A year ago, when the interim government took office, the country’s macroeconomic situation was in a fragile state. The economy was struggling with slow GDP growth, high inflation, a dollar shortage, instability in the exchange rate, a continuous decline in reserves, a record deficit in the balance of payments (BOP), and chaos in the banking sector. Over the past year since the mass uprising, Bangladesh has managed to overcome many of these macroeconomic challenges. However, the interim government still faces hurdles such as a lack of domestic and foreign investment, lagging job creation, inflation not falling to the expected level despite some decline, and the law-and-order situation remaining unstable.
After Sheikh Hasina fled to India, the interim government led by Dr. Muhammad Yunus assumed responsibility for running the country on August 8, 2024. The Yunus-led administration has completed its first year in office. Economists, analysts, business leaders, and bank executives say that the public’s expectations from the interim government were enormous, but the outcomes have been modest. The opportunity to rebuild the nation—earned through much sacrifice of life and blood—was not fully utilized. Bribery, corruption, extortion, bureaucratic complications, and administrative inefficiency remain as persistent as before. Many of the reform pledges the interim government had made for restructuring the state have not materialized over the past year.
Economist and Executive Director of the Institute for Inclusive Finance and Development (InM), Dr. Mustafa K Mujeri, said, “The fragile state of the country’s macroeconomy during Sheikh Hasina’s ouster has been somewhat overcome. But the high expectations with which the interim government took responsibility have not been met. There have been some reforms in the banking sector, and a few economic indicators have improved, but these are very small compared to what was expected. Overall, the interim government’s achievements in its first year cannot be called bright.”
For FY 2024–25, Sheikh Hasina’s government had announced a budget of BDT 7.97 trillion. Just a month after the implementation of that budget began, her government fell. After the interim government took over, there were calls to scrap Hasina’s budget and prepare a more realistic one. However, the interim government carried on with the existing budget until the very last day of the fiscal year. In the end, the budget remained unimplemented.
In that budget for FY 2024-25, the revenue collection target was set at BDT 5.41 trillion. Later, the target was revised, and the National Board of Revenue (NBR) was tasked with collecting BDT 4.63 trillion. However, by the end of the fiscal year, the agency managed to collect only over BDT 3.70 trillion—BDT 926.26 billion less than the revised target. Compared to the original target, the revenue shortfall stood at over BDT 1.70 trillion.
According to preliminary data from the Bangladesh Bureau of Statistics (BBS), GDP growth in FY 2024–25 stood at just 3.97 percent. Excluding the pandemic-hit 2019–20 fiscal year, this was the lowest GDP growth rate in the past 25 years.
In the midst of this financial distress, Finance Adviser Dr. Salehuddin Ahmed announced a budget of BDT 7.90 trillion for FY 2025–26. This is BDT 70 billion less than the budget announced for FY 2024–25 but BDT 460 billion more than the revised budget. The new budget set a GDP growth target of 5.5 percent and announced plans to bring inflation—which has stayed above 9 percent for the past three years—down to 6.5 percent.
However, Bangladesh Bank currently sees GDP growth targets as secondary to controlling inflation. For this reason, the policy interest rate (repo rate) was raised to 10 percent. As a result, bank lending rates have risen to 15–16 percent. Even then, inflation has not been brought under control as expected. According to BBS, inflation increased in July this year. The agency reported that last month the inflation rate was 8.55 percent, up from 8.48 percent in June.
Economists remain skeptical regarding the BBS’s reported inflation figures. They claim that during Sheikh Hasina’s tenure, the agency published false inflation data, and it is still releasing figures under the same policies and framework.
In July last year, the student-led movement had two core demands: ending discrimination through quota reform and creating jobs. But over the past year, the interim government has lagged far behind in employment generation. The Public Service Commission (PSC) did not hold any BCS exams during this period. Similarly, recruitment processes for state-owned banks, insurance companies, universities, and other government institutions have largely remained stalled. This has deepened frustration among unemployed graduates.
