On November 15, 2007, a catastrophic disaster struck the coastal regions of Bangladesh. Cyclone ‘Sidr’ hit the shores with waves reaching heights of 15 to 20 feet. Winds exceeding 300 kilometers per hour devastated around 31 districts, including Bagerhat, Khulna, Satkhira, Pirojpur, Jhalakathi, Patuakhali, Bhola, and Lakshmipur. The cyclone claimed over 10,000 lives, destroyed homes, and wiped out livelihoods, leaving roads and infrastructure in ruins.

At the time, the nation was governed by a military-backed caretaker government, which took power on January 11, 2007, with promises of political reform. However, Cyclone Sidr posed a significant economic challenge for the government. The cyclone’s impact severely damaged crops, fisheries, and livestock across vast regions, triggering inflation.

Simultaneously, the government’s attempts to break market syndicates created a rift with businesses, resulting in supply shortages. Prices of essential goods soared, making life unbearable for ordinary people. Public anger also grew as the government failed to repair damaged infrastructure and rehabilitate affected communities. The political and institutional reforms promised by the caretaker government led by Fakhruddin Ahmed ultimately fell short. Subsequently, when Prime Minister Sheikh Hasina assumed office in early 2009, her 15 and a half years of misrule further dismantled the entire state system.

On August 5, 2024 (Monday), a mass uprising by students and citizens led to the fall of Sheikh Hasina’s government. She resigned from the prime ministerial position and fled to India. On August 8 (Thursday), Dr. Muhammad Yunus was sworn in as the Chief Adviser of the interim government. Within 20 days of taking office, Bangladesh experienced devastating floods in 12 districts, including Feni, Noakhali, Lakshmipur, and Cumilla. The floods, fueled by upstream water flow, swept away the assets of over 5 million people. The country’s vast areas of crops, fish, and livestock suffered severe damage, and infrastructure, including roads, was destroyed.

The country’s economy is already fragile. High inflation has persisted for the past two years, with the rate reaching 11.66 percent in July 2024, the highest in 13 years. Food inflation last month exceeded 14 percent. Amidst this, Bangladesh was hit by sudden floods, further intensifying the economic pressure on the interim government. Millions of people, having lost everything in the floods, have now fallen below the poverty line. Repairing and rebuilding the damaged roads and infrastructure is now a significant challenge for the new government.

Economists argue that during Sheikh Hasina’s 15 and a half years in power, the country’s economic, political, administrative, and social institutions were severely damaged. The banking sector in particular has been plagued by unprecedented irregularities, corruption, and looting. The country’s foreign exchange reserves and revenue situation are also in a precarious state. Pulling the economy out of this situation will be extremely difficult. However, stabilizing the business environment quickly and curbing theft, corruption, and money laundering could lead to improvement.

Economist Dr. Selim Raihan believes that Bangladesh’s economy is currently going through a challenging period. Any misstep during this time could lead to an even greater economic disaster. Dr. Raihan, a professor of economics at Dhaka University and Executive Director of the research organization SANEM, told Bonik Barta, “The country’s financial sector, particularly the banking and stock markets, is extremely fragile. Over the past 15 years, all regulatory bodies and institutions in these sectors have been systematically destroyed. The market has become entirely dependent on syndicates. Since the interim government took office, steps have been taken to reform the banking sector and curb irregularities and corruption among major businesses. We hope that any actions taken by the government are well-considered. In the current situation, any wrong step could push the economy into an even deeper crisis.”

Selim Raihan urged authorities to separate individual misconduct from corporate entities. He stated, “It’s essential to ensure that punitive actions against individuals do not harm businesses or employment. We must also prevent the closure of factories and ensure that punitive measures against businesspeople do not disrupt market supplies.”

Following the fall of Sheikh Hasina’s government, one of the first major business figures to be arrested was Salman F. Rahman, the Prime Minister’s Adviser on industry and investment. In addition to his role as Vice Chairman of Beximco Group, Rahman also serves as the Chairman of IFIC Bank. Beximco Group operates over 40 companies across various sectors, including pharmaceuticals, textiles, ceramics, real estate, construction, trading, marine food, ICT, media, and power. Salman F. Rahman was arrested in connection with a murder case and remains in remand. He had also previously been arrested during the caretaker government in 2007.

Following his arrest, the Bangladesh Financial Intelligence Unit (BFIU) froze all of Rahman’s personal and business bank accounts. On August 4, Beximco’s textile factory in Ashulia was set ablaze. The next day, August 5, Rahman’s residence in Gulshan was torched. According to Beximco Group officials, most of their factories and businesses are now closed due to the freezing of bank accounts. They reported that Beximco Group provides employment for at least 50,000 people.

On August 24 (Saturday), former Textiles and Jute Minister Golam Dastagir Gazi was arrested in Dhaka’s Shantinagar area. Golam Dastagir Gazi, who is the Chairman of Gazi Group, faced immediate repercussions with arson attacks on all Gazi Group factories in Rupganj, Narayanganj, following his arrest. While writing this report, as of yesterday (Wednesday, August 28), Gazi Group’s Gazi Tyre factory was still burning.

