DEEP is committed to accelerating progress in tackling extreme poverty in Bangladesh through contributions to the implementation of policies, strategies and investments that better target and more effectively address barriers and opportunities for tackling extreme poverty.
This briefing note is intended to help inform a research engagement strategy in Bangladesh that takes into account the political economy of poverty reduction in the country. It addresses the following:
Lenhardt, A. and Salam, U. (2026). The political economy of poverty reduction in Bangladesh. Data & Evidence to End Extreme Poverty (DEEP), Oxford Policy Management.
https://doi.org/10.55158/DEEPPB4
The extreme poverty rate in Bangladesh, as measured by the international poverty line ($3.00/day), has fallen steadily and significantly since 2000 according to World Bank estimates (World Bank n.d.-a). Fluctuating since 1983 (the first available estimate), when the poverty rate stood at 37.3%, Bangladesh recorded a poverty rate of 33.3% in 2000. This fell to 24% in 2005, then to 18.2% by 2010 and to 13.5% by 2016. The latest estimate for 2022 suggests a poverty rate of only 5%. These figures have, however, been challenged by other data sources. The Power and Participation Research Centre’s survey conducted in 2025 found 9.35% of the population living below the lower poverty line (BDT 2,750 or USD 22.50/month) and 27.93% living below the upper poverty line (BDT 3,832 or USD 31.37/month) (Raihan 2025, 8 October). Reductions in multidimensional poverty have also been significant, though progress has been slower with the Multidimensional Poverty Index (MPI) showing a decline from 37.6% to 24.1% between 2014 and 2019 (General Economics Division (GED), Planning Commission 2025).
According to the End of Mission statement by the Special Rapporteur on Extreme Poverty and Human Rights (De Schutter 2023), general progress in poverty reduction remains fragile as many households, especially in urban areas, remain vulnerable to shocks. The report found that:
“a category of new poor is emerging … these are households just above the poverty line, have little to no savings, and are therefore highly vulnerable to becoming poor after a shock. A survey on the impact of COVID-19 highlighted this vulnerability: more than three quarters (77%) of those surveyed who were living in urban informal settlements or slum areas and who were not poor but whose income was below the median income level, fell into poverty following the first nationwide lockdown in 2020; and while the initial increase in rural and urban informal settlement areas was similar, the recovery in urban areas has been very slow. Similarly, a 2022 surey in Dhaka by the Bangladesh Institute of Development Studies found that 51% of the people in poverty had recently fallen below the poverty line to become newly poor. ”
For many years, conventional development narratives attributed Bangladesh’s sustained rates of poverty reduction to the country’s rapidly growing economy. More recent accounts have criticised these narratives, both on the rate and sustainability of growth – and also on the extent to which growth has been translated into poverty reduction, especially since 2010 (Hussain 2024). Most sources agree that growth has been driven by demographics and physical capital accumulation, with export earnings from the ready-made garments (RMG) sector and remittances being key drivers. However, overreliance on these sectors has left the country in a middle-income trap, characterised by low-productivity employment and limited diversification in the export sector (Raihan, Bourguignon and Salam 2023).
While growth has undoubtedly contributed to poverty reduction over the past three decades, there appear to be three distinct phases: (a) 1990s, characterised by slow economic growth and gradual poverty reduction; (b) 2000–2010, marked by moderate economic growth and accelerated poverty reduction; and (c) a period of rapid economic growth but with a slowing rate of poverty reduction since 2010 (Matin 2024). This latter period is also associated with widening inequality and the emergence of a large group just above the poverty line but highly vulnerable to shocks and reversals in poverty status (Raihan, Bourguignon and Salam 2023, p. 186).
Moreover, growth has slowed in recent years, and crises such as the Covid-19 pandemic and the war in Ukraine pose a threat to Bangladesh’s progress in poverty reduction through job losses, reduced earnings – especially among women – and inflation (World Bank 2023). Finally, the July 2024 uprising, as well as highlighting the erosion of democracy and increasing authoritarianism of the previous administration, has also led to a critical reappraisal of the state of the economy, and thus of the sustainability of the model of growth-led poverty reduction.
