Published :
Updated :
For all latest news, follow The Financial Express Google News channel.
Very early this month (August), millions of people celebrated across the country the anniversary of the fall of Sheikh Hasina who ran the country for close to 16 years. Under Hasina's rule Bangladesh essentially turned into a one-party rule, or more precisely a one-family rule resembling a criminal syndicate-run system.
In fact, she ruled the country for almost 21 years of the past 30years. She ran a brutal repressive regime marked by unlawful killings, enforced disappearances, and brutal repression of dissent. Her regime for all practical purposes was run like a criminal syndicate using the political banner called the Bangladesh Awami League.
Despite the claims of robust GDP growth, the economy under her rule was marked by rising living costs, stagnant labour markets, violent crackdown on dissent and widespread corruption in which she along with all her family members were deeply involved.
The Hasina-led government was not only involved in rampant corruption, but also in economic and administrative mismanagement which left the country's banking system on its knees. During her tenure opportunities for young people were continually dwindling creating a sense of hopelessness. It is estimated that about 18 million young people, including university graduates, are currently without work.
According to the Bangladesh Bureau of Statistics (BBS) approximately 40 per cent of youth in Bangladesh do not have jobs and are not receiving education or job training. An estimated 400,000 university graduates are competing for the 3000 civil service jobs that become available each year.
The Bangladesh Labour Force (BLF) Survey 2022 finds that close to 60 million people, accounting for 84.9 per cent of total working population in Bangladesh are employed in the informal sector. It is also noteworthy that the report also points out that out of the total employed women in Bangladesh, 96.6 per cent are in informal employment. Informal sectors in all countries including Bangladesh are typically characterised by a high incidence of poverty and severe decent workplace deficits.
The Hasina regime accumulated US$44.38 billion in foreign debt as widespread corruption plagued banking, infrastructure, energy, and power sectors. Among the most corrupt deals was a 25-year power agreement with India's well-known business enterprise Adani Power, awarded without competitive bidding and denying Bangladesh US$28.6 million in tax benefits. Investigations are also now underway into corruption allegations involving bribery and other financial irregularities involving Hasina and her niece former UK Anti-Corruption minister Tulip Siddique.
Business tycoons having ties to the ousted Prime Minister Hasina with the help of the country's military intelligence agency, the DGFI siphoned off US$17 billion from the banking sector during her 15 year-rule. This systematic transfer of funds out of the country was done through using methods such as issuing loans to the new shareholders and inflated import invoices.
Leaders like Hasina cannot afford to lose power. Because once out of power, leaders like her expect the same kind of repressive retribution that they extended to the opposition. So, losing power is not an option for them. Dictatorship is like sinking sand from which there is no exit strategy. Even about 45 minutes before her departure she wanted the army to act with force against the gathering crowd.
But the army read the atmosphere and decided that it was time for her to go. Several hours after, the Chief of Army Staff announced Hasina's resignation. Instead of pursuing an outright power takeover, military leaders endorsed technocratic transition under the leadership internationally respected Professor Muhammad Yunus.
While Yunus' government has initiated an ambitious reform agenda which is aligned with public expectations, the fundamental dynamics beneath the surface remain unchanged. The Awami League (AL) is out of office but not out of the system.
The opposition is fragmented and weak, and the main opposition party, the Bangladesh Nationalist Party (BNP), is the other side of the same coin with the AL on one side. In fact, challenges to restoring constitutional order are significant as the country has long been characterised by dynastic power politics and cronyism. Significant challenges still remain in strengthening democratic institutions, including the judiciary and to address long standing issues of governance and cronyism.
While the military is publicly endorsing the political transition, it has the capacity to halt the whole reform process. It is to be noted that in the country's 54 years history, Bangladesh experienced 29 actual or attempted coups.
Yunus, despite his global reputation, lacks a political base, persuasive or coercive power to implement any real changes. Critics also point out the existence of widespread corruption within key institutions including the judiciary and law enforcement undermining the rule of law.
The current constitution has enabled various authoritarian and corrupt regimes to capture the state power including the murderous repressive Hasina regime and her father Sheikh Mujibur Rahman turning the country into a one party rule country with devastating consequences, especially in terms of human, democratic and civil rights. In fact, Hasina has destroyed all state institutions as reflected in the nearly collapsed police and other law enforcing forces, judiciary and public administration during the mass uprising in July-August 2024.Therefore, there is an urgent need to frame a new constitution.
So far, over the last one year no clear consensus has emerged on the adoption of a new constitution and debates continue. The system within which Yunus operates is fundamentally opposed to any meaningful change and designed to preserve the underlying power structure. Also, no consensus has been reached on the July declaration.
Political crisis also worsens economic and public finance risks. But under the Yunus government the economy has largely been stabilised despite massive challenges facing the country. Buttressing economic stability requires implementing long overdue economic reforms and improving governance.
Bangladesh met its loan obligations, kept food prices largely stable and increased foreign exchange reserves from US$20.39 billion in July 2024 to over US$31 billion at the end of August 2025 which has helped to stabilise BDT/USD exchange rate. Contrary to fear, the banking sector has survived, and exports are steady.
Despite successes, the economy remains vulnerable due to its heavy reliance on garment exports accounting for about 85 per cent of total exports. The country is also facing rising inflation and unemployment and the pressure on foreign exchange reserves continue. According to a recent survey 27.93 per cent of population now live below the poverty line (FE August 26). Political instability is also seen as exacerbating existing economic weaknesses, particularly within the banking sector affecting investor confidence. During the 2024-25 FY imports of capital goods declined by 10 per cent suggesting slowdown in investment (FE, August 24).
Bangladesh is set to graduate to become a developing country in November 2026 transiting from the least developed country status. The graduation was due in 2024 but extended to 2026. Now the President of the International Chamber of Commerce, Bangladesh demanded a further extension of time for the graduation for another 5 to 6 years because businesses remain unprepared for the transition.
Constitutions are foundations to democracy, the rule of law, human rights and good governance. Therefore, the new constitution must provide for institutions that draw their authority from the people directly and are accountable to the people, not only through elections, but through processes that involve transparency and interaction. The failure of democratic transition process in Bangladesh will open the way to managed restoration of authoritarian control. Authoritarian forces are already positioning themselves for a comeback.
caption
A new political party held a rally at Central Shaheed Minar in Dhaka —Agency Photo