Bangladesh is once again on the brink of a major crisis as it struggles with a worsening economic situation. Under the leadership of West-backed economist Muhammad Yunus, the interim government is seeking a massive USD 8 billion in budgetary support from the International Monetary Fund (IMF), World Bank, Asian Development Bank (ADB), and other international lenders to stabilize the country’s faltering economy.
Bangladesh is currently grappling with an external debt exceeding USD 100 billion. The government urgently needs USD 3 billion from the IMF to manage its foreign liabilities, along with an additional USD 300 million for critical flood rehabilitation efforts.
In response, an IMF team is expected to visit Dhaka next month to engage in discussions with the Yunus administration.
Previously, the IMF had disbursed USD 2.3 billion under a USD 4.7 billion loan program approved in January 2023, when Sheikh Hasina was still in power.
A Nation in Turmoil
The situation is further complicated by the political upheaval following the Islamist coup that ousted Sheikh Hasina. The country’s political instability has been exacerbated by Yunus lifting the ban on Jamaat-e-Islami Bangladesh and other Islamic fundamentalist organizations, which aim to transform the country into an Emirate governed by Sharia law.
Islamist parties, particularly the BNP, are emboldened by Hasina’s ouster, while the interim government is already feeling the economic strain. The Awami League, once led by Hasina, is now in disarray, and Hindu minorities are facing persecution under the guise of anti-India sentiment, especially after the devastating floods in the Chattogram region.
Inflation is soaring, with the consumer price index rising sharply and food inflation reaching 14 percent in July, the highest in 13 years. In an attempt to mitigate the economic crisis and address the banking sector’s stress due to rising non-performing assets (NPAs), the Yunus government is seeking an additional USD 5 billion from lenders such as the World Bank, ADB, Japan International Cooperation Agency, and the Asian Infrastructure Investment Bank.
If the interim government fails to implement drastic reforms in the financial sector and across the country, the political situation could deteriorate further. The radicalized youth, who played a significant role in dethroning Hasina, may become increasingly restless, leading to further instability. The clock is ticking for Dhaka once more, as the nation faces yet another round of challenges.