Key questions are thus:
The distribution of poverty and ongoing vulnerability remains higher among marginalised groups in Bangladesh.
Hard-to-reach areas (Haor and Char): There is a high prevalence of poverty in both regions, with 28% of Haor residents living below the poverty line and 77% classified as ’hardcore’ poor in Char (Gillingham 2016). Haor and Char representatives at the National Summit of Marginalised Groups in Bangladesh highlighted the significant socioeconomic challenges faced by the residents of these areas (BRAC 2020). Limited access to essential services and resources are key contributors to poverty in these areas. Education is limited by the scarcity of primary and secondary schools, monsoon flooding which forced school closures, poor transportation systems, early marriage and gender biases (Mia 2021). Inadequate health care is driven by the limited availability of medical personnel, insufficient medical facilities in government hospitals and inadequate antenatal and postnatal care. Livelihood challenges contribute to poverty through limited access to open water bodies for fishing, exploitative pricing practices of farmers’ produce, and other challenges that exacerbate poverty in these regions (BRAC 2020).
Rohingya population: Nearly 1 million Rohingya refugees, survivors of a genocide perpetrated by the Myanmar military in August 2017, remain trapped in the world’s largest refugee settlement in Bangladesh. The Bangladesh government relocated around 30,000 Rohingya to Bhasan Char, a low-lying island prone to cyclones, exposing them to a new layer of vulnerability (International Crisis Group 2019). An assessment by the World Food Programme (WFP) stated that, by the end of 2020, 86% of Rohingya refugees faced a severe risk of poverty and hunger – an increase of 16% from the previous year (UNHCR 2020).
The Rohingya refugees in Bangladesh are denied the right to work, and the Bangladesh government is unwilling to allow them to pursue income-generating initiatives. As a result, the Rohingya population is solely dependent on humanitarian aid. United Nations agencies and non-governmental organisations supporting the Rohingya population are now finding it increasingly difficult to source funds to continue with the support. This financing gap also led WFP to reduce the value of its food vouchers from USD 12 to USD 10 per person per month in March 2023 (De Schutter 2023). In April 2025, WFP announced that further cuts to USD 6 per person would have to be implemented but subsequent donor support appears to have allowed the programme to resume at the USD 12 level, as of December 2025 (World Food Programme 2025).
The Global South Forum states that:
Bangladesh has no official refugee law; it is not a signatory to the 1951 Convention and formally treats the Rohingya as “temporary” guests. Without legal status, Bangladesh’s Rohingya cannot legally work or come and go from camps freely, and aid agencies cannot meet all needs. (Global South Forum 2025, 6 June)
Overcrowding, security concerns and poverty risk pushing some refugees, particularly young men, towards criminal gangs and armed groups, potentially fuelling further violence. Women and girls, facing limited options, are undertaking risky journeys by boat or through Myanmar and Thailand to reach Malaysia, often in exchange for marriage.
Disability: According to a BRAC report, people with disabilities are estimated to account for 10% of the Bangladeshi population and face heightened risks of poverty (BRAC 2020). People with disabilities face significant disadvantage in accessing health care (inadequate equipment to provide treatment, gender-based disparities in receiving adequate reproductive healthcare services as well as the high cost of private health care), education, employment opportunities and inaccessible infrastructure in marketplaces, terminals and transportation systems, which hinders their participation in various aspects of life.
