Without structural fixes, the one-crore job promise will remain hollow

Every government since 1990 has learned the same lesson the hard way: promising jobs is easy, creating them is not. In its 2026 election manifesto, BNP had pledged to create one crore jobs for educated youth within 18 months of taking office. However, instead of employment-generating facilities, the last several months have often seen closures.

According to a recent report by the Industrial Police, due to severe gas and electricity crises, several factories across the country’s major industrial zones were partially closed, a few fully shuttered, and production operations suspended in more than a dozen in July and August, with hundreds of workers being laid off. Although the situation has somewhat improved now, the World Bank’s warning that 6 lakh jobs could disappear under a Middle East-conflict stress scenario looms. Besides, the IMF projected a growth rate of 3.5 percent for the current fiscal year—barely half the government’s 6.5-percent target. This is not a cyclical dip. Several structural problems are compounding each other: a banking sector that has quietly slid into insolvency, an energy-driven supply shock, and a balance of payments whose calm rests on one narrow pillar, plus a fiscal squeeze the government is largely creating for itself.

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The banking sector is not illiquid; it is insolvent. The ratio of non-performing loans (NPL) hit 32.78 percent by June 2026, the highest in the world. Overall capital adequacy has turned deeply negative. Yet, banks sit atop record excess liquidity, over Tk 4 lakh crore, as private credit growth has collapsed to roughly 4.5 percent. Banks are not short of money; they are short of confidence in borrowers and in their own capital.

Instead of an independent resolution framework, the response has been repeated forbearance. On June 29, Bangladesh Bank issued a circular offering an interest waiver to defaulters who repay their full principal in one lump sum by December 31. Economists warned that such a move must not be politically captured or repeated. The concern is well-founded: forgiving interest for repeat defaulters is precisely the moral hazard critics fear. A one-time, transparent, and principal-only settlement to clear dead legacy debt is defensible. A recurring pattern of forbearance for the same borrowers is not resolution, it is deferral with extra steps.

Regarding energy, Bangladesh imports roughly 95 percent of what it needs. When fire disabled part of a floating LNG terminal off Moheshkhali in July, wiping out an estimated 17 percent of the nation’s gas supply overnight, the shortfall became an industrial crisis: hundreds of units have shut down, including Bangladesh Garment Manufacturers and Exporters Association and Bangladesh Knitwear Manufacturers and Exporters Association member factories, with many survivors running well below capacity. Essentially, an import-dependent energy mix with almost no strategic redundancy met a supply shock it could not absorb.

With regard to foreign exchange reserves, this has rebounded considerably since the 2022 crisis—comfortably above the conventional danger line—and the exchange rate has stabilised, but remittances claim most of the credit. Exports have contracted while imports have grown. A trade deficit itself may not be a crisis, but resting external stability on one income stream is fragility in the long run, not resilience.

The government cannot hire its way out and is now less able to put money where needed. Government employment, with roughly14.6 lakh officers and employees in service at present, is a rounding error against the country’s labour force of 7.17 crore. Job creation has to be private-sector-led, or it will not happen at scale. However, the fiscal capacity to facilitate private growth is shrinking. In such a situation, the cabinet approved the 9th pay scale on August 31—which was overdue, but it added roughly Tk 1,05,580 crore in annual recurring cost in phases, benefitting only 24 lakh employees and 9 lakh pensioners. The problem is: recurring spending is rigid; development spending absorbs the shock.

Meanwhile, ADP implementation in FY2025-26 collapsed to a record low of 67.5 percent even though the overall allocation was the lowest; ministries and agencies spent Tk 1.4 lakh crore against a revised allocation of Tk 2.09 lakh crore. Yet FY2026-27’s ADP target is a record Tk 3 lakh crore, which is unrealistic given the execution record and heavy foreign-financing dependence. A rigid, growing wage bill will likely squeeze the funds needed for roads, ports, health, and education if the tax base that the next year’s revenue depends on does not increase.

Worryingly, the ratio of private-investment-to-GDP has fallen to 22.03, the lowest level in 11 years. Businesses continue to face extortion; law enforcement agencies’ own list from April names roughly 650 extortion “godfathers” nationwide. A trade licence still sometimes requires clearances from a dozen or more separate offices, each a potential informal-payment point. This is a tax that funds nothing and damages sentiment more than formal taxation of similar size.

In the meantime, capacity payments to private power producers continue. A projected Tk 52,608 crore for the current fiscal year will be paid whether or not power is generated. Most of the independent power plants stayed conspicuously idle during this year’s gas crisis, all while collecting charges. Quick-rental power plants under no-tender indemnity legislation are estimated to have misallocated over Tk 1 lakh crore over 14 years. Any further privatisation of power or petroleum distribution without a genuine competition policy first will simply convert a public monopoly into private entities with political connections, while the state continues to guarantee payments.

What should the government do? The first step is to treat banking as an insolvency problem. An independent asset-quality review should be carried out, followed by real resolution, recapitalisation, orderly wind-down, and establishing a functioning asset management company (not another forbearance circular for repeat defaulters). Energy sourcing should be diversified, while no-tender capacity payments are cancelled so generators are paid for power delivered, not for sitting idle. The government should also broaden the tax base through digitisation instead of chasing another unrealistic headline target. Extortion and licensing hassles should be resolved to improve the investment climate, featuring a single-window registration system and visible prosecution of known extortion networks.

Open power and petroleum to private capital only through competitive, transparent bidding under an empowered regulator. And pair the pay scale with real rightsizing, questioning how many of the over five lakh vacant posts need filling, while ring-fencing grid, transport and port spending from being the development budget’s first casualty. And most importantly, what is missing is the will to act before the next shock finds the same vulnerabilities exposed.

Dr Sibbir Ahmad is an economist and assistant professor at North South University. He can be reached at sibbir.ahmad@northsouth.edu.

Views expressed in this article are the author's own. 

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