Bangladesh faced economic challenges following a significant political change on August 5, 2024. The country experienced slowing economic growth, high inflation, low revenue collection, and dwindling foreign reserves, leading to strains on the external sector and reduced remittance inflows. Additionally, both domestic and foreign investments were stagnant, and the banking industry was fragile. The new interim government, which came into power on August 8, 2024, was expected to restore democratic governance, revamp state institutions, stabilize the economy, and ensure fair national elections to enable citizens to freely exercise their voting rights.
One year later, although some economic indicators have shown slight improvements, many areas still exhibit weaknesses. The government implemented measures in macro-financial management, including easing interest rate controls to combat inflation and administrative interventions to address price hikes. Notably, import duties on essential goods were removed, the requirement for letters of credit for daily essentials was eliminated, and borrowing limits for food and fertilizer importers were raised to alleviate supply issues and prevent further inflation spikes.
After a prolonged period of double-digit inflation, the rate began to decline, dropping from 11.66 percent in July 2024 to 8.48 percent in June 2025. The Bangladesh Bureau of Statistics projected a GDP growth of 3.97 percent for fiscal year 2025, compared to 4.22 percent in fiscal year 2024. The sluggish growth was attributed to underlying problems such as low investment, political uncertainties, supply constraints, reduced demand, and the lack of fiscal stimulus.
The interim government focused on initiating reforms across various sectors, forming several reform commissions. While no commissions were specifically dedicated to economic issues, a task force aimed to enhance the Bangladesh Bureau of Statistics for data-driven decision-making. Additionally, a task force on “Re-strategizing the Economy and Mobilizing Resources for Equitable and Sustainable Development” proposed actionable recommendations for economic growth, social development, and environmental sustainability in the short, medium, and long terms. However, the government has yet to show substantial interest in implementing these recommendations.
Meanwhile, the central bank established three task forces to implement banking sector reforms to address its ailing condition. These task forces aim to conduct comprehensive asset quality reviews, enhance Bangladesh Bank’s capacity and efficiency, and manage non-performing assets of banks. The government also approved the Bank Resolution Ordinance 2025, granting Bangladesh Bank powers to enhance the health of commercial banks. However, the success of cleaning up the banking sector will depend on the future government’s commitment to sustaining these reform efforts.
A critical reform concerning the National Board of Revenue is pending implementation. The interim government announced the Revenue Policy and Revenue Management Ordinance, 2025 to restructure the revenue authority into two separate entities—the Revenue Policy Division and the Revenue Administration Division, as mandated by the International Monetary Fund. Despite long-standing recommendations from experts and the private sector, the ordinance’s implementation is on hold pending amendments from the Ministry of Finance.
As the national elections approach in February, it is unlikely that the interim government will introduce new reforms. Instead, the focus should be on consolidating existing progress and addressing the economy’s underlying vulnerabilities. Key areas for attention include restoring and maintaining macroeconomic stability, boosting private investments, upgrading fiscal institutions through inclusive dialogue, providing targeted economic relief for vulnerable populations, mitigating export vulnerabilities through strategic actions, strengthening the financial sector’s resilience, and preparing for a smooth post-election transition.
Despite some successes, economic and institutional weaknesses persist, overshadowing the initial optimism among the public. The government’s ability to implement reforms effectively has been questioned, highlighting the need for tangible progress and enhanced governance. The interim government faces an opportunity and a responsibility to make substantial economic and institutional advancements before the upcoming elections to regain public trust and credibility.