THE PAPER
Four Fronts, One Economy: Inside Bangladesh’s Balancing Act
Reviving closed factories, mopping up idle bank cash, easing bad-loan rules, and funding a decade-overdue pay rise — all four policies are drawing on the same limited pool of money, and a gas crisis is undercutting all of them at once.
A Tk 60,000 Crore Push to Restart 1,200 Silent Factories
More than 1,200 industrial units across Bangladesh are sitting fully or partially idle, and reopening them has become close to a national mission for Bangladesh Bank Governor Md Mostaqur Rahman. In late May, the central bank unveiled a stimulus package worth roughly Tk 60,000 crore to revive closed and struggling factories, boost private investment, and generate an estimated 2.5 million jobs.
The financing is telling in itself: about Tk 41,000 crore is being raised from commercial banks holding surplus liquidity — offered roughly 10 percent on long-term deposits — while Bangladesh Bank supplies the remaining Tk 19,000 crore from its own resources under government guarantee. A follow-up Tk 20,000 crore revolving pre-finance scheme in June set a 7 percent lending cap, a six-month grace period, and a Tk 200 crore single-borrower ceiling, with CIB-listed defaulters barred outright.
Too Much Money, Too Little Borrowing
Excess liquidity in the banking sector crossed Tk 4.08 lakh crore at the end of June 2026 — an all-time high, and more than double the level of two years ago. Deposit growth is running near 11 percent while private-sector credit growth has slowed below 5 percent, a widening gap that reflects business owners’ reluctance to expand amid high borrowing costs and energy uncertainty.
This is precisely why the central bank chose to fund its industrial-revival schemes by absorbing surplus liquidity rather than printing new money — sound in principle, but a reminder that banks are swimming in deposits they cannot profitably lend, even as thousands of factories sit idle for want of working capital. Bangladesh Bank has also trimmed its policy repo rate from 10 percent to 9.5 percent to nudge borrowing costs lower.
“A significant portion of these funds is held in government Treasury bills and bonds,” — a senior state bank chairman, on why surplus liquidity isn’t simply idle cash in vaults.
The Shortage Undercutting Every Other Policy
A fire and technical failure at one of the country’s two floating LNG terminals off Maheshkhali on July 22 cut pipeline gas supply by more than 17 percent overnight. At the worst point in mid-August, LNG availability fell below 300 mmcfd against national demand of roughly 3,800 mmcfd, forcing power plants onto costlier furnace oil and triggering load-shedding of up to twelve hours a day in some districts.
Industrial hubs bore the brunt. Around 80 percent of textile, dyeing and printing mills in Narsingdi and Madhabdi halted operations, and one major conglomerate shut all 57 of its factories overnight. Supply has since partly recovered, but industry groups say power plants are absorbing most of the improvement — factories are still starved of pressure. State-owned Ashuganj fertiliser factory has stood idle for more than a year.
Loosening the Rules on Bad Loans
Facing a mounting pile of non-performing loans, Bangladesh Bank has repeatedly eased rescheduling terms — up to 10 years’ tenure against a down payment as low as 2 percent, a two-year grace period, and an interest rate a point below the sector’s floor. The “exit facility” now upgrades a borrower’s classification status immediately on entering a repayment plan, though quarterly repayment discipline has been tightened so borrowers can no longer simply run out the clock.
Bankers are split: supporters call it prudent, case-by-case triage; critics warn borrowers have long treated rescheduling as a way to use the bank’s money without ever really repaying it.
A Decade-Overdue Pay Rise Comes Due
The 9th National Pay Scale — the first major revision since 2015 — proposes raising the minimum basic salary from Tk 8,250 to Tk 20,000, and the top of the scale toward Tk 160,000. Frustration boiled over in February when employees marched on the Chief Adviser’s residence; police used water cannon and stun grenades, injuring more than a dozen.
Full implementation would cost an estimated Tk 106,000 crore a year atop an existing Tk 131,000 crore salary bill — at a time when Bangladesh’s tax-to-GDP ratio remains among the lowest in Asia.
One Pool of Money, Five Competing Claims
None of these five policies exists in isolation. Cheap refinancing cannot revive a factory that has no gas. Loan rescheduling cannot repair a bank’s balance sheet if borrowers see it as a permanent escape hatch. And a pay rise meant to protect real incomes will only add to the same fiscal pressures limiting how much the state can spend on energy infrastructure and industrial support in the first place.
Editorial voices in the local business press have already flagged the distributional tension: the pay scale mainly benefits the formal-sector middle class, while garment workers and rural households are more likely to absorb the inflationary and fiscal costs these interlocking interventions generate.
For readers watching Bangladesh’s economy this year, the real story is not any single circular or budget line — it is how tightly these fronts are now bound together, and how little room policymakers have left to manage one without disturbing the others.