Bangladesh is facing several challenges, including restoring law and order and stabilising the economy in the near term.

The country also needs to address structural constraints such as a lack of economic diversification, low productivity, high youth unemployment, a large informal sector, and weaknesses in governance and accountability.

"These are the root of ongoing macroeconomic challenges like low foreign exchange reserves, high inflation, low revenue mobilisation, meagre foreign direct investment, and significant banking sector vulnerabilities," said Edimon Ginting, country director of Bangladesh at the Asian Development Bank (ADB).

In an interview with The Daily Star, he said the crisis provided "an opening for important reforms to improve governance and public administration to combat corruption".

The country needs to address structural constraints such as a lack of economic diversification, high youth unemployment, a large informal sector, and weaknesses in governance

"Tax revenues remain low compared to international peers and must be raised so that critical investments in physical infrastructure and social sectors can be made," he said.

The chief of the Dhaka office of the ADB, one of the leading financiers for Bangladesh, said greater transparency and accountability of government institutions would help win the public's trust.

"The regulatory and policy environment must be more conducive to investment. Finally, tackling institutional capacity gaps, design flaws and implementation challenges will enable more effective social protection schemes."

Citing Bangladesh's banking sector, he said it is a big area of concern, especially as non-performing loans (NPLs) have been on the rise for quite some time.

"The recent political change, coupled with improved data transparency, may change the picture on NPLs and it is possible that the size of NPLs increases significantly," he said, adding that the decision to form a banking commission supported by international expertise is a positive development.

He said Bangladesh needs a stable and strong banking system to efficiently finance its development needs going forward. For this, Bangladesh Bank will need to address weaknesses in the regulatory environment while strengthening supervision and governance to rebuild confidence, he said.

Ginting, an Indonesian national, said the ADB is engaging with the interim government to understand its priorities, share its views, and offer assistance.

"My impression is that the interim government is focused on stabilising the situation, and on making effective use of the opportunity to advance robust and far-reaching reforms," he said, citing meetings between senior ADB officials and Chief Adviser Prof Muhammad Yunus and other top government functionaries.

He said the ADB stands ready to support the reforms, which are needed to forge a more inclusive, resilient, and sustainable future for the people of Bangladesh.

Ginting said the interim government needs the support and trust of the public, which means restoring confidence in law and order and getting the economy back on track while charting a path towards elections.

"There are no quick fixes."

He added that the Manila-based lender has a large ongoing portfolio of projects financing critical sectors including energy, transport, human and social development, finance, public sector management and governance, agriculture, water, and urban development.

"Once the situation is more stable, we intend to undertake a comprehensive portfolio review with the interim government so that public investments and services are not stalled."

This year, ADB has committed $481 million to three projects and had planned to commit to many more projects.

"We hope to be able to continue financing as requested by the interim government. Our approach will be cautious, paying close attention to the political environment and preparations for an election that will hopefully bring a peaceful resolution to the current difficulties."

For new projects, ADB will carefully identify any needed adjustments to meet the priorities of the interim government.

He said the interim government's major reform priorities line up with the ADB's key areas of interest and expertise. The ADB will continue to provide support on the country's most pressing development challenges, he added.

"There are persistent, cross-cutting issues such as climate change and inclusive growth that we aim to prioritise.

"Also, there are growth opportunities that we should further leverage, such as an abundance of talent and skills and a thirst for digital transformation."

In times of transition, strong development outcomes depend on a stable political settlement, transparent and fair processes, and trust in public institutions and political leaders, he opined.

"ADB is an apolitical institution, but as a trusted development partner of Bangladesh, we are committed to supporting the strength and resilience of public institutions so they can be a force multiplier to drive growth and prosperity.

"Once a new government is elected, ADB will work hard to support the leadership's policy agenda to realise the country's immense potential and help meet the aspirations of its people," said Ginting, who has over 20 years of experience, including about 14 years at the ADB.