A study by the Chronic Poverty Advisory Network (CPAN), based on 60 qualitative life-history interviews, explored the complex interplay between disability and poverty in rural Bangladesh (Davis 2016). The study found that poverty not only worsens the impact of existing impairments but also makes people with disabilities more vulnerable to economic, social and environmental pressures, potentially pushing them into a cycle of impoverishment. The research findings highlight two key observations:
Davis (2016) also found that medical costs were extremely high, and in some cases, assets such as agricultural land, livestock (cattle and goats) and business capital were used to pay for medical care. Exclusion from work (or work environments that are not inclusive), abandonment or divorce, exclusion from education, stigma and discrimination were also highlighted as impoverishment pressures for families with a member with a disability.
A 2025 DEEP study of disability and poverty (Alfonzetti and Carraro 2025) found that households with members with a disability need to spend 13% more on average than other households to achieve the same standard of living. These additional disability-related costs increase substantially with the degree of functional difficulties and the number of disabled household members. The implication is that the poverty rate among households with people with disabilities in Bangladesh increases by almost 50%, from 23% to 34%.
Studies of Bangladesh’s achievements in poverty reduction found that rapid economic growth and social progress of the poorest areas were attributed to:
Over time, tighter agricultural labour markets have also fostered non-farm employment opportunities for the most impoverished rural populations. Two key mechanisms have been identified (Sen and Ali 2014).
Bangladesh has recently experienced a watershed moment in its history, leading to a reappraisal of its past, a seismic shift in its present form of politics, and uncertainty and concern over its future. The July 2024 uprising, brutally suppressed by the Awami League government of Sheikh Hasina, was the trigger for the regime change of August 2024, and the installation of the interim government of Muhammad Yunus, with a mandate to restore stability and bring about reform. At the time of writing, an election is expected in February 2026; the Awami League will be prevented from participating, and the Bangladesh Nationalist Party (BNP) is widely expected to form the next government, although whether that will be in some form of coalition with smaller parties remains to be seen.
These dramatic events brought an end to the 15-year period of rule by the Awami League, which saw ‘competitive clientelism’ give way to increasing authoritarianism (Raihan, Bourguignon and Salam 2023). Neither the 2014, 2018 nor 2024 elections were considered free or fair, marred by electoral violence, and with opposition parties either boycotting or being banned from participating. The period has been characterised as a ‘blended regime’, marked by weak state capacity, a weak regulatory environment, state capture by a segment of business-sector elites, and the dominance of cronies (Raihan 2023, 3 December). This has meant a blend of two contrasting aspects of the political economy of development — the ‘developmental state’ on the one hand, and the dominance of cronies and high levels of rent-seeking on the other. The former included using the state to promote economic and social development, efforts to reduce poverty, strengthening growth drivers to sustain economic growth, developing notable physical infrastructure, and expanding social services for the poor (Raihan 2023, 3 December). The latter included forms of crony capitalism that exploited political connections and undermined state institutions to pursue rent-seeking opportunities across numerous economic and financial sectors, notably infrastructure projects and banking (Raihan 2024, 6 November).
The trend towards authoritarianism was reflected in many indicators. According to the Democracy Index from the Economist Intelligence Unit (EIU), Bangladesh’s ranking on several democracy indices has been declining for some time. Concerns were expressed about judicial independence and the lack of free and fair elections (Riaz 2024, 23 February).
Freedom House highlighted the limitations on free speech in Bangladesh, particularly concerning sensitive religious and political topics (Rafique 2024, 30 May). Fear of retribution from both the government and religious extremists acted as a significant deterrent to open discourse. Instances were reported of violence and harassment directed towards those publicly discussing issues on LGBT+ rights and atheism, or criticising Islamist movements perpetuated by religious fundamentalists.
A 2023 poll by the International Republican Institute (IRI) further underscored this point, revealing that nearly half the population refrained from publicly voicing political opinions.
Additionally, over 70% of respondents expressed hesitancy to engage in political discussions on social media (IRI 2023). The previously implemented Digital Security Act 2018 (DSA), replaced by the Communications Surveillance Act (CSA) in September 2023, was criticised for empowering the government to censor online content and conduct broad surveillance of telecommunications and social media platforms (Rafique 2024, 30 May). The high number of DSA cases filed (over 7,000 between January and June 2023) further underscored its suppressive nature.
