14 November 2026
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‘Disaster averted, investor confidence remains fragile’

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Banglapress Published: 23 September 2025, 10:25 AM
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‘Disaster averted, investor confidence remains fragile’
    Bangla Press Desk: Bangladesh’s financial sector has made significant strides towards stability by averting a major disaster over the past year under the interim government, but persistent political uncertainty ahead of the 13th parliamentary election is prompting both domestic and foreign investors to hold back, dampening investment prospects. This was the central theme at a policy dialogue on “365 Days of the Interim Government” organised by the Centre for Policy Dialogue (CPD) at the Lakeshore Hotel in Dhaka on Sunday. Policymakers, business leaders, academics, and economists offered candid assessments of the country’s economic progress alongside its ongoing challenges. The CPD’s signature “traffic-light” assessment revealed a mixed picture: while macroeconomic stability indicators have improved in some respects, critical social sectors, including health, education, revenue mobilisation and governance remain firmly in the “red” zone, signalling an urgent need for corrective action. The CPD said that a major economic disaster was averted following the takeover of the interim government, but poor and low-income groups continued to suffer amid high inflation.
"Achieving economic stabilisation and recovery was one of the exigencies of the time," said CPD Executive Director Fahmida Khatun told the event. Bangladesh Bank Governor Ahsan H Mansur provided a comprehensive overview of the central bank’s efforts to stabilise a financial sector that was severely strained before the interim government took office last August. Liquidity shortages have eased, the balance of payments is in surplus, and inflation, currently just above 6%, is forecast to drop below 5% by the end of 2025. “We have stabilised the financial sector, but political uncertainty ahead of elections is keeping investors cautious,” Mansur explained.
“Capital machinery imports remain low, and foreign investors are adopting a ‘wait-and-see’ stance. It would be unrealistic to expect a rush of investment at this time. Everyone is watching what the next government will do.” He credited a combination of remittance inflows, robust export performance, and stringent external payment discipline with restoring confidence among foreign banks. “When I took office, outstanding dues had reached $2.5 billion, and over 200 foreign banks had cut credit lines. We cleared the arrears swiftly, and now all foreign banks have resumed relations — many even expanding their credit lines,” Mansur said. Since 14 August last year, not a single dollar has been sold from reserves, he added, noting the use of moral suasion to curb currency speculation.
“There was no way to stabilise the exchange rate through reserves. We made it clear to Dubai-based aggregators: sell dollars at Tk122 or lose market access,” he remarked. Mansur outlined several legislative and regulatory reforms currently underway, including amendments to the Bank Company Act to limit board terms, mandate independent directors, and enhance central bank authority. Other initiatives include revisions to the Money Laundering Act to expedite asset recovery, a new Deposit Insurance Act to protect depositors, and changes to the Money Loan Court Act to prevent prolonged injunctions in loan recovery cases. He stressed the imperative for the next government to uphold the central bank’s autonomy while ensuring accountability, warning that political interference in banking could undermine hard-won progress. Industry representatives voiced serious concerns about the pace of reforms and the prevailing business climate.
Showkat Aziz Russell, president of the Bangladesh Textile Mills Association (BTMA), accused systemic inefficiencies and extortion of crippling the sector. “I haven’t seen anything magical in 365 days. No factories have been built – rather, they are shutting down. Money is being looted from banks, and yet those banks receive more funds while customers cannot access their money. Banks are handed out on a family basis. We need an effective bank merger initiative,” he said. Mahmud Hasan Khan (Babu), president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), criticised the lack of transparency in banking reforms. “The governor spoke at length but said nothing about corruption in obtaining banking licences, nor about the merger of five banks. Letters of credit are becoming more complicated, and factory numbers have plummeted from 7,200 to 3,000 due to unsustainable policies. We need long-term policy commitments, including clear timelines for gas and electricity price adjustments,” he argued. National University Vice-Chancellor Professor Dr ASM Amanullah highlighted a growing disconnect between higher education and industry needs. “This university is producing examinees, not students. In one college I visited, students were using AI to take their exams while the principal sat drinking tea,” he said. He warned that graduates from the country’s largest university system often lack relevant skills and ambition, leaving them vulnerable to long-term labour market exploitation. “There is virtually zero connection between the curriculum and industrial requirements,” he added. BNP Standing Committee member Amir Khasru Mahmud Chowdhury criticised Bangladesh’s excessive regulatory environment as a major investment deterrent. “Opening a restaurant requires 19 different permissions. This kind of overregulation fuels corruption and creates an oligarchy favouring a few businesses,” he said. Khasru called for serious deregulation, suggesting foreign investors should be able to register a company online upon arrival. “If you genuinely want development, the government’s role must be minimised,” he insisted. He also emphasised skill development, economic democratisation, and long-term policies to attract foreign direct investment. The CPD’s assessment divided macroeconomic and social sector performance into 38 categories. Eleven areas, including health, education, revenue mobilisation, and governance, were marked “red,” indicating serious concern. Eighteen areas, such as inflation control, employment generation, and export diversification, were labelled “yellow” as warning signs. Nine areas, including foreign exchange stability, targeted social safety nets, and some subsidy reforms, were placed in the “green” category for positive progress. CPD Executive Director Dr Fahmida Khatun warned that underfunded health services, stagnant education quality, weak tax collection, and governance lapses could undermine long-term growth. “Without decisive reform, the next generation will bear the cost,” she said. Shipping Adviser Brig Gen (Retd) M Sakhawat Hossain described the severe institutional damage inherited by the interim government. “The previous administration destroyed the entire state structure – law enforcement, civil administration, even the army. Fascism had infiltrated every institution. What can be done in just one year under such circumstances?” he asked. He said the interim government is focused on rebuilding institutional frameworks so the next administration can function effectively. Highlighting the labour sector, he cited Beximco Group, which owes Tk48,000 crore to 16 banks and seven financial institutions. “Janata Bank alone lent Tk24,000 crore. There is no trace of the money,” he said, adding that large-scale financial misconduct remains a serious challenge. Speakers agreed that while stabilisation efforts in the financial sector have borne fruit, deeper structural reforms are essential to attract sustained investment. Political stability, transparent governance, and consistent long-term policies were repeatedly cited as prerequisites for turning investor “wait-and-see” attitudes into concrete commitments. The CPD recommended that the interim government increase budget allocations for health and education while improving spending efficiency, strengthen tax administration and broaden the revenue base, accelerate regulatory reforms in banking, energy, and land sectors, and maintain macroeconomic stability while diversifying exports ahead of LDC graduation in 2026. Ensuring policy predictability to restore investor confidence was also stressed as a top priority. “One year may not be enough to solve deep-rooted structural problems,” Dr Fahmida reflected, adding, “But it is enough to set the right course and demonstrate the political will to act.” As Bangladesh approaches a critical political transition, the consensus from Sunday’s dialogue was clear: without swift and sustained reforms in governance, education, and regulatory policy – alongside continued macroeconomic stability – the country risks missing the opportunity to translate recent gains into long-term economic resilience. Prof Mustafizur Rahman, distinguished fellow at CPD, moderated the programme. This article was originally published on Daily Sun. [Bangla Press is a global platform for free thought. It provides impartial news, analysis, and commentary for independent-minded individuals. Our goal is to bring about positive change, which is more important today than ever before.] B P/SP
[Bangla Press is a global platform for free thought. It provides impartial news, analysis, and commentary for independent-minded individuals. Our goal is to bring about positive change, which is more important today than ever before.]

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