tests as: 1) Keep food prices from rising, 2) Secure IMF support and stabilise the economy, 3) Control government spending and debt, 4) Boost revenue collection and plug tax leakage, and 5) Prepare for life after LDC status.

However, in this assessment, two major impediments to economic growth – governance (including corruption) and revenue collection – have not been focused prominently enough.

Governance failures are evident across almost all sectors of the economy over the past 15 years, if not longer. Non-adherence to laws and regulations, unqualified individuals in key positions, ineffective independent directors, undue political interference, including influence over the legal system, and weak ethical standards and professionalism have all contributed to this problem, impacting economic growth.

Together, these factors have placed the economy and its growth under sustained strain.

Weak or absent governance has enabled widespread corruption, including the syphoning of funds. For many years, Bangladesh has ranked among the countries with a high perception of corruption.

Despite widespread discussion and extensive media coverage, there has been little improvement. Almost everyone is aware of corruption, whether as a beneficiary or a victim. Although the relevant agencies remain active, the overall level of corruption has not come down. Without clear political will, it is unlikely that any meaningful progress will be achieved.

Foreign debt obligation and management is another important issue. According to media reports, the interim government had not undertaken any new mega project, but external debt has increased by about $10 billion to keep under-construction projects ongoing. Another approximately $45 billion is in the pipeline as commitment awaiting release in line with progress of construction.

Since most projects are at different phases of construction, the government has no scope to abandon them. Ultimately, foreign debts will touch nearly $150 billion. This scenario is based on the assumption that if the new government undertakes any new mega projects, foreign debt will further increase.

How will these debts be repaid? Revenues from completed projects are insufficient to repay instalments. We have no option but to increase our internal revenue collection through both direct and indirect taxes.

For many years, Bangladesh’s taxation system has been marked by a narrow tax base, a low tax-to-GDP ratio, tax evasion, and corruption. The government has taken various isolated measures over the years, but results have fallen short of expectations. This situation cannot continue indefinitely.

Many developing countries have addressed similar problems and improved their tax-to-GDP ratios. Long-overdue tax reforms, including digitalisation as an effective tool, have no real alternative if the current situation is to improve.

Bangladesh currently faces numerous economic challenges. The priorities should be streamlining governance, reducing corruption, and increasing revenue collection significantly. Until the fundamental structure is in place and economic engines are activated, economic management becomes more challenging, if not impossible.

To manage external debts, these economic priorities have no alternative. Political will is important to prioritise the challenges and take the economy forward.

AF Nesaruddin is a senior partner of Hoda Vasi Chowdhury & Co and former president of ICAB