Bangladesh: Hope and Hurdles One Year Post-Revolution

 A year after a historic student-led uprising toppled the autocratic rule of Sheikh Hasina, Bangladesh finds itself navigating a complex landscape of cautious optimism and persistent challenges. While Nobel laureate Dr. Muhammad Yunus' interim government has brought a remarkable degree of economic and political stability, recent developments indicate a fragile equilibrium, demanding careful handling in the turbulent months ahead.

When the dust settled on the 36-day protest that culminated in Sheikh Hasina’s ouster in July 2024, Bangladesh's economy was in free fall. Years of unchecked corruption, mismanagement, and the brutal repression of the previous regime had brought financial institutions to their knees, with a banking system teetering on collapse and dwindling foreign reserves. The immediate aftermath was marked by a breakdown of law and order, as loyalists of the overthrown government vanished.

However, a year on, Bangladesh has demonstrated an impressive resilience under the stewardship of Dr. Yunus, who assumed the de facto leadership of the interim government on August 8, 2024, at the urging of student activists. His transitional administration, composed of technocrats, civil society leaders, and student representatives, has prioritized restoring order, laying the groundwork for free and fair elections, implementing democratic reforms, and ensuring accountability for past atrocities.

Economic Resilience Tested by New Challenges

On the economic front, significant progress has been made. The central bank, under new leadership, has implemented painful but essential reforms, stabilizing the banking sector through monetary policy adjustments and a comprehensive restructuring that included replacing the boards of 11 troubled banks. This has contributed to a notable rebound in foreign reserves, which climbed from a perilous US$20.39 billion in July 2024 to over $31.77 billion by the end of June 2025 (gross reserves; approximately $26.74 billion as per IMF's BPM6 methodology). This recovery is particularly striking given the simultaneous settlement of outstanding import arrears and the servicing of a substantial foreign debt inherited from the previous government. Rising export earnings and increased remittances from Bangladeshi migrant workers abroad have been key drivers of this improvement.

The Yunus government also boasts successes in domestic macroeconomic management. Inflation, which stood at a crippling 12% in July 2024, had seen some reduction. However, recent projections indicate a challenging outlook, with inflation forecast to accelerate from 9.7% in FY2024 to 10.2% in FY2025, driven by stifled competition in wholesale markets, supply chain constraints, and the depreciation of the Taka. While the GDP growth rate reached 3.9% in 2024-25, the Asian Development Bank forecasts a similar 3.9% for FY2025 before a projected rebound to 5.1% in FY2026. This slower growth for the current fiscal year reflects weaker domestic demand, political transition risks, natural disasters, and industrial unrest.

Crucially, the interim government has also curbed the influence of powerful, politically connected business cartels that previously manipulated prices of essential goods. Legal action against corrupt business leaders and enhanced oversight by food inspectors have led to price stability, even during periods like Ramadan and Eid al-Adha, a stark contrast to previous years.

Diplomatic Successes and Mounting External Pressures

In foreign policy, the Yunus government has scored significant wins. A landmark agreement with Myanmar in March 2025, following a visit by U.N. Secretary-General Antonio Guterres, secured the repatriation of some 180,000 Rohingya refugees. Bangladesh has also strengthened ties with China, its primary trading partner, unburdened by the previous regime's India-centric foreign policy. During Dr. Yunus' official visit to Beijing in March 2025, Bangladesh secured a pledge for a $2.1 billion loan.

Further bolstering its financial footing, Dhaka has secured billions in critical funds from various international creditors in 2025, including the IMF, the Asian Development Bank, the Japanese government, and an $850 million loan from the World Bank for job training, social protections, and trade capacity. A recent summit in April drew global fund managers and multinational corporations, securing investment pledges of $260 million.

However, the path forward is fraught with challenges, particularly concerning Bangladesh’s powerful neighbor, India. Relations have reportedly hit a new low. Despite a "high-stakes conversation" between Indian Prime Minister Narendra Modi and Dr. Yunus at the BIMSTEC Summit 2025 in Bangkok, India has maintained an increasingly aggressive stance. This includes cancelling airport transit facilities for Bangladeshi exporters, banning imports through land borders, and suspending visa issuance. Concerns are mounting over India's intensified deportations of alleged "illegal Bangladeshi migrants," many reportedly Muslim Indian citizens, and its unease over Bangladesh's decision to revive Lalmonirhat airport due to its strategic proximity to the Siliguri Corridor. Bangladesh also recently abruptly cancelled a $21 million contract for an advanced ocean-going tug from India.

Domestically, the law-and-order situation remains fragile. Recent clashes between security forces and supporters of ousted Prime Minister Sheikh Hasina in mid-July 2025, resulting in at least four deaths in Gopalganj, underscore the lingering instability. A new curfew was imposed in the district. Meanwhile, political parties, including the Bangladesh Nationalist Party, are resisting the interim government's reform agenda, demanding immediate elections.

A Shifting Political Landscape

In a significant political development, Bangladesh's largest Islamist party, Jamaat-e-Islami, held a massive rally in Dhaka on July 19, 2025, their first at that specific site since 1971. The party, whose Supreme Court registration was restored last month, presented a seven-point demand for fair elections and accountability, signaling a potential new force in Bangladeshi politics. They plan to contest 300 parliamentary seats and are seeking alliances, including with the National Citizen Party (NCP), a new political party formed by the student leaders of last year's uprising. Both Jamaat-e-Islami and the NCP are actively promoting anti-India campaigns. This has led to criticisms from the now-banned Awami League, accusing the Yunus government of a "stark betrayal." Sheikh Hasina, meanwhile, remains in exile in India, facing charges of crimes against humanity, with Bangladesh's extradition requests to India remaining unanswered.

Battling Corruption and Seeking Justice

A major undertaking for the Yunus government is the recovery of an estimated $234 billion in assets laundered by bureaucrats, politicians, and business tycoons associated with the fallen regime – a sum exceeding the country’s total foreign debt. While securing meaningful international cooperation remains a challenge, Bangladesh is actively pursuing these assets. The UK, in particular, is providing full support, with its National Crime Agency recently ordering the freezing of £170 million in properties belonging to former land minister Saifuzzaman Chowdhury Javed and £90 million targeting Beximco Group officials. International litigation firms are also showing keen interest, offering to invest $50 million to $100 million to finance asset recovery, expecting a share of 15-20% of the recovered funds.

The Yunus government has set a roadmap for general elections no later than April 2026, recognizing that sustainable gains require a functioning democratic and legal system. Its ultimate success hinges on achieving three interconnected objectives: conducting free, fair, and inclusive elections followed by a peaceful transfer of power; implementing recommendations from various reform commissions to strengthen economic and political foundations; and delivering justice for victims of the previous government’s persecution.

A year into its tenure, the Yunus government has demonstrated a remarkable ability to weather difficult circumstances. However, the path ahead remains precarious, with both domestic and international factors, some beyond its control, poised to determine the ultimate fate of Bangladesh's nascent democratic and economic recovery.