THE persistent depreciation of the taka against the US dollar has become a focal point. This decline, gradual thouhg, has intensified over the past decade, triggering questions about its causes, implications and solutions. While the weakening of the taka has multiple contributing factors, such as non-performing loans from multilateral development banks, money laundering, corruption in infrastructure projects under the Awami League government and structural reforms under the Yunus administration, a deep look shows that mismanagement and external pressures have exacerbated the problem.
THE depreciation has unfolded gradually but with pronounced consequences, especially in recent years. The factors driving this decline are multifaceted, with the first signs appearing during the 2010鈥�2015 period, when the Awami League government prioritised infrastructure development. Major projects such as the Padma bridge and Rooppur nuclear power projects were financed with foreign loans, many of which were in dollars. While the projects were expected to boost gross domestic product, they were marred by delays and allegations of corruption.
In 2016鈥�2020, the financial sector began to show signs of instability. A surge in non-performing loans, particularly disbursed by agencies such as the Asian Development Bank, the World Bank and the Asian Infrastructure Investment Bank further compounded the crisis. The $1.5 billion ADB loan for the energy sector reported a 20 per cent default rate by 2019, reflecting inefficiency and mismanagement.
The Covid outbreak in 2020鈥�2023 only deepened economic vulnerabilities. Declining export earnings, stagnant remittances and dwindling foreign exchange reserves placed additional pressure on the taka. Allegations of money laundering surged, with estimates suggesting that $7.5 billion was illicitly laundered out each year. By 2024, the government sought assistance from the International Monetary Fund, entering into a programme that introduced stringent reforms to stabilise the economy.
THE role of lender agencies in facilitating infrastructure projects has come under increased scrutiny because of high non-performing loans. A number of projects, particularly in the energy and transport sectors, faced cost overruns and repayment difficulties. The World Bank鈥檚 involvement in the Padma bridge was also marred by corruption allegations, forcing the bank to withdraw its funding. AIIB-backed projects such as the metro rail have faced delays and repayment issues, exacerbating fiscal challenges.
The Awami League government faced widespread allegations of corruption, particularly in relation to major infrastructure projects. A prime example of this is the Padma bridge project, initially budgeted at $3 billion but ultimately running to $6.1 billion, partly because of fund misappropriation. This has eroded public trust and undermined the government鈥檚 credibility in managing large-scale projects.
Money laundering has also been a persistent issue. In 2022, the Financial Intelligence Unit identified more than 500 cases of illicit fund transfers, primarily to Malaysia and Dubai. It has not only drained the foreign exchange reserves but also deepened public distrust in the government鈥檚 ability to maintain financial stability.
In 2025, the Yunus administration focused on macroeconomic stabilisation. Key measures included tax reforms, including an increase in value-added tax and higher duties on import, all to meet IMF revenue targets. The government also established the national recovery commission to trace and recover embezzled funds, with a focus on the vast sums allegedly stolen in the Awami League鈥檚 tenure.
However, the efforts have not been without criticism. While the government has made some progress in addressing fiscal deficits and instituting anti-corruption measures, critics argue that little has been done to recover the billions of dollars allegedly siphoned. Moreover, the increased taxes have had a regressive effect, disproportionately affecting low- and middle-income groups. Essentials like rice and cooking oil have seen price increase by 15鈥�20 per cent, straining household budgets and heightening public discontent.
The IMF鈥檚 structural adjustment programme has introduced a host of challenges for the economy. While the measures aim to stabilise the taka and rebuild foreign exchange reserves, they have led to inflationary pressure and stagnating wage. In 2025, inflation is projected to reach 12 per cent, pushing the cost of living to unaffordable levels.
The austerity measures have also resulted in lower consumer spending, with real wages stagnating and disposable income shrinking. This has led to social unrest, with protests and strikes erupting nationwide. Critics have labelled the IMF conditions as 鈥榓nti-people,鈥� arguing that the burden of the economic adjustment disproportionately falls on the poorest sections of society.
THE depreciation of the taka is the result of a confluence of factors, including systemic mismanagement, external shocks and internal corruption. While the reforms under the Yunus administration address some issues, their heavy reliance on IMF-mandated austerity measures risks exacerbating economic inequality and alienating the people. To ensure long-term economic stability and growth, the government must prioritise recovering stolen assets, reducing non-performing loans and implementing progressive taxes that do not disproportionately burden the poor. Without the changes, the adjustment process will continue to deepen social divisions and undermine the potential for sustainable economic development.
听
Rayyan Hassan is the executive director of NGO Forum on ADB.
