Fragile economy amid interim govt’s inefficiency

Dr. Muhammad Yunus, a Nobel laureate and globally renowned figure known for advocating the “Three Zeros” concept, has come under criticism for allegedly leaving Bangladesh’s economy in a weakened and fragile state at the end of his tenure as head of the interim government.

Critics argue that while delivering inspiring speeches and envisioning global change may be easier, governing a country is far more complex. Instead of steering economic recovery, Yunus is accused of leaving the economy in greater “disorder.” 

He, along with three other doctorate-holding economists in his administration, has faced strong criticism from various quarters for failing to revive business and trade. Business leaders, economists, and former bureaucrats have openly voiced their concerns, holding him largely responsible for widespread economic challenges.

According to these critics, Yunus failed to address a range of pressing issues, including high inflation, rising interest rates, record levels of non-performing loans, a slowdown in investment, factory closures, unemployment, sluggish exports, controversial trade agreements, the transfer of port management to foreign entities, and a significant revenue shortfall. Instead, they claim, he left behind a “hollowed-out” economy for the current government to manage. Allegations also include neglect of healthcare allocations, cancellation of key projects, and lack of preparedness in the energy sector.

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As a result, Prime Minister Tarique Rahman is now reportedly struggling to manage an economy burdened with depleted reserves and a heavy debt load.

Expectations had been high that Yunus would lead Bangladesh toward stronger economic growth. However, critics say his apparent detachment contributed to instability. During his tenure, he reportedly did not engage with top business leaders or entrepreneurs, nor did he provide assurances to encourage investment or business expansion. Consequently, investor confidence declined significantly.

Former National Board of Revenue (NBR) chairman Badiur Rahman said, “Dr. Yunus’s government was hardly a government at all. It was the most ineffective government in Bangladesh’s history… It has set the nation back by decades.” He further alleged that Yunus prioritized money and power and that many of his appointees lacked the expertise required to run a government effectively.

Senior banker and economic analyst Mamun Rashid also criticized the administration, saying, “The nation has been deceived… Businesses had no clear direction or support.”

During the 18-month tenure, critics claim businesses faced neglect, legal harassment, account freezes, factory closures, and mass layoffs. The stock market reportedly hit a low point, while high inflation severely affected everyday life. Defaulted loans surged by 151 percent, and investment stagnation worsened due to high interest rates. Both domestic and foreign investment proposals dropped by 58 percent, reaching a decade low.

How the Economy Became Vulnerable

Data shows a sharp rise in non-performing loans. In June 2024, defaulted loans stood at around Tk 2.11 lakh crore (about 11 percent of total loans). By June 2025, this figure had risen to Tk 5.30 lakh crore—an increase of Tk 3.19 lakh crore in just one year.

By December 2025, Bangladesh’s total external debt reached $113.51 billion, the highest in its history. Within just three months (October–December 2025), external debt increased by $1.30 billion. Compared to $103.41 billion at the end of the previous government’s tenure, debt rose by nearly $10 billion within 18 months.

Interest rates also increased significantly. From around 8 percent in early 2024, policy rates climbed to 10 percent by 2026, with lending rates reaching 14–16 percent. This raised borrowing costs, discouraging new investments and business expansion. At least 327 factories reportedly shut down, leaving over 150,000 workers unemployed.

High inflation eroded purchasing power, forcing households to spend most of their income on essential goods such as rice, lentils, and oil. Consumer spending on non-essential items declined sharply, affecting retail and wholesale trade. At the same time, dollar shortages disrupted imports of fuel and LNG, leading to energy shortages in industrial sectors.

Law and order concerns also worsened, with reports of mob violence and labor unrest in industrial areas. International buyers reportedly shifted orders to countries like India, Vietnam, and Cambodia due to instability and delays in shipments. Business leaders claim that they received little support from the government during this period.

Controversial Foreign Agreements

In February 2026, Bangladesh signed a “reciprocal trade agreement” with the United States. Under this agreement, Bangladesh reportedly agreed to purchase around $21.5 billion worth of US goods—including Boeing aircraft, LNG, wheat, and cotton—in exchange for tariff benefits on garment exports.

However, critics argue that the agreement is uneven. Bangladeshi exports to the US now face a 19 percent tariff, up from an earlier average of 15.7 percent. Meanwhile, Bangladesh has committed to removing tariffs on around 4,400 US products, raising concerns about potential revenue losses.

Additionally, a 15-year LNG agreement with Excelerate Energy has drawn criticism for allegedly setting prices higher than the global spot market. Some clauses in these agreements are also feared to limit Bangladesh’s strategic flexibility in engaging with countries like China or Russia.