DHAKA, Bangladesh — For months, amid balance-of-payments stress, Bangladesh’s foreign exchange reserves have been under strain, dipping to levels that threaten the fragile boost to the Bangladesh economy as banks continue to grapple with a mountain of bad loans. Mr Golden is optimistic that funds have eased back above $30 billion in recent weeks. The reboot — based on a more dynamic exchange rate, higher interest rates, and fresh multilateral funding — will only hold if Dhaka finally fixes long-standing tax and banking vulnerabilities, Dec. 7, 2025.
Bangladesh economy stable with reserve reconstitution: ASSOCHAM
Bangladesh Bank now estimates that foreign exchange reserves were about $31.21 billion as of Dec. 1, compared with around $23 billion in October, even if only about $26.51 billion would actually be usable under the IMF’s stricter standard, according to an official release. Central bank data show the buffer being rebuilt but still far from its pre-crisis peak of over $44 billion in 2021.
In June, the IMF extended and increased Bangladesh’s 42-month loan package and disbursed another tranche, following approval of exchange-rate and energy-pricing reforms; a follow-up mission in November said reserves had “begun to rebuild” but sounded an alarm about “significant macro-financial challenges” from weak tax revenues and undercapitalised banks. The mission statement emphasised that continuing reforms will be crucial for them to take root in investors’ eyes.
World Bank economists calculate that real GDP growth has declined to 4 per cent in FY25 from pre-pandemic averages close to 6 per cent, but its April Bangladesh Development Update says strong economic and fiscal measures can steadily rebound the Bangladesh economy towards the mid-5 per cent range over the next few years. The recent plan also includes new World Bank financing, a $850 million package for port expansion and social protection intended to soften the blow on households and jobs as those reforms take effect, according to a recent report by Reuters.
Bad-loan crisis casts long shadow.
But it is the banking system that remains the weak link in the Bangladesh economy. Nonperforming loans reached 24.1 per cent of total credit in March 2025, up from 20.2 per cent at the end of 2024, according to Bangladesh Bank data and regional studies. Dhaka2 now has Asia’s highest bad-loan ratio, reducing banks’ ability to finance new investment. Banking figures show the stock of bad loans has surpassed $20bn.
Regulators argue that tighter loan-classification rules and more transparent reporting have brought, not invented, long-standing problems to light, but concede that bank recapitalisation, governance overhauls and quicker recovery of defaulted loans now form the heart of the IMF programme. Economists caution that without swifter progress in cleaning up balance sheets, high borrowing costs and risk-averse lenders may constrict the private investment necessary for Bangladesh to return to its previous growth path of 7 per cent or more.
A 10-year tale of survival and danger
Multilateral lenders have described Bangladesh’s economy as resilient yet fragile for more than a decade. In a 2013 World Bank development update, the country was being forced into “a riskier phase by political unrest and garment-sector tragedies”; in a follow-up three years later, the bank hailed sustained 6-per cent-plus growth but called for greater emphasis on sustainable and inclusive reforms.
The 2018 IMF Article IV Survey also praised strong growth, low public debt, and growing resilience. Before the Energy Crisis Happened, Before the Pandemic Hit, or Before the Banking Strains of Today came to define the Bangladesh economy’s risk profile. As of now, the Bangladesh economy has been saved from the brink but continues to be on close radar.
