After the fall of the Sheikh Hasina government in a mass uprising, last year, on August 8, the interim government led by Dr Mohammad Yunus was formed and they completed one year.
Although there were many positive aspects in the economy in one year, it could not overcome the drought in investment.
The industrial sector could not provide gas connections reliably. There is a kind of unease among businessmen as the law and order situation has not improved.
Sources said that the country's economy has turned around. High growth in export earnings, record remittance income, breaking the market syndicate and controlling inflation, increasing per capita income, foreign exchange reserves have increased this year despite paying off billions of dollars in foreign debt.
In addition, the government has succeeded in restoring discipline in the banking sector and bringing import activities back to normal after overcoming the dollar crisis. The balance of foreign transactions has turned surplus, and the capital market has regained momentum.
Ashraf Ahmed, former president of the Dhaka Chamber of Commerce and Industry (DCCI), said that investment has decreased alarmingly and this crisis may continue until the next fiscal year. However the current government is trying to stabilize the
current economy.
According to the government, overall inflation has come down from 11.5 per cent to 8.55 per cent in a year. And food inflation has almost halved from 14 per cent. Although the general public says that commodity prices have came under some control, they have started rising again over a few months. This has increased the cost of living.
Meanwhile, visible progress has been made in reforming the collapsed banking sector. A new board of directors has been formed to restore customer confidence; the central bank has printed money and provided it to weak banks to overcome the liquidity crisis. The government has also announced the appointment of a legal firm to recover laundered money.
Remittance flows have also increased. During the last fiscal year 2024-25, expatriates sent US$ 30.32 billion in remittances to the country, which is the highest record of expatriate income in any particular fiscal year in the country's history. This has increased by 26.80 per cent year-on-year. And during the fiscal year 2023-24, $ 23.91 billion came in.
Stability has returned to the volatile currency market. Foreign exchange reserves, which were under severe pressure a year ago, have gradually strengthened and crossed $30 billion.
Traders say that despite the government's efforts to normalize the unstable economy, complications still remain in the energy and financial sectors.
Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said that despite the government's efforts and sincerity, there is still a gas and electricity crisis. In addition, evidence of non-cooperation is being found in various fields in banks. Many incentives have been stopped based on the opportunity to transition to Middle Income Country in 2026. The Export Development Fund (EDF) loan facility is also almost closed. In addition, interest rates are gradually increasing.
Sources said there has been visible progress in banking sector reforms. The government has announced the formation of a new board of directors to restore customer confidence, the provision of money to weak banks to overcome the liquidity crisis, and the appointment of a law firm to recover laundered money. The currency market has also stabilized, and reserves have exceeded US$30 billion.
Nevertheless, complications remain in the energy and the financial sectors. Businessmen say that the cessation of various incentives due to LDC graduation, high interest rates, and a decrease in investment will affect growth in the coming fiscal years.
Economists advise that the government must be more focused on increasing sustainable investment and employment and maintaining growth.
Government data says that the interim government has shown success in repaying liabilities despite a decrease in foreign loans and grants. Reserves are increasing, but major successes in accelerating investment, further reducing inflation, and growth and employment are still to be achieved.
Prof Dr Mostafizur Rahman, distinguished fellow of the Center for Policy Dialogue (CPD), a research organization, said, "Foreign exchange has been relieved and the decline in reserves has been prevented; now it is increasing. However, more work is needed to stimulate investment, reduce inflation, and promote economic growth and employment generation."
The interim government's finance adviser, Dr Salehuddin Ahmed said, the Hasina government has turned the country into a cesspool of corruption. At that time, corruption spread from the top level of the government to the grassroots.
He said, "In the past 15 years, corruption has spread to every union and village in the country. Banks, insurance and financial institutions had lost their momentum. After we took office, we saw a huge burden of debt. Oil sellers in the international market will get money, electricity sellers will get money, lenders will get money. We are handling a lot of pressure from them. The situation has come to a tolerable level. This is a big success. There will be some failures. In this case, maybe the investment that was supposed to come did not come due to law and order. However, all the avenues for new investment are now open. The situation will normalize within a few months. I want to say, you are now getting the real picture of the economy."
The Economic Relations Division (ERD) said that when Hasina returned to power on January 6, 2009, Bangladesh's debt was only $3.66 billion. On August 5, 2024, total loan was $156 billion, both domestic and foreign.
The government is now repaying this huge debt. In the just-ended 2024-25 fiscal year, the government repaid a record $4.08 billion or $4.08 billion in debt, which is the highest in the country's history.
According to experts, many of the big projects taken up by the previous government with excessive enthusiasm were not properly planned and economically profitable.
In this regard, Masrur Riaz, Chairman of Policy Exchange Bangladesh, said that many of the big projects for which the government has taken loans since the 2016-17 fiscal year were prepared by showing an additional budget.
Those projects were approved without considering the reality. As a result, the country's weak revenue collection has led to increased dependence on foreign debt, and the amount of foreign debt has almost doubled in the last seven years.
According to the Bangladesh Bureau of Statistics (BBS), the number of unemployed people in the country stood at 2.74 million in the fourth quarter of 2024-4.63 per cent of the total labour force. A year ago, the rate was 3.95 per cent.
The investment rate as a percentage of GDP in the 2024-25 fiscal year fell to just 29.8 per cent, the lowest in the last decade.
Private sector investment is still sluggish. Credit growth in this sector is stuck below 8 per cent, and imports of capital equipment are also low-a clear indication that confidence among entrepreneurs is not returning.
Although there has been some improvement in macroeconomic indicators, reform activities in the revenue and financial sectors are still at an incomplete stage.
Shafiqul Alam, Press Secretary to the Chief Adviser, said that out of the 121 reform proposals received from the 11 commissions, the government has already implemented 16, 85 are in process and 10 have been partially implemented.
