The interim government of Bangladesh, led by Nobel laureate Muhammad Yunus since August 8, 2024, faces a complex array of challenges following the ouster of former Prime Minister Sheikh Hasina. These challenges span political, economic, social, and geopolitical domains, each requiring careful navigation to stabilize the country and pave the way for a democratic transition. Below is a detailed exploration of these challenges, drawing on available information and critical analysis.
1. Political Instability and Legitimacy Concerns
The interim government, established after a student-led uprising forced Sheikh Hasina to flee on August 5, 2024, operates in a politically volatile environment. Its primary mandate is to restore stability and prepare for free and fair elections, but several issues complicate this task:
Lack of Constitutional Clarity: The interim government is not explicitly provided for in Bangladesh’s constitution, leading to debates about its legitimacy and duration. While the Supreme Court invoked Article 106 to endorse its formation, the absence of a clear legal framework raises questions about its authority, especially as it seeks to implement sweeping reforms. Some analysts argue that a one- to two-year term may be necessary to enact these changes, but this could strain public patience and fuel accusations of prolonging power.
Pressure for Early Elections: Political parties, particularly the Bangladesh Nationalist Party (BNP), are pushing for elections within a short timeframe, while others, including student leaders, advocate for deep institutional reforms before polls. Balancing these competing demands is challenging, as premature elections could reinforce old power structures, while delays risk perceptions of an unelected regime overstaying its mandate. The interim government’s announcement that elections may occur by late 2025 or mid-2026 has sparked concerns about procrastination, with some accusing it of buying time for student leaders to form a political party.
Awami League Resistance: The ousted Awami League (AL), despite being in disarray, remains a potent force. Loyalists within government institutions and society may attempt to destabilize the interim government through sporadic protests or sectarian discord. The AL’s historical dominance and Hasina’s refuge in India, coupled with her party’s bipartisan support there, add complexity, as external backing could embolden AL efforts to undermine the interim administration.
Military Influence: The interim government was formed with military backing, raising concerns about its independence. Posts on X suggest unease about the military’s role, with some describing the regime as a “military-installed” one. The army’s refusal to repress protests led to Hasina’s ouster, but its ongoing involvement could lead to perceptions of a power grab, especially if elections are delayed.
2. Economic Challenges
Bangladesh’s economy, already strained before the political upheaval, poses significant hurdles for the interim government:
High Inflation and Slowing Growth: Inflation reached a decade-high of 9.94% in January 2025, down slightly from 10.89% in December 2024, but it remains a major concern, eroding purchasing power. GDP growth slowed to 3.91% in the final quarter of FY 2023-24, far below the 7.5% target, exacerbated by political unrest and disruptions in the garment industry, a key economic driver. The interim government has sought additional IMF funding to stabilize the economy, but public expectations for quick relief are high.
Dwindling Foreign Reserves: Foreign exchange reserves are critically low due to high import bills and weak remittance inflows, straining the central bank’s ability to manage the exchange rate. This impacts the availability and prices of essential goods, further fueling public discontent.
Garment Industry Disruptions: The garment sector, which accounts for a significant portion of exports, faced closures during the protests, leading to unemployment and economic instability. The interim government must diversify the economy and attract foreign investment to reduce reliance on this sector, but political uncertainty deters investors.
Banking Sector Crisis: The banking sector is plagued by liquidity issues and mismanagement. The interim government’s decision to raise interest rates to 9–10% aims to curb inflation but risks stifling business activity. Reforming the sector while maintaining economic activity is a delicate balance.
Trade and Investment Reforms: With Bangladesh set to graduate from Least Developed Country status in November 2026, the government must liberalize trade and investment policies to attract foreign direct investment (FDI) and diversify exports. However, renegotiating deals made by the Hasina government, such as those with India’s Adani Group or Russia’s Rooppur Nuclear Power Plant, could deter investors and strain international relations.
3. Law and Order Restoration
Restoring law and order is a top priority, as the country experienced significant violence during and after the protests:
Post-Protest Violence: The uprising led to over 700 deaths, with looting and mob justice reported in the aftermath. Incidents of vandalism and assaults at universities like Dhaka and Jahangirnagar threaten to undermine the student movement’s legitimacy. The interim government must curb mob justice without alienating its student base.
