Working capital crisis ahead

Bangladesh has not been hit by a single cyclone. It has faced a series of shocks, back-to-back, leaving little time to rebuild. First came Covid-19. Then global commodity spikes, freight disruptions, energy volatility and unpredictable supply chains. Power shortages became routine, the taka weakened, reserves fell and confidence among international lenders wavered.

Taken individually, each shock is a storm. Together, they are converging into a tsunami, one breaking not in headlines but on the most fragile part of any enterprise: working capital. Working capital is not merely an accounting term. It is the lifeblood of a business. It buys raw materials, pays wages, sustains suppliers and protects export credibility. A business can endure low profitability for a time. It cannot endure a prolonged liquidity squeeze. When working capital dries up, even strong factories begin to bleed through delayed wages, missed shipments, lost buyers and eventual defaults. Remittances have sustained consumption and given industry breathing space during liquidity stress.

But breathing space is not recovery. Exports have fallen from their recent peak of nearly $57 billion to around $47 billion. Many factories now operate below capacity. Some have closed. Others survive in reduced form. An economy cannot thrive in survival mode. Encouragingly, a new government has taken office at a moment when economic realism is urgently needed. The prime minister has emphasised reviving closed mills and protecting employment to restore growth momentum. Confidence begins not with statistics but with leadership and clarity of purpose.

Bangladesh does not lack entrepreneurs, workers or demand potential. What it lacks is circulation. Manufacturing and services support millions of livelihoods and underpin modern agriculture through finance, logistics, fertilisers and machinery. Industry and rural prosperity are interdependent. Remittances alone cannot sustain national growth. Industry must operate at scale, and scale requires reliable and realistically priced working capital. Recent regulatory flexibility, including extended repayment windows, has helped prevent immediate collapse. But extensions without fresh liquidity only postpone stress.

First, risk perception in parts of the banking sector has tightened sharply. Past abuses have made institutions cautious. Prudence is essential. Yet when a single stressed account freezes otherwise viable sister concerns through blanket group CIB classifications, productive capacity is unnecessarily lost. A time-bound approach to group reporting could prevent avoidable domino effects. Second, exchange rate depreciation has distorted credit exposure limits. Businesses that have not expanded in real terms may appear overleveraged simply because nominal values have risen. This forces deleveraging when liquidity is most needed. Temporarily recalibrating single borrower exposure limits in dollar terms could neutralise this distortion. Third, trade finance instruments such as LCs and bank guarantees must flow more smoothly. Working capital is not always cash.

Macroeconomic logic assumes that if one firm exits, another will replace it. But behind every factory are years of savings, risk and sacrifice, and the livelihoods of hundreds or thousands of families. An economy must value each productive unit. Without a structured working capital revival, the next two years may bring avoidable capital erosion, job losses and further banking stress. A targeted Working Capital Stabilisation Window, time-bound and performance-linked, jointly monitored by banks and regulators, could provide that bridge. Combined with faster tax refunds, a predictable energy supply and smoother trade processing, it would restore circulation without undermining prudence.

Bangladesh has repeatedly demonstrated resilience. Entrepreneurs rebuild after crises. Workers adapt. Overseas wage earners support families with dignity. What is needed now is alignment between policy signals and factory floor realities. Money must move through the veins of industry. If working capital circulation is restored, confidence will follow, factories will reopen, and growth will regain credibility. The tsunami we face is not inevitable. With timely liquidity support, it can be redirected.

The writer is the chairman of Anwar Group of Industries