Mohsen Rashid

Bangladesh faces a severe and rapid contraction under the current economic trajectory. Without a credible economic team, policy response will lag, turning manageable deficits into a crisis of confidence.

· Fiscal Collapse: The inability to balance the budget will trigger a sharp rise in borrowing from the banking system, crowding out private credit. Inflation, already sticky, will re-accelerate past 12-15%. The government will be forced to cut development spending by 40-50%, halting major infrastructure projects and triggering mass layoffs in construction and allied sectors.
· NBR’s ‘Thuggish’ Revenue Drive: Illegal account freezes and coercive tax collection will backfire catastrophically. Formal sector tax compliance will plummet as businesses shift to cash or informal channels. Instead of raising revenue, the NBR will see a 30-40% drop in real collections within two quarters. Foreign investors—already wary—will trigger immediate capital flight. Credit rating agencies will likely downgrade Bangladesh to ‘Selective Default’ territory.
· Judicial and Economic Gridlock: This would result in explosion of court cases (injunctions against account blockades and freezes) will affect the Judiciary. Working capital for small and medium enterprises (SMEs)—80% of the economy—will evaporate as bank accounts remain frozen for months. Trade receivables will seize up; letters of credit will go unpaid.
· Divided Country & Social Pressures: With export-oriented industries (RMG) unable to access working capital or face chaotic tax demands, factory closures will spike. Job losses could reach 1.5–2 million within 12 months. In a divided polity, this will fuel street protests, hartals (strikes), and potential supply chain blockades. Remittances, a critical lifeline, will drop as informal channels (hundi) replace formal banking due to fear of arbitrary seizures.

This will trigger balance of payments and fiscal confidence crisis spiraling into a law-and-order breakdown. Foreign exchange reserves could fall below one month of import cover, forcing selective debt defaults. The outlook is for an acute economic depression in specific sectors (SMEs, construction, trade), rising poverty, and systemic banking distress. Recovery would require an externally monitored IMF program and a complete reset of fiscal governance—neither possible under the described political divisions.

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