International Crisis Group today (23 April) said the newly elected government in Bangladesh faces a “daunting set of challenges,” but how the BNP handles these competing pressures will shape Bangladesh’s trajectory in the years ahead.
“If it can revive the economy, the government will create space to pursue the rest of its ambitious agenda, including improving public services and strengthening the rule of law,” said the organisation that sounds the alarm to prevent deadly conflict globally.
If it fails to create the jobs needed to meet the aspirations of young Bangladeshis or struggles to ensure clean governance, however, the country could find itself confronting another bout of instability and political upheaval, said the independent organisation working to prevent wars and shape policies that will build a more peaceful world.
The organisation said BNP should take advantage of the post-election honeymoon to move quickly on economic, governance and security reforms.
Dealing with economic disruption linked to the Iran conflict will be a crucial test, it said.
The BNP, the organisation said, should avoid confrontation with opposition parties over proposed reforms and review cases against Awami League activists, according to the Crisis Group Asia Briefing titled “Bangladesh’s New Government Gets Down to Business”.
“The stakes are high for the BNP. It should move quickly to take advantage of the narrow post-election window for political and economic reforms, and demonstrate to the Bangladeshi people it is not simply reverting to past practices now that it is back in power,” said Crisis Group’s Senior Consultant on Bangladesh and Myanmar, Thomas Kean.
Kean said Bangladesh’s 12 February elections were a historic moment, ending eighteen months of interim rule following a mass uprising that ousted former prime minister Sheikh Hasina.
The Bangladesh Nationalist Party won a clear majority while voters also backed the July Charter reforms in a concurrent referendum.
The parties, the interim government, the election commission and security forces all deserve credit for the way they conducted the election, which was largely free of violence or irregularities, and was followed by a smooth transfer of power, Kean said.
“Two months on from the vote, however, the scale of the challenge facing the new government is becoming clearer. For the BNP, the top priority needs to be reviving the economy and managing the fallout from conflict in the Middle East, which is hurting households and businesses. Bangladesh is heavily dependent on energy imports from the Middle East for fuel and electricity, and the region is also an important source of fertiliser for the agriculture sector,” Kean said.
Rising energy prices and trade disruptions linked to the Iran conflict are likely to drain foreign exchange reserves, lower GDP growth and push up inflation.
“But conflict in the Middle East will not just drain government coffers – it could potentially push millions of Bangladeshis back into poverty,” Kean said.
“At the same time, economic growth on its own is not enough. Bangladeshis are expecting to see real improvements in the performance of state institutions and public security,” Kean said.
“The government will also need to implement political reforms, and it should avoid a major confrontation with its political opponents over the July Charter in order to focus on more pressing challenges,” he said.
The BNP government will also have to address the politically sensitive question of the Awami League’s future, he said.
Given its pivotal role in Bangladesh politics since independence, the party’s temporary ban is not sustainable over the longer term, Kean said.
Challenges Ahead
The election and handover of power marked a huge step in Bangladesh’s attempt to turn the page on a decade and a half of increasingly authoritarian rule, the organisation said.
But while the new government has a clear mandate from voters, whether it can translate that into lasting popularity and stability remains uncertain, it observed.
The BNP will face several major tests in the coming years, including in reviving the economy, improving security, managing political reforms and dealing with the question of the AL’s future, said the Crisis Group.
If it fails to meet the political and economic aspirations that fuelled the uprising against Sheikh Hasina, Bangladesh could face renewed unrest and political upheaval, according to the briefing note.
Bangladesh’s history of anti-incumbency mobilisation suggests that the BNP will struggle to maintain its current support without decisive action, the organisation said.
The US-Israeli airstrikes on Iran, coming less than two weeks after the BNP took office, have only amplified the challenge given Bangladesh’s reliance on oil and gas imports from the Middle East.
Economic Growth
The government’s most important task will be to deliver inclusive economic growth.
Though the interim administration initiated some reforms and was largely successful in restoring macro-economic stability, political uncertainty during the transition and high interest rates discouraged the private investment needed to create jobs for the country’s large youth population, said the Crisis Group.
The GDP growth is still recovering, and inflation remains high, at almost 9 per cent.
Foreign currency reserves have increased, but the economy remains heavily dependent on garment exports and remittances from overseas workers.
Both sources of revenue are vulnerable to global shocks.
Pressure to service debt incurred to pay for infrastructure projects initiated under the AL government is also rising, said the Crisis Group.
Meanwhile, it said, the banking sector remains under severe strain, with high levels of non-performing loans linked to poor governance and large-scale corruption under Hasina’s rule.
Economic frustration played a major role in sparking the popular revolt that brought down Hasina, including anger over corruption and mismanagement, rising prices and limited opportunities for young people, said the organisation.
The BNP has unveiled an ambitious 180-day plan focused on electricity supply, infrastructure bottlenecks and investment, but it will have only a short window of time in which to demonstrate progress.
External shocks are already complicating this task: the conflict in the Middle East is pushing up energy prices and disrupting trade.
With Bangladesh importing most of its commercial fuels from Middle Eastern sources, and the Gulf Arab countries also accounting for almost half of remittance income, the Crisis Group said, a prominent economist has predicted that the war could hit the economy “like an earthquake”.
Already, Bangladesh is suffering from power outages and long lines at fuel stations, while most of its fertiliser plants have been forced to close, the organisation said.
The energy crisis is putting downward pressure on the local currency and depleting foreign reserves, with Bangladesh’s fuel import bill expected to rise by as much as 40 per cent in 2026.
Though the government has increased subsidies to shield consumers, officials concede they may soon have little choice but to roll these back.
Bangladesh’s 12 February election and handover of power mark an important step forward for the country after eighteen months of interim rule.
There is now an opportunity to strengthen this step toward peaceful, democratic competition and make sure it is not a one-off occurrence, the organisation said.
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