One year of interim govt: limitations of success and imperfections of progress

The interim government has shown glimpses of positive changes in the economy over the past year. Exports and remittance inflows have increased, and foreign currency reserves, though reduced, have not continued to decline sharply.

Inflation has eased slightly, but the prices of essential commodities, including rice, remain high. The greatest relief is that large-scale looting and corruption, as seen in the past, have not been reported. These achievements are undoubtedly significant.

But the question remains – how durable are these successes? The reality is that investor confidence has not yet returned. Political uncertainty and weaknesses in law and order have undermined the investment climate. Individual growth is slowing, new jobs are not being created, bank loan disbursement is at its lowest in recent years, and imports of capital machinery have declined. The root cause behind all of this is uncertainty, which has left investors hesitant and indecisive.

At the same time, there is a considerable gap between expectations and reality regarding reforms. Although initiatives such as the white paper and task force reports have been undertaken, no real action plans have followed. While not all reforms could be completed in a year, at least the first steps could have been initiated. If ministries had been compelled to prepare action plans, future governments would have felt pressure to continue the reform process. That opportunity has been missed.

Even the national budget has fallen short of expectations. There was no effort to increase allocations for health and education or to address individual concerns. As a result, the kind of inclusive budget people were hoping for never materialised.

The banking sector reform process also remains ambiguous. Sometimes it is said that five banks will be merged, other times six — but no clear roadmap has been provided. Consequently, public and investor confidence has not been restored. At the same time, Bangladesh Bank has taken some positive initiatives, particularly in trying to modernise the sector by enforcing new laws and regulations. However, these efforts remain stuck in the uncertainty of implementation. Ultimately, the sustainability of these reforms will depend entirely on the political will of the next government. Without political commitment, these initiatives risk remaining incomplete, threatening both banking sector stability and broader economic recovery.

Similarly, attempts to reform the National Board of Revenue (NBR) have yielded only modest progress. The revenue administration urgently needs structural reforms to modernise and expand the tax base, but the measures taken have been piecemeal. Even the initiative to split the NBR has sparked controversy, renewing mistrust due to officials' dissatisfaction and a lack of transparency. Instead of driving meaningful change, this has only deepened uncertainty in the revenue sector.

In the end, despite partial economic successes during the interim government's first year, political uncertainty, fragile investment conditions, and incomplete reform efforts point to an uncertain future. Sustainable progress requires restoring confidence, transparent planning, and bold reforms.

Otherwise, some achievements won't be sustainable.

The write-up is taken from the Facebook page of Dr Selim Raihan, who serves as the Executive Director of the South Asian Network on Economic Modelling (Sanem).

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.