Skyrocketing inflation has left ordinary citizens struggling, with some liquidating savings bonds while others are selling off stock market investments at a loss.
This dire financial strain has persisted for years, worsening in recent months.
The late, beloved writer Humayun Ahmed once wrote, “Bad times do not last forever; if God wills, good days will return.”
Economists echo a similar sentiment.
While Bangladesh has seen progress over the past few decades, including GDP growth and rising per capita income, a stark wealth disparity remains.
The government has failed to regulate market prices effectively—an issue that has plagued successive administrations.
Inflation has remained high for the past two and a half years, exacerbating the cost-of-living crisis.
Though there are signs of marginal relief, with inflation easing slightly in February compared to January, the overall rate remains high.
According to the Bangladesh Bureau of Statistics, February’s general inflation rate stood at 9.32%, with food inflation at 9.24%.
To provide some respite to low- and fixed-income households, the government has slashed import duties on essentials such as rice and cooking oil.
However, instead of reducing prices, the benefits have been pocketed by middlemen, further exacerbating the crisis.
Despite ample imports ahead of Ramadan, prices have not stabilised.
Former NBR official Farid Uddin highlighted that past attempts to lower duties and taxes had failed to stabilise markets, only resulting in revenue losses for the government.
He stressed the need for stricter market monitoring and enforcement.
Traditionally, the middle class invests heavily in savings bonds due to their security and attractive returns.
However, recent data from Bangladesh Bank reveals a troubling trend—between October and December last year, citizens liquidated Tk25,695 crore worth of savings bonds.
Meanwhile, in the first half of the 2024–25 fiscal year, savings bond purchases declined by 27%.
Economists attribute this decline to several factors, primarily high inflation.
Moreover, bank deposit interest rates remain unattractive, often lower than inflation.
Many banks are also struggling to return customer deposits, further eroding confidence in financial institutions.
Former chief economist of Bangladesh Bank and ex-director general of BIDS, Mustafa K Mujeri, underscored the grim reality.
“People save when their income exceeds their expenses. Now, many have no earnings but rising costs, compelling them to dip into their savings.”
He added, “The middle class is the primary investor in savings bonds, but the prolonged inflationary pressure has squeezed them. Long-term financial stability is essential for such investments, but the middle class can no longer afford that security.”
When asked whether better days would come, Mujeri stressed that economic recovery depends on Bangladesh’s financial, social, and political stability.
“We are in a fragile state, with a battered economy and an interim government that has yet to achieve notable success. Law and order remain unstable, and this uncertainty deters both domestic and foreign investors. Without investment, job creation remains stagnant, and without jobs, incomes cannot rise. As things stand, people have no option but to liquidate their savings bonds to survive.”
Private sector credit growth has plummeted, with fresh investments at a standstill.
While banks have sufficient deposits, low interest rates deter savers. Previously, banks offered attractive returns, encouraging customers to deposit funds and rely on the interest to sustain their livelihoods.
Now, with diminished rates, people are looking elsewhere.
Additionally, prolonged volatility in the stock market has resulted in significant capital losses, particularly for those who had taken out loans to invest.
Dr Zahid Hussain, former lead economist at the World Bank’s Dhaka office, highlighted the gravity of the situation.
“When incomes decline, people are forced to withdraw their savings. Inflation has remained persistently high, real wages have steadily declined, and job markets have been stagnant since 2016. The situation is deteriorating.”
On the question of recovery, Dr Zahid Hussain maintained cautious optimism.
“It would be wrong to say better days will never come. History proves that economic revival is possible if there is genuine intent. The solutions are well-known—boost investment, curb inflation, stabilise macroeconomics, and fix the banking sector. Foreign currency reserves must be managed efficiently, and bureaucratic red tape hampering business must be eliminated.”
Yet, he posed a critical question—“Is there the will to act? And if so, how soon? Until then, we can do little more than wait and hope.”
