Introduction
Between August 2024 and August 2025, Bangladesh underwent a transformative period marked by political upheaval, economic challenges, and significant reforms. The resignation of Prime Minister Sheikh Hasina on August 5, 2024, amid widespread protests, led to the establishment of an interim government under Nobel laureate Muhammad Yunus. This period witnessed a series of events that reshaped the nation's economic landscape.
Pre-August 2024: Economic Challenges Under Hasina's Tenure
Prior to the political shift, Bangladesh's economy faced mounting pressures:
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Youth Unemployment: Reaching a three-decade high of 16%, youth unemployment became a significant concern, fueling public discontent and protests. WSJ
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Inflation: Food inflation soared to 14%, with general inflation at 11%, exacerbated by global economic disruptions and domestic policy challenges. Wikipedia
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Foreign Exchange Reserves: Reserves dwindled to $20.18 billion by December 2024, prompting concerns over the country's ability to meet import bills and debt obligations. Centre for Policy Dialogue (CPD)
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Political Unrest: Protests against job quotas escalated into nationwide demonstrations, leading to a crackdown that resulted in nearly 150 deaths and further destabilized the economy. Reuters+1The Guardian+1
August 2024: Political Transition and Immediate Economic Impacts
The resignation of Sheikh Hasina and the subsequent formation of an interim government led by Muhammad Yunus marked a turning point:
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Interim Government Formation: On August 8, 2024, Yunus was sworn in as Chief Adviser, pledging to restore democracy and implement economic reforms. Wikipedia+2Wikipedia+2Wikipedia+2
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Economic Policy Shifts: The new administration prioritized transparency, anti-corruption measures, and restructuring of financial institutions to stabilize the economy.
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Flood Disaster: In August 2024, severe floods affected over 5.8 million people, causing damages estimated at Tk144 billion ($1.2 billion), further straining the economy. Wikipedia
Post-August 2024: Economic Reforms and International Engagement
The interim government undertook several initiatives to address economic challenges:
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Monetary Policy Adjustments: The Bangladesh Bank raised the policy rate to 10% to combat inflation, which remained above 11% through late 2024. Centre for Policy Dialogue (CPD)
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Banking Sector Reforms: Boards of 11 private banks were reconstituted to address mismanagement, though liquidity crises persisted, necessitating Tk22,500 crore in support to six banks. Centre for Policy Dialogue (CPD)
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Taxation and Revenue Measures: The government canceled provisions allowing the legitimization of undeclared assets and introduced mandatory online income tax return submissions for certain professions. Wikipedia
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International Aid and Investment: Bangladesh secured $850 million from the World Bank for infrastructure and social protection projects and received commitments from the European Investment Bank to double funding to €2 billion. Reuters
Challenges and Outlook
Despite reforms, significant challenges remained:
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Inflation Persistence: Food and general inflation rates remained high, impacting the cost of living and economic stability. Centre for Policy Dialogue (CPD)
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Debt Servicing: Annual foreign debt repayments were projected to reach $4.5 billion in 2025-2026, posing risks to fiscal sustainability.
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Political Uncertainty: The absence of a clear timeline for general elections and the formation of new political parties added to the uncertainty affecting investor confidence. Wikipedia
Conclusion
The period following August 5, 2024, was one of significant transition for Bangladesh. The interim government's efforts to stabilize the economy through reforms and international engagement laid the groundwork for recovery. However, persistent challenges such as high inflation, debt servicing pressures, and political uncertainty underscore the need for continued vigilance and strategic policymaking to ensure sustainable economic growth.
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