A year has passed since the shift in the country’s political landscape, yet the much-needed stability remains elusive. There is still no visible prospect of unity among political parties on key reform issues. Despite holding multiple rounds of discussions on constitutional, judicial, financial sector, and electoral reforms, no acceptable solutions have been reached. This has increased anxiety and uncertainty among the general public.
The economy too shows little sign of relief. Although inflationary pressures have eased somewhat, food prices remain high. The banking sector is burdened with a record volume of non-performing loans. According to Bangladesh Bank data, there is no shortage of liquidity; the problem lies in the lack of confidence. Despite a net liquidity surplus of Tk 2.65 trillion, nearly double the demand, funds are not being channeled into investment. The reasons include an uncertain investment climate, political instability, and high interest rates.
In particular, liquidity crises and lack of transparency in Shariah-based banks controlled by the S Alam Group have further eroded trust in the banking system. Businesses are reluctant to take risks, leading to a dearth of new investments and stagnation in job creation. Numerous factories in sectors such as garments and pharmaceuticals have shut down, leaving hundreds of thousands of workers unemployed and slowing overall economic growth.
However, some positive signs exist. Record-high remittance inflows and increased foreign financing have alleviated pressure on the dollar market, strengthening the Taka slightly. Yet, the sustainability of this trend depends on the trajectory of imports and investment.
According to Dr. Zahid Hossain, former chief economist at the World Bank’s Dhaka office, overcoming this stagnation requires a credible election and political stability. With the formation of an acceptable government through a fair election, the country can regain momentum and set itself back on the path to growth.