Former Nobel Peace Prize winner Professor Muhammad Yunus has taken charge of the interim government, following the fall of Sheikh Hasina’s government, and her subsequent flight to India. The BNP leadership has called for Hasina to be extradited to Bangladesh to face trial. Flash floods have devastated various low-lying areas of the country, leaving millions stranded, with many losing their homes and livelihoods. Inward remittances hit a 10-month low, while export data was not released for a second straight month.
Resignation of Sheikh Hasina and Interim Government Formation. Long-serving Prime Minister Sheikh Hasina resigned on 5th August after weeks of student protests, with around 300 people killed, thousands injured, and more than 10,000 arrested. Nobel Laureate Professor Muhammad Yunus has taken charge of Bangladesh’s interim government, having been picked by the President, Shahabuddin Ahmed. Yunus, who was on bail after being sentenced to six months in jail in a case that was widely seen as politically motivated, was acquitted before taking charge. Key members of the initial interim government include Dr. Salehuddin Ahmed (former governor of Bangladesh Bank), Dr. Asif Nazrul (professor of Law at Dhaka University), and Touhid Hossain (former foreign secretary of Bangladesh), as well as Nahid Islam and Asif Mahmud, two of the key leaders of the student protests that ultimately led to the ouster of former Prime Minister Sheikh Hasina. Four more advisors were later added to the interim government, including noted economist Wahiduddin Mahmud. Asif Mahmud leads the Sports Ministry and Nahid Islam is overseeing the ICT ministry.
BNP Comments on Sheikh Hasina and Interim Government. “BNP Secretary General Mirza Fakhrul Islam Alamgir (has) asked India to extradite ousted prime minister Sheikh Hasina to Bangladesh and let her face trial here.” He said that India was not keeping its commitment to democracy by letting her stay in India and said that Hasina is taking advantage of the situation by using India as a base to make plans to prevent the advancements that Bangladesh is making as a result of the revolution that is taking place. He said that around USD100 billion had been taken out of the country during her rule, and that all the institutions of the country had been destroyed during her leadership. Regarding the interim government, he said that their main responsibility was to ensure a proper democratic election and commended the work that they had done so far.
Bangladesh Floods. As many as three million people have been affected by some of the worst floods seen in Bangladesh in three decades. The flash floods have affected mainly low-lying areas in the southern and eastern districts of the country, such as Feni, where up to 350,000 people are stranded without food and water. Aside from disaster at a human level, the economic impact has also been understandably considerable with countless homes, livestock, and farmlands, all washed away by the floods. Destruction of telecommunications and transport networks have also made recovery efforts more difficult. In slightly more positive news, the flood levels have dropped slightly as of 25th August, and electricity has also been partially restored in Feni, which has been among the districts worst affected by the floods. However, the mobile networks and internet connections are still patchy. Bangladesh’s poor transport and communications infrastructure has meant that carrying supplies to the rural areas is proving to be difficult, with sufficient water and dry rations yet to reach many of the most remote areas.
Banking. Following the change in government earlier in the month, hundreds of central bank officials stormed the Bangladesh Bank premises demanding the resignation of various top officials, including the governor himself, and others who they believe were close to former Prime Minister Sheikh Hasina. Deputy Governor Kazi Sayedur Rahman resigned in response to the protests, while various contractual officers are demanding permanent positions, in what has become quite a chaotic situation. In other banking news, the central bank has decided to increase interest rates from 8.5% to 9% in an effort to reduce rapidly increasing inflation. This comes after inflation hit double digits in July (11.66% at its peak) as a result of the political unrest and resultant hit on exports. Bangladesh Bank’s new governor, Ahsan H Mansur, also said that he would raise interest rates to 10% or more in the coming months to continue combatting inflation, whilst also seeking an additional funds from the international development community, including USD 3 billion from the International Monetary Fund, and USD 1.5 billion from the World Bank, among others. Significant among other new banking rules, banks will now be allowed to transfer up to 30% of their regulatory capital to offshore banking accounts, putting an end to the compete ban on this earlier this year. A senior official at Bangladesh Bank has mentioned that this was done with an eye towards the fact that many banks in Bangladesh are in arrears with international entities, and this move was a way to stop prolonged overdue payments from Bangladesh and to help settle outstanding payments (which cannot be done via domestic units and instead must be paid via offshore accounts).
