Bangladesh has launched a sweeping Tk 60,000 crore economic stimulus package aimed at reviving industrial production, restoring investor confidence and creating more than 2.5 million jobs as the country grapples with slowing growth, financial sector stress and weakening export demand.
The package, officially titled the “Economic Recovery Program 2026,” was introduced by Bangladesh Bank as policymakers attempt to counter a sharp economic slowdown that has seen GDP growth decline from 5.8% in FY2023 to an estimated 3.7% in FY2025, according to projections cited in the central bank’s presentation. The initiative is one of the largest post-pandemic-style industrial recovery interventions undertaken by Bangladesh in recent years and places significant emphasis on the textile, apparel and export manufacturing sectors, which remain the backbone of the country’s economy.
Bangladesh’s ready-made garment (RMG) industry, which accounts for more than 80% of export earnings and employs millions of workers, has been under pressure from weak global apparel demand, rising energy and financing costs, inflationary pressures in Western markets and ongoing supply chain uncertainty. Factory closures, reduced production capacity and liquidity shortages across banks have intensified concerns among exporters and manufacturers over the past two years.
The Bangladesh Bank said the new stimulus package seeks to restore industrial productivity, support export-oriented sectors and inject long-term liquidity into the financial system at a time when many businesses are struggling to access affordable financing. The package also aims to strengthen rural economic activity, encourage export diversification and stimulate green investment.
Under the program, the total Tk 60,000 crore fund will be divided into two tiers. The first and largest segment consists of Tk 41,000 crore mobilized through commercial banks, while the second segment involves Tk 19,000 crore from Bangladesh Bank’s own refinancing funds.
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Commercial banks participating in the program will provide long-term credit to large-scale borrowers at a 7% interest rate, supported by a 6% government interest subsidy. The structure is designed to ease borrowing costs for industries facing working capital shortages while encouraging banks to restart lending to productive sectors.
According to Bangladesh Bank, the commercial bank facility will channel Tk 20,000 crore to closed industries and service-sector businesses to help factories reopen, restart production lines and restore employment. Another Tk 10,000 crore has been earmarked for agriculture and rural economic activities, while Tk 5,000 crore will support CMSMEs, a segment considered critical for Bangladesh’s industrial supply chain and employment generation. Export diversification initiatives will receive Tk 3,000 crore and another Tk 3,000 crore will support the North Bengal Agricultural Hub initiative.
The focus on closed industries is particularly significant for the textile and apparel supply chain. In recent months, many small and medium-sized textile mills, dyeing units, accessories manufacturers and subcontracting garment factories have faced operational disruptions because of high financing costs, dollar shortages and weak purchase orders from international buyers. Industry insiders say the recovery package could help restart dormant factories and restore production capacity across spinning, weaving, dyeing and garment manufacturing.
Bangladesh Bank noted in its report that industrial disruptions have affected garments and textiles alongside sectors such as steel, ceramics, information technology and manufacturing. The central bank also warned that rising classified loans, declining depositor confidence and the siphoning of funds from banks have created a liquidity crisis that is limiting access to working capital for the private sector.
The textile and apparel sector is expected to benefit strongly from the Tk 5,000 crore pre-shipment credit refinancing facility under the Bangladesh Bank refinancing fund. Pre-shipment financing is critical for exporters purchasing raw materials, paying workers and meeting shipment schedules for overseas buyers. Exporters have repeatedly called for easier access to low-cost financing as many apparel manufacturers continue to face payment delays, margin pressure and reduced order volumes from key markets in Europe and North America.
The refinancing fund will also allocate Tk 5,000 crore to cottage and micro entrepreneurs, Tk 2,000 crore each to leather goods and footwear exports and frozen shrimp and fish exports, and Tk 1,000 crore each to unemployed youth employment, rural economic activities, green eco-friendly projects and overseas employment initiatives. Startups and the creative economy will receive Tk 500 crore each.
The inclusion of leather goods and footwear exports is being viewed as part of Bangladesh’s broader export diversification strategy beyond apparel. Policymakers and industry associations have long emphasized the need to reduce overdependence on garments by strengthening sectors such as leather, agro-processing, pharmaceuticals, information technology and man-made fiber-based manufacturing.
At the same time, the package’s green financing component could support Bangladesh’s growing push toward sustainable textile production. Bangladesh currently hosts some of the world’s highest-rated green garment factories, and international brands are increasingly demanding cleaner production systems, renewable energy integration and environmentally responsible manufacturing. The Tk 1,000 crore green eco-friendly fund may help factories invest in cleaner technologies, energy-efficient equipment and environmentally compliant infrastructure as global buyers tighten sustainability requirements across supply chains.
Bangladesh Bank estimates the overall package could generate more than 2.5 million direct and indirect jobs across the economy. The largest employment contribution is expected from agriculture and rural activities, with a projected 900,000 jobs, followed by the CMSME sector with 500,000 jobs. Closed industries and cottage and micro enterprises are each expected to generate around 200,000 jobs, while overseas employment, export diversification and North Bengal agricultural initiatives are also expected to contribute significantly.
The central bank described the stimulus as a “countercyclical” intervention intended to restore industrial capacity, stimulate domestic demand and rebuild investor confidence amid global uncertainty, weak export demand and rising trade tensions.
Economists say the success of the package will depend heavily on implementation efficiency, banking sector governance and whether businesses can access financing without excessive procedural barriers. Concerns remain over non-performing loans, political influence in lending decisions and the ability of banks to manage subsidized financing transparently.
Still, the package signals a strong policy shift toward industrial stabilization at a time when Bangladesh is preparing for its post-LDC transition and facing growing competition from regional manufacturing hubs such as Vietnam and India. For the apparel sector, which continues to employ millions of workers and anchor the country’s export economy, the recovery plan may provide much-needed breathing space to restore capacity, protect jobs and prepare for the next phase of global sourcing competition.
Bangladesh Bank said the broader goals of the stimulus include stabilizing the financial sector, reviving industrial production, accelerating GDP growth, boosting remittance inflows, expanding environmentally friendly investment and strengthening business confidence nationwide.
With global trade conditions remaining volatile and Bangladesh’s manufacturing sector under pressure, the Economic Recovery Program 2026 is likely to become one of the country’s most closely watched economic policy initiatives in the coming year.