The immediate cause for the July uprising was the decision by the Awami League government to reinstate an unpopular quota system that reserved a certain number of public sector jobs for the descendants of freedom fighters. The issue reflected concerns among young people not only over a lack employment opportunities but also whatever mechanisms of support there might be to find employment had been politicised and captured by the then government to reward its own followers. This, combined with the repression and brutality, rapidly escalated the protests into a much wider campaign, in which the removal of the government was the one-point demand, and in which the new Students Against Discrimination movement played a central role.
Other opposition parties, such as the BNP and Jamaat-e-Islami, later tried to capitalise on this momentum but did not play a major role in instigating the uprising. The events of July and August 2024 saw significant violence on the streets of Dhaka, especially around the university, where an estimated 1,400 people, mostly unarmed protestors, were killed, according to the Office of the United Nations High Commissioner for Human Rights (OHCHR 2025). This period also saw the internet shut down, banks and other businesses closed, curfews imposed, and almost all routine political processes suspended. On 5 August 2024, the army declined to follow orders to suppress a major planned protest and instead pressured Sheikh Hasina to tender her resignation. The following day, the army invited Nobel Laureate Muhammad Yunus to form an interim government.
The context in which the interim government took charge was one of great political instability. Not only were there immediate security concerns, but the political fallout of Sheikh Hasina’s departure and the collapse of the Awami League meant that many key institutions could no longer function: parliament was suspended, the police (in particular, the widely-feared Rapid Action Battalion) were discredited, and many civil servants or other figures in public life were tainted by party associations with the Awami League. Thus, although the interim government enjoyed a strong popular mandate, and the goodwill of a large part of civil society, it lacked a clear constitutional and legislative basis and could not rely on strong state capacity to implement the many reforms that were expected.
The political parties, with almost no experience of government, have expressed conflicting demands and expectations, with disagreement over key issues, such as the timing of the forthcoming election or the restrictions that should be placed on the Awami League and its leaders. The newly formed National Citizen Party (NCP), which emerged from the student movement, represents a new force in Bangladeshi politics, with a radical agenda and mobilised support base unlike anything seen previously.
With this challenging political context, the interim government has had three main objectives: to restore order and stability; to initiate and implement a reform agenda; and to organise a free and fair election to restore democracy. On the first of these, there has been a degree of success – political violence has not been absent but equally has not been a defining feature of the past year. On the question of reform, there were several initiatives to articulate a detailed reform agenda, notably the White Paper on the State of the Economy and the Task Force report on economic strategy, along with other reports on key areas, such as banking or the Bureau of Statistics.
The National Consensus Commission was established in February 2025 to debate political and constitutional reforms. The July Charter emerged from this – an 85-point reform agenda that may be the subject of a national referendum in 2026 (Alamgir and Abbas 2025, 1 August). Yet implementing reforms has, in many cases, been harder than identifying them (Raihan 2025, 17 March).
Following the July uprising, some key government activities, including parliament, have operated with severe restrictions, although after the election in February 2026, these are expected to be lifted. Ordinarily, government has primary responsibility for formulating and implementing policies. Key institutions have included:
Bangladesh’s poverty reduction policy formulation process has been criticised for lacking true national ownership, with the dominance by external actors, namely bilateral and multilateral donors. Development partners have been heavily involved in policy formulation. The World Bank and International Monetary Fund (IMF) have had significant influence in the past through loan conditionalities and the promotion of specific economic models (Rahman 2009), and the IMF provided significant credit facilities in 2025 (IMF 2025). Some bilateral donors have historically made significant investments in poverty reduction (though this has waned in recent years) and through their funding programmes have had significant influence on poverty-related policy formulation. Approximately 1.25 % of GDP derives from donor contributions (World Bank n.d.-b). However, there are signs of a shift towards a more inclusive approach.
