Almost eleven months ago, the Interim Government came to power, promising change across the board. A number of policy measures have been taken to reform the national economy, organisations, administration, and establish a strong system of fostering public spirit. For instance, Bangladesh’s foreign reserves have gone up from less than US$20 billion in 2024 to a level of some $31.31 billion or more by June 2025, pointing to the fact that the country is now going through an economic recovery phase. It is an important step in the country's economic stabilization. The flow of remittances into our national reserves is fairly substantial, having contributed mainly to the stability of institutions, to the easing of the liquidity crisis, and allowing for some other activities. This has been an important bellwether of Bangladesh's economic recovery.

The National Reserve, however, managed to collect the greenbacks with the help of the International Monetary Fund (IMF), which provided a sum of $5.5 billion until June 2025. In the Fiscal Year 2024-2025 of Bangladesh, the caretaker government repaid over $3.5 billion in debt without using any of its reserves. Remittance has also gone up by 26.8 percent to $2.81 billion in June 2025, with remittance soaring further from there. Several factors contributed to the sudden surge of remittances in Bangladesh. While the government took a range of initiatives to tackle manipulated prices under the capital market, defying the norm, surging exports reaching a staggering amount of $48 billion also contributed to this rise. Furthermore, the non-residents or the Bangladeshi expatriates also felt motivated to send remittances legally through the banking channels.

A.H.M. Ahsan Mansur, Governor of Bangladesh Bank, decides that the national reserve of Bangladesh is at the estimated quantity of $33 billion. This is when the reserve starts to grow once the situation has stabilized. The governor of Bangladesh also wants to bring together five Islamic banks in the following months, confirming a more muscular reform plan is taking shape to bolster the nation’s financial outfits. The nation surely hopes that it works as the whole country wants to domestic economy to perform better.

Increase in remittances

Since August of the previous year, remittances have consistently increased, providing the interim government with a respite amidst the rapid depletion of foreign exchange reserves. This has evolved as a critical economic relief for a nation that is currently suffering from macroeconomic strain. In the month of Ramadan this year. The remittance inflows to Bangladesh increased by 25% year-on-year to $2.52 billion, as migrant Bangladeshi workers transferred higher-than-expected sums to their families for Ramadan-related expenditures and Eid purchasing.

As for Bangladesh, it remains a challenge that FDI is still low and did not contribute significantly in its increasing national reserve. Further efforts from BIDA in this regard are required, and Ashik Chowdhury is the key person in this regard who needs to continue the process he started for the development of investment in Bangladesh, which can positively impact Bangladesh’s national reserve. But making no mistake, Bangladesh's biggest obstacle is the loan taken by the previous government, accounting for almost $156 billion. This debt has factored into the short-term forecast of the national reserve. Besides, the uncertainty over the political future and the democratic transition are hindering FDI inflow. Furthermore, the growing geopolitical tension in South Asia is further increasing geopolitical risks for foreign investors.

On the other hand, the interim government of Bangladesh is taking every effort not to erode its reserves through freezing of bank accounts of those associated with financial corruption and subsequently confiscating properties, and using the recovered money to settle its liabilities. The IMF has suggested that the Bangladeshi government eschew short-term political objectives and focus on stability and risk-mitigating measures in the face of increasing hazards.

Policy reforms awaited

The pace at which national reserves progressively grow is largely influenced by import and export data. Recent developments have first flushed the NBR officials in opposition to a reform initiative launched by the government to widen the national revenue stream. The governor of Bangladesh Bank stated that Bangladesh Bank (BB )'s monetary policy and financial development have underscored the role of inclusion in financial development in recent times and the inflation will drop by 5% by the end of 2025.  The results of the expected policy reform include a growth in official remittances, improved export capacity, increased foreign capital investment, the establishment of a sound foreign exchange regulation, etc. However, achieving a drop in inflation to 5% is an ambitious goal and a mammoth task considering Bangladesh’s domestic economic climate. And one has to wait to see the results.

It is not just that national reserves should not depend solely on remittances and taxes, but that diversification is needed. It is also required for a stable pace of growth in the national economy. Keeping a large level of national reserves will bring down the import prices and inflation. It may be a little too early to declare economic recovery, but certainly the growing forex reserve, remittance inflow, and surging exports are symptoms of the recovery that Bangladesh is aiming for. Bangladesh appears on the right track, though many other challenges remain.

(The author, an executive officer at the People’s University of Bangladesh, is a post-graduate from the Department of International Relations, University of Dhaka. Views expressed are personal. He can be contacted at jaidulkarimiram@gmail.com.)