When a caretaker government was sworn in after the ouster of the Awami League regime just 100 days ago, there was an air of expectation that the administration led by Professor Muhammad Yunus would take steps to save a scam-ridden financial sector and save an ailing sick. economy.

To achieve this, the caretaker government has formed numerous task forces and panels to take stock of existing policies and measures and analyze their effects on banking, taxation, the capital market and the economy as a whole.

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

The central bank also decided not to support troubled banks by printing money and instead facilitated liquidity support in the interbank money market, allowing wealthy lenders to lend to those in trouble. Some of the initiatives, such as stopping the practice of borrowing US dollars from foreign 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 remittance recipients to use formal channels have also paid dividends.

Remittance flows rose 80 percent year-on-year in September to $2.4 billion, followed by a 21 percent year-on-year increase in October to $2.39 billion.

An increase in export earnings relative to import expenditure was also observed, allowing the country to reduce pressure on its external accounts.

At the same time, various ailments continue to persist.

Inflation, a major concern for the general population for over two years, remains stubbornly high and hit 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 has continued to raise the policy rate to curb rising prices, doing so three times since taking over in mid-August.

Most recently, late October marked the 11th time since May 2022 that the policy rate, which makes money more expensive for banks, has been raised.

This increase in the monetary policy rate, from just 5% in May 2022 to 10% by October 22 this year, has led companies to complain about the increase in interest rates on loans.

Furthermore, although the vicious circle of extortion seemed to have been broken following the political change, such unscrupulous practices have returned, with “higher rates” being applied by other parties.

This has worsened the business climate and contributed to higher production costs.

The caretaker government inherited an economic outlook darkened by double-digit inflation, massive capital flight, dwindling reserves and a severely strained banking system — a legacy of the Sheikh Hasina regime.

Thus, working groups were formed to address the key issues. For example, Bangladesh Bank and Bangladesh Securities and Exchange Commission (BSEC) have taken steps to prevent any further damage to their respective sectors by forming several task forces and investigative committees.

Chief Counsel Yunus formed a committee to prepare a white paper on the state of Bangladesh’s economy, while the planning ministry formed a task force to develop strategies to boost the economy and 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 reports within three months, meaning some are due by the end of this month, while others will take a little longer.

However, no significant steps have been taken, apart from changes in the leadership of the Insurance Regulatory and Development Authority, 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 significant capital was being siphoned off abroad, foreign reserves were rapidly depleting and the local currency was depreciating significantly.

“He was able to stop all of this,” he added, crediting the interim government’s success in tackling the crisis to the US dollar.

“However, inflation is still high and the law and order situation is not up to scratch,” he said, expressing hope that rising prices could be brought under control in January or February.

Regarding the ongoing reform activities, Islam said: “I cannot comment on this matter before it completes its activities. After reports are submitted, this government will start the reforms. Some reforms may be left to be implemented by the next elected government,” he added. .

People still face serious problems getting their deposits back from about a dozen distressed banks whose poor conditions are known, he said.

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

Under the new governor, the central bank continued with a contractionary monetary policy to reduce inflation. However, inflationary pressures remain stubborn, especially after the production of several crops was hampered by floods in several districts within weeks of the political change.

By way of credibility, he indicated that the central bank is not lending to the government by printing money, while at the same time claiming to be implementing a contractionary monetary policy to tame inflation as it has done in the past.

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

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

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

“For proper reform, policies must be informed and inclusive,” Razzaque said, adding that all reform-related committees 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 working groups, the government will begin significant 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 pinch. As a result of the political turmoil in July and August, most of the listed firms saw an erosion of profits in the first quarter of the current fiscal year.

Moreover, manipulators, perhaps wary of impending reforms, are hedging their bets.

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

The regulator also appears to have moved away from the tradition of slapping fines by imposing an unprecedented penalty of Tk 428.52 million on several investors for manipulating the share prices of Beximco Ltd in October.

In addition, he took steps to avoid any shortfall in consolidated client accounts, which had previously created room for embezzlement, and took a tough stance against directors of several listed firms that failed to deliver dividends properly.

Despite all these moves, the DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), fell to a four-year low last month amid a crisis of confidence.

In response, the caretaker government quickly devised some moves to boost investor confidence.

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

After that, the stock index rebounded.

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

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

He also said there should be bureaucratic accountability, making them responsible for spending so much time in forwarding files.

“The government has started a marathon and a 100m sprint in parallel. It has come after 10-12 years of very poor rule in terms of democratic and economic governance,” said M Masrur Reaz, president and CEO of Policy Exchange from Bangladesh. .

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

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

“100 days is long enough to launch plans to restore normality and build confidence,” he said, adding that there should be a plan on reforms to be implemented in the trade and investment sectors.