Many national policies are on hold or are being revised as part of the government transition, pending the election in February 2026; however, the 8th Five Year Plan (July 2020 – June 2025) indicates the direction that poverty-related policy had taken previously in Bangladesh:
“Promoting Prosperity: The plan has emphasized on appropriate policies, frameworks and devised suitable and sustainable development strategies for promoting prosperity. For this, the first step is to bring Bangladesh closer to attaining Upper Middle-Income Country (UMIC) status, major Sustainable Development Goal (SDG) targets, and eliminating extreme poverty. Fostering Inclusivity: A broad-based strategy of inclusiveness with a view to empowering every citizen to participate fully and benefit from the development process and helping the poor and vulnerable with social protection- based income transfers has been adopted in the plan. (Bose n.d.)”
The expansion of social safety net programmes has been a leading poverty reduction strategy of the government and its development partners, both in terms of coverage and funding. The government has increased resources for these programmes each year, aiming for efficiency and effectiveness. In 2015, Bangladesh introduced a National Social Security Strategy (NSSS) to guide this effort, seeking to streamline and strengthen the existing safety net programmes with a view to achieving better results from money invested. (GED, Planning Commission 2015). The NSSS broadened the scope of social security to include employment policies and social insurance to address the emerging needs of a middle-income Bangladesh. According to data from household income and expenditure surveys (HIES), existing social protection programmes were now more widely available to low-income and vulnerable households and had reduced poverty. However, survey data also indicated that many low-income and vulnerable households are not even aware that such programmes exist.
Several other well-established programmes address immediate needs, such as food security. These include providing free food, workfare programmes (‘food for work’), and disaster relief (‘test relief’). The government also invests in longer-term solutions like the One House One Farm project, which promotes self-sufficiency. Additionally, housing initiatives (Ashrayan and Grihayan) and livestock distribution (Ghora Phera) aim to improve living conditions. Social safety nets extend beyond basic needs, with allowances for widows, deserted women and older people (Ministry of Finance 2017).
Poverty reduction has always been one of – if not the most – important political issues in Bangladesh. Previous governments have regarded sustained poverty reduction accompanied by economic growth as key national achievements, and policies and resources have been directed to achieving that end. Not only has growth directly helped many escape from poverty through improved livelihoods and jobs, but it has also provided the resources through which the state has been able to implement social protection and public services that have benefited the poor – although, at the same time, it is important to note how little Bangladesh spends as a share of GDP on health and education, even compared to regional peers. Indeed, the role of NGOs has been very important in the story of poverty reduction in Bangladesh. This note has attempted to summarise the overall poverty trends and the architecture of poverty reduction, in terms of policies and actors, that lie behind this story.
Yet, as the recent White Paper on the State of the Economy observes, such achievements have been something of a ‘fragile glory’ (Matin 2024), resting on a growth model that may be less sustainable than governments have liked to admit, and with a large proportion of those who had escaped from poverty vulnerable to economic and other shocks, not least climate change (Raihan, Bourguignon and Salam 2023). The political economy behind this story is therefore one in which the drivers of growth also generate the political conditions in which the government is least able to effectively deliver on its own programmes, culminating in the corrupt and authoritarian regime of the previous Awami League government. In the wake of the overthrow of Sheikh Hasina’s administration and the installation of Muhammad Yunus’s interim government, a period of reflection and introspection has taken place, in which the connections between a fragile economy and a vulnerable society have been more openly discussed in public discourse. The interim government had set out a reform agenda on a range of socioeconomic areas but encountered implementation and capacity challenges – again, the political economy of the past decades had left Bangladesh without the institutional strength to deliver on policy objectives, even when there was wide consensus on some of the reforms that were needed. In February 2026, a new government, elected through a process that is expected to be free and fair – for the first time in years – will have an opportunity to address these issues and to see if it can overcome the political economy constraints that have been so much part of Bangladesh’s past.
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