By conventional measures, Bangladesh looks economically strained: inflation above 8%, slowing private lending, and a banking sector burdened by high non-performing loans. But to treat these signs as proof of this interim administration’s failure is to miss the deeper damage it inherited and the unavoidable pain of normalising an economy after prolonged institutional distortion.
After fifteen years of politically driven financial manipulation, Bangladesh’s economy is returning to normal — and normalisation appears harsh. Claims that the interim government inherited a “crippled economy” and will hand over a “stagnant economy” are rhetorically neat but analytically thin. They treat statistics as static facts rather than contextual signals and ignore the vital question: what was left on Day One — genuine economic activity or a stage-managed façade?
Under the previous ruling order, the financial system was profoundly warped. Politically connected groups treated commercial banks as private ATMs. State-linked conglomerates received massive loans with minimal collateral and little pressure to repay. In some cases — such as roughly Tk 80,000 crore linked to Islami Bank and Tk 24,000 crore through Janata Bank to Beximco — funds were not just unpaid; they were moved abroad into real estate and other assets in Singapore, Dubai, London, Toronto and elsewhere.
Those practices inflated private-credit growth during the Hasina era, making investment figures look healthier than they were. When private lending falls now, commentators lament stagnation without asking: what kind of borrowing has declined and for what purpose? Under the interim administration, lending has become less political and more cautious. The result: lending volumes fall, but lending quality improves. Presenting private credit’s multi-decade lows without context is misleading — the critical measure is whether new credit funds productive domestic activity rather than overseas asset flight. By that yardstick, the trend is healthier.
Inflation, too, is often misread. Comparing Bangladesh’s roughly 8% inflation with Sri Lanka’s 2.1% ignores vital context. Sri Lanka’s low inflation follows a catastrophic sovereign default and IMF-enforced contraction that crushed domestic demand. Bangladesh still has a functioning consumer base; life feels expensive and wages lag, but current inflation partly reflects the after-effects of years when the currency was artificially suppressed and liquidity was pumped into the system for political reasons. Where many countries tightened monetary policy after the pandemic, the previous government injected liquidity. Today’s inflation is a delayed consequence of those choices.
Data integrity matters. For 15 years Bangladesh’s economic reporting resembled theatre: glowing GDP figures, inflated reserves via accounting tricks, massaged NPL data, and adjusted employment indicators. That Potemkin economy looked strong on paper but was hollow. When the interim administration stopped the massaging and disclosed more accurate numbers, the economy appeared worse not because it had deteriorated overnight but because honesty replaced illusion. Bad numbers, in this context, can be a sign of transparency rather than failure.
There are noteworthy positives. Foreign direct investment grew nearly 20% last fiscal year despite domestic uncertainty and a weak global backdrop. Foreign investors conduct rigorous due diligence and do not invest in gestures; they respond to signs of structural credibility — regulatory transparency, reduced corruption, and potential returns. Rising FDI alongside falling politically circulated domestic loans suggests capital is shifting from opaque, domestic channels to external markets.
Claims about rising poverty should be handled with care. A 28% figure cited from a small private survey contrasts with internationally peer-reviewed measures; the World Bank projects a poverty decline this fiscal year. Source and methodology matter when interpreting such statistics.
Beyond numbers, a philosophical shift is underway. Investor confidence depends on trust, which takes time to rebuild. The interim government has not eradicated rent-seeking or bureaucratic inertia, but it has stopped protecting certain privileges. The era of protected oligarchs appears to be ending; business groups that once operated like private governments are being repositioned as market participants.
The challenges remain formidable. Cleaning a banking sector where up to 28% of loans are non-performing is Herculean. Bank mergers may fail, and partisan interference could return if a political government comes to power. The interim administration has not adopted deep fiscal austerity—symbolic spending and foreign trips continue. Inflation expectations are stubborn, and street-level law-and-order uncertainty deters investment.
What must be resisted is equating the newfound visibility of problems with deterioration. The Hasina years left many problems hidden or cosmetically disguised; the interim government has allowed those issues to surface and then bears the blame for their visibility. Recovery from state-captured capitalism is not judged by swift rebounds in headline statistics but by whether institutions shift from extraction to production, from privilege-based access to merit-based access, and from political favouritism to autonomy.
Bangladesh today is neither an instant success nor the failure some declare. It is a wounded economy in convalescence—breathing more freely even if still coughing. Slow healing is not relapse. The next government will likely inherit not a stagnant but a stabilised economy: one that has stopped bleeding, revealed its infections, and begun the long process of genuine recovery.
The danger is narrative manipulation that focuses on symptoms, snapshots, and sensational headlines rather than causes, timelines, and history. For too long, Bangladesh’s economics was curated as a story. It is time to treat it as a reality to be understood.
The author is the Minister (Press) of the Bangladesh High Commission in New Delhi.
The opinions expressed in this article are those of the author and do not purport to reflect the opinions or views of THE WEEK.