Beximco and Gazi Group are not the only companies affected. The BFIU has frozen bank accounts of several influential business figures, including MPs and ministers close to the Sheikh Hasina government. Bangladesh Bank has already dissolved the Boards of Directors of six banks under S. Alam Group’s control and is preparing to dismantle the boards of seven to eight more banks soon.

Syed Mahbubur Rahman, Managing Director of Mutual Trust Bank, stressed the importance of safeguarding institutions while taking action against individuals. He told Bonik Barta, “Each company has hundreds of crores in loans with banks, and thousands of jobs depend on these businesses. If these companies are shut down or burned, the banks will not be able to recover their loans. Additionally, many people will lose their jobs. This must not be allowed to happen. The banking sector is already struggling under the weight of non-performing loans. If defaults continue to rise, even healthy banks will face difficulties. Both the country’s export sector and the domestic supply chain will be severely impacted.”

During the 2007-08 caretaker government, several state reform initiatives were taken. While implementing strict anti-corruption measures, the caretaker government led to a breakdown in the business environment. This triggered inflation. The average inflation rate, which stood at 7.20 percent in the 2006-07 fiscal year, soared to 9.94 percent in the following fiscal year, with food inflation reaching 12.28 percent. To alleviate high inflation, the ‘Operation Dal-Bhat’ program was launched. The severe economic crisis eventually led to the BDR mutiny. The political reforms initiated by the caretaker government also failed to yield any positive results. The Anti-Corruption Commission (ACC) became an institution that, ironically, encouraged corruption. There are allegations that those tasked with combating corruption later extorted bribes from businesspeople and politicians in exchange for immunity.

The August 5 mass uprising was spearheaded by the nation’s young students from schools, colleges, and universities. Among these young visionaries is Mamun Abdullahil, a member of the Liaison Committee of the Anti-Discrimination Student Movement. Speaking to Bonik Barta, he said, “We want an economic system where equality prevails, reducing the gap between the rich and the poor. A new state will emerge, founded on human dignity and justice. This state will be safe for everyone, regardless of religion or race, ensuring the security of people’s assets. It is not about what the ruling class wants; it is about what the people of this country desire as the true owners of the state.”

The responsibility of realizing this dream now lies with the interim government led by Dr. Muhammad Yunus. Writer and researcher Mohiuddin Ahmed believes that the context of the January 11, 2007 situation is different from the current student-led mass uprising. As a result, expectations from the two governments vary significantly. He noted, “The government formed through the August 5 student uprising faces far greater expectations. In 2007, the judiciary, banking sector, and other institutions were still intact. However, over the past 15 years, every institution has been destroyed. Rebuilding the economy, politics, and judiciary will be the greatest challenge for this government.”

Before leaving office, Sheikh Hasina’s government accrued a debt of BDT 18.35 trillion, sourced from both domestic and international avenues. When she assumed power in 2009, the government’s total debt was around BDT 2.77 trillion. This means that during the 15 years of Awami League rule, the government’s debt increased by BDT 15.58 trillion, accounting for nearly 85 percent of the total debt.

This debt was raised to cover the government’s operational expenses and development projects, despite widespread allegations of corruption against Sheikh Hasina’s administration. The country’s banking sector was ravaged by rampant looting during this period. Much of this looted wealth was laundered to Europe, America, and other parts of the world. According to an analysis of data from the U.S. based research organization Global Financial Integrity (GFI), at least $149.20 billion (approximately BDT 17.6 trillion at the current exchange rate) was siphoned out of Bangladesh during Hasina’s tenure. Currently, Bangladesh’s usable net reserves stand at just under $16 billion.

After winning the 9th National Parliamentary Election, Sheikh Hasina took office as Prime Minister on January 6, 2009. At the end of that year, the amount of defaulted loans in the country’s banking sector was just BDT 224.82 billion. As of March of this year, the figure has surged past BDT 1.82 trillion. By the time the student uprising forced her out of the country, defaulted loans had ballooned to over BDT 2 trillion.

An analysis of Bangladesh Bank data shows that in May of this year, the country’s imports amounted to $5.18 billion, while exports for the same month were $3.67 billion, and remittances totaled $2.25 billion. This means that the country’s foreign currency earnings exceeded its expenses for that month. Central bank officials believe that if the growth in export earnings and remittances continues, the balance of payments will soon return to a positive trajectory, leading to an increase in foreign currency reserves.

Dr. Zahid Hussain, a former lead economist at the World Bank’s Bangladesh office, remarked, “The interim government’s primary task now is to put out the fire and restore order. The flames haven’t been fully extinguished yet. Controlling the high inflation is part of this effort. It’s been 20 days since the new government was formed, and each week we see some improvement in the situation. The government has issued stern warnings against irregularities and corruption. If money laundering is prevented and corruption curbed, building the Bangladesh of the youth’s dreams will not be impossible.”