Job creation in the private sector has also shrunk. In the past year, private-sector credit growth was only 6.40 percent—the lowest in many years. Analysts say stagnant credit growth signals a halt in private-sector expansion. Bangladesh Bank data shows that in FY 2024–25, the settlement of letters of credit (LCs) for importing capital machinery fell by 25.42 percent. In the previous fiscal year, such imports had already dropped by 23.86 percent.
One of the biggest expectations from Dr. Yunus’s government was to secure foreign investment and grants. But in the past year, there has been no significant progress in this area. Bangladesh failed to receive the desired level of support from development partners and friendly nations, and in some cases, even pledged funds never arrived.
Dr. Fahmida Khatun, Executive Director of the Center for Policy Dialogue (CPD), believes that in terms of overall performance, the interim government might score 50 percent. “Some macroeconomic indicators have improved over the past year,” she said. “There have been visible reforms in the banking sector. Remittance inflows and export earnings are growing. Reserves are no longer depleting and are gradually increasing. But the fundamental weaknesses of the economy remain.”
According to Dr. Fahmida Khatun, the public had very high hopes from the post-uprising government. The interim government promised various reforms, but apart from changes in the banking sector, no other areas have seen visible progress. Longstanding issues in the power and energy sector persist, while corruption, extortion, bureaucratic red tape, and administrative inefficiency continue as before.
Research and data from various government and non-government agencies show that over the past year, poverty in Bangladesh has risen due to high inflation, sluggish investment, lack of job creation, and growing unemployment. The government has also failed to take effective measures to improve law and order. Incidents of land grabbing and extortion continue to make daily headlines, with allegations that in some areas, marginalized communities are being forced to pay even higher extortion fees than before.
Among the interim government’s key achievements, banking sector reforms stand out. During Sheikh Hasina’s one-and-a-half decades in power, this sector—considered the backbone of the economy—suffered unprecedented chaos and looting. Bank chairmen and directors allegedly siphoned off depositors’ money from their own institutions, often under different names, with the central bank itself accused of enabling the process.
After the interim government took office, economist Dr. Ahsan H Mansur was appointed Governor of Bangladesh Bank. Soon after, he dissolved the boards of 14 private banks. While this temporarily halted the looting, the move also eroded public confidence in those banks, leading to a severe liquidity crisis. Unable to meet withdrawal demands, the banks saw thousands of depositors queue up daily. To ease the crisis, Bangladesh Bank began lending to those institutions by printing money, providing over BDT 500 billion in total. This injection helped restore much of the lost confidence in the sector.
Top executives from several banks told Bonik Barta that large-scale plundering, as seen in the previous decade and a half, has stopped. However, irregularities and corruption have not been completely eliminated. While governance has improved, they say it is still far from satisfactory.
During Sheikh Hasina’s tenure, banks in the country were able to conceal default loans artificially, with the central bank playing a rather lenient role in this regard. Since Ahsan H Mansur became Governor, the practice of hiding default loans has largely stopped. As a result, the past damages in the banking sector are now becoming visible. According to Bangladesh Bank data, by the end of June this year, the amount of default loans in the country’s banking sector stood at BDT 5.31 trillion. More than 27 percent of the loans disbursed by banks have now turned into defaults. In 2009, the amount of default loans in the banking sector was only BDT 224.82 billion.
Although transparency has improved in reporting default loans, neither the government nor the central bank has yet taken effective measures to recover them. The central bank formed a committee to reschedule default loans exceeding BDT 500 million, but its activities have caused frustration among businesses.
Due to a reduction in capital flight and the halt of plundering in the banking sector, the country has seen a significant surge in remittance inflows through legal channels over the past year. Bangladesh Bank data shows that in FY 2024–25 alone, the country received $30.33 billion in remittances. This is the highest amount of remittance in the country’s history. Back in FY 2023–24, remittances totaled $23.91 billion. Based on that, remittance growth in the last fiscal year stood at 26.83 percent. Alongside high remittance growth, the export sector also expanded in the last fiscal year, with an 8.58 percent growth in exports.