Exports. No export data has been released from either the Bangladesh Bank or the Export Processing Bureau for the second month in a row. This is most likely a result of the huge discrepancy that was found in the export data (an inflated overall figure of around USD 14 billion for the first ten months of the last fiscal year between July 2023 – April 2024: covered in last month’s report)
Remittances. Inward remittances in July 2024 were USD 1.91 billion, a 3% year-on-year drop from July 2024’s amount of USD 1.97 billion. This month’s figure was the lowest for ten months. Remittance inflows dropped in July mainly due to the political unrest which prevailed in the country in July, and the resultant bank closures and internet blackout. There have been videos circulating of Bangladeshi workers in the Middle East being urged not to send remittances through official channels as a support towards the quota reforms unrest, as well as other videos of a state minister urging expatriates to use legal channels.
Foreign Direct Investment. “Chinese company Meigo is going to invest USD 6.7 million to set up a collectable items and toys manufacturing factory at Uttara Export Processing Zone (UEPZ).” The company will produce 700,000 items and toys of different kinds and create employment for more than 1,000 Bangladeshis. Officials at the Bangladesh Export Processing Zone Authority (BEPZA) said that they hoped this was a step towards reducing the dependency on garments in Bangladesh and to diversify the product basket. Meanwhile, Chinese Ambassador to Bangladesh, Yao Wen, has assured that Chinese projects in Bangladesh will continue as planned. Finance advisor to the interim government, Dr. Salehuddin Ahmed, Finance advisor to the interim government, is also exploring proposals to lower interest rates on Chinese loans and extend the repayments period by ten years as a way to ease the repayment burden on Bangladesh, mentioning that the burden was created in part by the previous government having taken on too many projects.
Human Rights Violations. Information advisor Nahid Islam is seeking the assistance of the United Nations to look into the human rights violations in the recent student-led protests that rocked the country. He mentioned that the interim government is focusing on the areas of reforming the state structure, rehabilitating the families of those injured or killed in the protests, and ensuring proper justice against the perpetrators of the killings. With the Bangladesh justice system being painfully slow at the best of times, it will be challenging for the interim government to move quickly, and to bring those guilty to book.
A spate of Awami League leaders and those perceived to be close to them have been arrested through the month. Perhaps among the most notable of these have been the detentions of private industry affairs advisor to former PM Hasina, Salman F Rahman, and former law minister Anisul Haq, in a case filed with Dhaka’s New Market police station.
August 2024 will be an historic month for Bangladesh, as student-led protests led to the ouster of former Prime Minister Sheikh Hasina, who had led the country for the last 15 years, albeit with a controversial iron hand in the latter part of her rule. The pressure is now on the interim government to make much-needed economic, political and infrastructural reforms, the absence of which have led to severely weak institutions over the last decade or so. Under normal circumstances, the interim government’s main task is to ensure free and fair elections within 90 days, but with the general public giving this government a much broader mandate to clean up corruption, improve institutional strength, and control rising inflation, among other things, there is a feeling and a possibility that they will stay in power for longer to try and deal with some of these issues. If this does happen, the general consensus is that most people will not mind a longer stay (at least in the short-term) but whether BNP, who have been in opposition for 15 years and see this as their best chance to come back to power, will be as keen on the interim government staying on remains to be seen.
We will be carefully monitoring what happens in the next few weeks with the government’s leadership, and with BNP rhetoric, regards when the next elections will potentially be held. The devastating flash floods, which are ongoing, have added an extra layer of challenges for the government, and so they will have their hands very full in the coming weeks. We will also keep a weather eye on the proposed hike in interest rates prove to be successful in controlling inflation.