Minority Rights Concerns: Violence against minorities, particularly Hindus, has raised international alarm. Indian leaders, including Prime Minister Narendra Modi, have called for the protection of minorities, while posts on X highlight the absence of Hindu and tribal representation in the constitutional reform commission. Failure to address these concerns could escalate communal tensions and strain ties with India.
Security Sector Reforms: The police and security forces, heavily politicized under Hasina, require overhaul to restore public trust. The death of a BNP youth activist in custody has fueled fears of recurring extrajudicial practices, undermining the government’s reformist credentials.
4. Institutional Reforms and Governance
The interim government aims to reform key institutions, but its inexperience and internal divisions pose risks:
Decision-Making Inconsistencies: The government has backtracked on several decisions, such as appointments of officials and reform commission heads, due to public and social media pressure. This reflects inexperience and a lack of cohesive strategy, eroding public confidence. For example, the replacement of Shahdeen Malik with Ali Riaz as head of the Constitutional Reform Commission and the cancellation of deputy commissioner appointments highlight governance missteps.
Reform Overload: The government has formed at least 15 reform commissions to address the electoral system, judiciary, police, and constitution. However, managing these reforms within a limited timeframe is daunting, especially given the lack of governmental experience among cabinet members, many of whom are activists and academics.
Corruption Investigations: The interim government is investigating corruption allegations against Hasina’s family and major industrial groups. However, a lack of transparency in these probes risks perceptions of political vendettas, especially if targeted against AL supporters.
5. Geopolitical and Foreign Policy Challenges
Navigating Bangladesh’s foreign relations is critical, given its strategic position and economic dependencies:
Redefining Ties with India: Hasina’s strong alliance with India facilitated trade and infrastructure development but alienated some Bangladeshis who favor a more balanced foreign policy. The interim government must maintain cooperation with India while addressing domestic sentiments. Hasina’s presence in India and Bangladesh’s extradition request add tension, as does India’s concern over minority rights.
Balancing China and the West: China, a major investor in Bangladesh, seeks assurances for its projects, while the U.S., critical of Hasina’s regime, supports the interim government but expects democratic reforms. Balancing these powers while addressing domestic priorities is complex, especially as China engages with opposition parties like Jamaat-e-Islami.
Regional Dynamics: The interim government’s push to revive the South Asian Association for Regional Cooperation (SAARC) signals an ambition to enhance regional influence, but domestic instability and strained India relations could hinder this goal.
6. Public Expectations and Social Cohesion
The interim government faces immense pressure to meet public expectations while maintaining social cohesion:
High Public Expectations: Described as a “second liberation,” the uprising has created sky-high expectations for systemic change. Failure to deliver tangible improvements in governance, economic conditions, and human rights could lead to public disillusionment and renewed protests.
Student and Youth Influence: The inclusion of student leaders in the cabinet, while symbolic, raises questions about impartiality, as some plan to form a political party. Their influence must be balanced with the demands of established political parties to avoid perceptions of bias.
Rebuilding Social Contract: Years of autocratic rule under Hasina eroded trust between the state and citizens. The interim government must establish a new social contract through transparent governance and inclusive policies, but this requires time and resources it may lack.
7. Human Rights and Accountability
Addressing human rights violations from Hasina’s era is a priority, but it presents dilemmas:
Investigating Past Abuses: The UN Human Rights Office is probing abuses from July 1 to August 15, 2024, with options including the domestic International Crimes Tribunal or a hybrid mechanism. Deciding how to pursue justice without fueling revenge-driven narratives is challenging, as public demand for accountability is strong.
Balancing Justice and Stability: While many Bangladeshis seek retribution for AL abuses, Yunus aims to avoid a cycle of vengeance. Politically motivated arrests or reprisals could replicate the very authoritarianism the government seeks to dismantle.
Conclusion
The interim government under Muhammad Yunus faces a Herculean task in stabilizing Bangladesh while implementing reforms to prevent a return to autocracy. Political legitimacy, economic recovery, law and order, institutional overhaul, and geopolitical navigation are intertwined challenges that require strategic planning and broad stakeholder engagement. The government’s ability to balance immediate priorities, such as restoring public trust and economic stability, with long-term goals like democratic elections and institutional reform will determine its success. International support, particularly from the IMF, U.S., and regional neighbors, will be crucial, but domestic pressures from students, political parties, and minority communities demand equal attention. The coming months will test the interim government’s resilience and its capacity to deliver on the promise of a “new Bangladesh.”
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