Driven by remittance and export growth, Bangladesh has been able to overcome its foreign currency crisis. The severe dollar shortage the country had faced for the past three years has largely eased during the one year of the interim government. Even after switching to a market-based exchange rate system, the dollar rate has remained stable at BDT 122. At the same time, the foreign currency reserve has increased. According to international standards (BPM6), on July 31 last year, the country’s reserve stood at $20.49 billion, which rose to $25.06 billion on August 6 this year.
In the past four fiscal years, the biggest concern in the country’s foreign transactions was the balance of payments (BOP) deficit. Back in FY 2021–22, the BOP deficit was $6.65 billion. The following year, in FY 2022–23, it rose to $8.22 billion. In FY 2023–24, the deficit narrowed slightly to $4.3 billion. This means that in the three fiscal years before Sheikh Hasina’s ouster, the BOP recorded a total deficit of $19.17 billion. This shortfall was met by selling dollars from the reserves. After the interim government took over, instead of a deficit, the BOP posted a surplus of $3.29 billion.
A national budget, designed to ensure socio-economic development, protection, basic services, job creation, and above all, the reduction of inequality for citizens, is generally known as a people-oriented budget. The people of Bangladesh have been deprived of such a budget for many years. During the Awami League’s rule, the budget became synonymous with the indiscriminate misuse of public funds in the name of development projects. The student-led mass uprising created an opportunity to change this anti-people budget structure. However, the FY 2025–26 budget presented by the interim government has shown no significant change in the country’s economic philosophy or management. Although the uprising successfully called for the elimination of inequality, no strong measures were taken in economic management to address it.
During Sheikh Hasina’s decade and a half in power, electricity prices increased by 188 percent, and the price of WASA-supplied water rose by nearly 200 percent. Gas and fuel oil prices also surged abnormally. The interim government had the opportunity to lower the prices of these essential public utilities that had made people’s lives difficult. Yet, the pricing of electricity, gas, fuel oil, and water continues under the same system. Unethical agreements in the power sector, including capacity charges, have not been canceled or reviewed either.
Because Sheikh Hasina’s government announced large deficit budgets every year, the government’s debt burden only kept growing. According to the Ministry of Finance, at the end of March this year, the government’s outstanding debt from domestic and foreign sources stood at over BDT 19.99 trillion. Of this, BDT 11.57 trillion was borrowed from domestic sources, while the remaining BDT 8.41 trillion came from foreign sources. In comparison, when Sheikh Hasina took office in 2009, the government’s outstanding debt was slightly over BDT 2.76 trillion.
When the interim government prepared its first budget, it had the chance to move away from debt-dependent budgeting. But it did not take that path. In FY 2025–26, the budget deficit has been set at BDT 2.26 trillion. Of this, BDT 1.04 trillion will be borrowed from the country’s banking sector, which is already facing a liquidity crisis. Another BDT 210 billion will be taken from non-bank sources. The remaining BDT 960 billion is targeted to come from foreign sources. However, with revenue collection falling short of expectations, the deficit could grow even larger by the end of the fiscal year.
Analysts say the interim government also had the opportunity to cut through excessive red tape. Instead, over the past year, it appears to have become even more dependent on bureaucracy. Administrative disorder within the government has increased, while the pace of work has slowed. This sluggishness is evident not only in the Secretariat but also in the operations of government, semi-government, and autonomous institutions. Alongside cost-cutting, the government has failed to prevent significant wasteful spending. Over the past year, it has taken no effective steps to improve the quality of education. On the contrary, the rise of “mob” culture has made students even more reluctant to attend classes. The government has also failed to curb chaos on the roads or reduce accidents.
Professor Selim Raihan of the University of Dhaka’s Department of Economics told Bonik Barta, “The mass uprising created many opportunities. But we have already lost them. I’m doubtful whether we’ll get such an opportunity again.”