When a caretaker government was sworn in after the ouster of the Awami League regime barely 100 days ago, the Prof. Muhammad Yunus-led administration was expected to take steps to save a financial sector plagued by scams and save a country in difficulty. economy.

To achieve this, the interim government has formed numerous working groups and panels to take stock of existing policies and measures and analyze their effects on the banking sector, taxation, the capital market and the economy in general.

Steps were also taken to stabilize the exchange rate and stem the fall in foreign exchange reserves, while the boards of 11 crisis-hit banks were restructured to protect depositors’ interests.

The central bank also decided not to support struggling banks by printing money and instead facilitated liquidity support to the interbank money market, allowing well-off lenders to lend to those in trouble. Some initiatives, such as stopping the practice of lending US dollars from foreign exchange reserves and allowing market forces to determine exchange rates and interest rates, are already bearing fruit.

Stability has prevailed in the foreign exchange market over the past three months, with reserves hovering around $19 billion.

The central bank’s strategies to encourage migrants to use formal channels have also borne fruit.

Remittances jumped 80 percent year-on-year in September to $2.4 billion, followed by a 21 percent year-on-year rise in October to $2.39 billion.

An increase in export revenues relative to import expenditures was also noted, allowing the country to reduce pressure on external accounts.

At the same time, various ailments persist.

Inflation, a major public concern for more than two years, remains stubbornly high and reached a three-month high of 10.87 percent in October. Food inflation was even more intense, reaching 12.66 percent in the same month.

The central bank continued to raise its key rate to contain rising prices, which it has done three times since taking responsibility in mid-August.

The latest, at the end of October, marked the 11th time since May 2022 that the key rate, which makes money more expensive for banks, was raised.

This increase in the key rate, from just 5% in May 2022 to 10% on October 22 this year, has led to businesses complaining about rising interest rates on loans.

Furthermore, although the vicious cycle of extortion appears to have been broken after the political change, such unscrupulous practices have re-emerged, with “even higher tariffs” imposed by other parties.

This has deteriorated the business climate and contributed to increasing production costs.

The caretaker government inherited an economic outlook clouded by double-digit inflation, massive capital flight, dwindling reserves and a strained banking system – a legacy of Sheikh Hasina’s regime.

Working groups were therefore formed to resolve key issues. For example, the Bangladesh Bank and the Bangladesh Securities and Exchange Commission (BSEC) have taken steps to prevent further damage to their respective sectors, by forming several task forces and investigation committees.

Chief Advisor Yunus has formed a committee to prepare a white paper on the state of Bangladesh’s economy, while the Planning Ministry has formed a task force to develop strategies to boost economic growth. economy and to mobilize resources for equitable and sustainable development.

In total, several committees have been formed and are preparing their tasks. Most have been asked to submit their reports within three months, meaning some must be submitted by the end of the month, while others will take a little longer.

However, no significant steps, apart from changes in the top brass of the Insurance Development and Regulatory Authority, have been taken to revive the insurance sector.

Professor Muinul Islam, former president of the Bangladesh Economic Association, said the caretaker government came to power at a time when large amounts of capital had been siphoned abroad, with foreign exchange reserves rapidly depleting and where the local currency depreciated considerably.

“He managed to stop all this,” he added, crediting the caretaker government in tackling the US dollar crisis.

“However, inflation remains high and the law and order situation is not up to par,” he said, expressing hope that price rises can be brought under control by January or FEBRUARY.

Regarding the ongoing reform activities, Islam said: “I cannot comment on the matter until they complete their activities. After the submission of reports, this government will begin the reforms. Some reforms may be left to the implemented by the next elected government,” he added. .

People still face serious difficulties in recovering their deposits from a dozen troubled banks, whose dire conditions are common knowledge, he said.

Abdur Razzaque, president of Research and Policy Integration for Development (RAPID), said the credibility and depth of monetary policy have increased under the caretaker government, which is very important in combating any economic crisis.

Under the new governor, the central bank continued its restrictive monetary policy to reduce inflation. Yet inflationary pressures remain stubborn, especially after production of several crops was hampered by flooding in several districts weeks after the political change.

For credibility, he said the central bank does not provide loans to the government by printing money while claiming to implement restrictive monetary policy to control inflation as it had done in the past.

“So people can now believe the central bank,” Razzaque said.

“Raising interest rates is a non-populist measure, but the implementation by the central bank is adequate and reflects the depth of the policy,” he added.

The RAPID president also said that reform activities may seem a bit slow, but in reality the caretaker government is cautious about its policies.

“For proper reform, policies must be informed and inclusive,” Razzaque said, adding that all committees charged with reform have held discussions with stakeholders.

“So it may take time, but it will be appropriate,” he added.

Razzaque informed that after receiving reports from various committees and task forces, the government would launch major reform activities in the next six months.

“So the next budget is very important, especially in terms of sufficient allocation for reform activities,” he said.

Stock market investors are also feeling the effects. Due to the political unrest in July and August, most listed companies experienced an erosion of profits in the first quarter of the current fiscal year.

Moreover, manipulators, perhaps wary of impending reforms, run away with their stakes.

So far, BSEC has formed an inquiry committee to probe any anomalies in the stock market, including allegations regarding the issuance of Beximco’s Green Sukuk Bond and Zero Coupon Green Bond of Sreepur canton granted by IFIC, as well as irregularities involving around nine other listed companies.

The regulator also appears to have moved away from the tradition of hand-wringing fines, imposing an unprecedented penalty of Tk 428.52 crore on several investors for manipulating Beximco Ltd’s share prices in October.

At the same time, it took steps to avoid any shortfalls in consolidated accounts receivable, which previously created a risk of misappropriation of funds, and took a tough stance against executives of several listed companies who failed to pay dividends properly .

Despite all these movements, the DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), fell to its lowest level in four years last month, amid a crisis of confidence.

In response, the caretaker government quickly took steps to boost investor confidence.

For example, it reduced capital gains tax and provided a sovereign guarantee against loans of Taka 3,000 crore that the Investment Corporation of Bangladesh (ICB) was seeking from the central bank.

After that, the stock index rebounded.

On the business climate, Meghna Group of Industries (MGI) Chairman and Managing Director Mostafa Kamal said the law and order situation needs to be improved.

Pointing to extortion, he said the regime had changed, but the same system remained. Moreover, their demands have increased, he added.

He also said there should be bureaucratic accountability, making them responsible for the time spent transmitting records.

“The government has launched a marathon and a 100-meter sprint in parallel. This follows 10 to 12 years of very poor governance in terms of democratic and economic governance,” said Mr. Masrur Reaz, Chairman and CEO of Policy Exchange of Bangladesh. .

Restoring governance to crippled institutions is a long-term agenda, he said, adding that the caretaker government started with the right approach.

He said the government had inherited several problems that threatened the economy and had started working on the tasks at hand. However, Reaz added that he could have done more on two fronts: restoring normalcy to the banking sector and focusing on small and medium-sized businesses and exports.

“100 days is long enough to roll out plans to restore normalcy and consolidate confidence,” he said, adding that there should be a plan on the reforms that will be implemented in the trade and investment sectors.