The exodus of international capital from Bangladesh's premier bourse accelerated to an alarming pace in June, as foreign investors offloaded shares worth Tk358 crore – the largest monthly net sell-off so far this calendar year.

Despite recent attempts by the central bank to simplify tax repatriation procedures, global fund managers appear to be voting with their feet, driven by deep-seated concerns over regulatory interference and the shifting direction of the country's economic management, according to the stock market analysts.

Data from the Dhaka Stock Exchange (DSE) reveals a staggering imbalance in trade, with total foreign purchases amounting to a negligible Tk6 crore against the massive sell-volume, leaving the market's international participation at a historic low.

The June outflow almost doubled the Tk161 crore in foreign sales recorded in May and was nearly three times higher than the Tk124 crore seen in April.

This persistent retreat by overseas investors comes at a time when the market is struggling to find a stable footing, as the loss of institutional foreign support drains liquidity from high-quality, large-cap scrips.

According to the DSE, portfolio investment data show that while foreign funds maintain holdings in approximately 130 firms, they actively trimmed their stakes in 19 major companies during June, while showing marginal interest in only 15 others.

The brunt of the selling pressure was felt by the market's most prestigious blue-chip entities.

BRAC Bank, long a staple of international portfolios, witnessed the most significant exit, with foreign investors offloading shares valued at a massive Tk186 crore. This move saw their stake in the bank slide from 35.89% in May to 34.69% in June.

Telecommunications leader Grameenphone followed a similar path, recording Tk42 crore in foreign sales as its international holding dropped to a mere 0.33%.

Other defensive giants such as Square Pharmaceuticals, Marico Bangladesh, and Renata also faced heavy liquidations, with sell values reaching Tk35 crore, Tk23 crore, and Tk16 crore, respectively.

Even British American Tobacco (BAT) Bangladesh and Beximco Pharmaceuticals were not spared, seeing double-digit crore outflows as global funds recalibrated their exposure to the Bangladesh market.

In sharp contrast to the aggressive selling, the appetite for fresh investment remained remarkably thin.

While foreign investors increased their holdings in a handful of companies like Shasha Denims, ITC, and Premier Cement, the monetary value of these entries was insufficient to offset the broader exodus.

Shasha Denims attracted Tk1.24 crore in new foreign capital, while ITC and Premier Cement saw inflows of approximately Tk1.10 crore and Tk1 crore, respectively. Marginal increases were also noted in LafargeHolcim Bangladesh, IDLC Finance, and Jamuna Oil, though analysts described these as minor portfolio adjustments rather than a renewed vote of confidence in the market.

Market experts and industry leaders point to a growing disconnect between the regulator's intentions and investor perceptions.

Moniruzzaman, managing director of Prime Bank Securities and senior vice president of the DSE Brokers Association (DBA), provided a blunt assessment of the situation. He told The Business Standard that renowned global investment firms are increasingly dissatisfied with the performance and policy direction of the central bank.

He further said, "In particular, the way Governor Ahsan H Mansur was removed has raised concerns among foreign investors about the future direction of the country's economy."

He also criticised the Bangladesh Bank's recent directive requiring commercial banks to maintain paid-up capital of at least Tk2,000 crore to qualify for dividend declarations.

According to Moniruzzaman, the move effectively bypasses the globally recognised Basel III framework and penalises shareholders of otherwise healthy banks. Furthermore, the central bank's decision to cap the interest rate spread – the gap between deposit and lending rates – at a maximum of 4% is being viewed as a regressive step.

"This type of regulatory interference destroys the confidence of foreign investors," he observed. He warned that the central bank's current trajectory is moving the country toward what is known as a "command economy."

In such a system, the central government or regulator controls all major economic decisions, ignoring the fundamental market forces of supply and demand to dictate exactly what is produced and how it is priced.

For international fund managers who prioritise market-driven dynamics and transparency, the shift toward a command-style approach makes the Bangladesh equity market appear increasingly high-risk and unattractive.

The irony of the situation is that this massive sell-off occurred despite a landmark policy shift aimed at doing exactly the opposite.

On 20 May, the Bangladesh Bank issued a circular eliminating the long-standing requirement for an auditor's certificate for every single transaction made by non-resident investors.

Previously, foreign investors were forced to obtain a certificate from a chartered accountant for every trade to determine capital gains tax before funds could be reinvested or repatriated – a cumbersome process that caused significant delays and increased compliance costs.

Under the new rules, authorised dealer banks now handle the tax withholding directly from sale proceeds, allowing for immediate credit to Non-Resident Investor Taka Accounts (NITA).

Shares of Daffodil Computers PLC have surged more than 308% over the past five months despite weak financial performance and the absence of any price-sensitive information (PSI), raising concerns over the stock's valuation and trading pattern.

According to data from the Dhaka Stock Exchange (DSE), the company's share price climbed from Tk41.80 on 8 February to Tk170.60 on 9 July, marking a 308.13% gain during the period.

Despite the steep rally, Daffodil Computers did not disclose any PSI that could explain the price movement. The DSE sought explanations from the company twice over the unusual rise in its share price. On both occasions, the company said it had no undisclosed price-sensitive information.

The company's financial performance also offers little support for the sharp appreciation.

According to its unaudited financial statements for the January-March quarter of 2026, Daffodil Computers reported revenue of Tk9.43 crore and a net profit of Tk23 lakh. Earnings per share (EPS) stood at Tk0.05, while net asset value (NAV) per share was Tk13.41. The company attributed the earnings decline to lower sales during the quarter.

Even so, sustained buying interest continued to push the stock higher, driving its price-to-earnings (P/E) ratio to 511.8 – one of the highest among companies listed on the country's capital market.

A P/E ratio above 500 means investors are paying more than Tk500 for every Tk1 of the company's earnings, a level that market analysts say is difficult to justify unless there are strong expectations of exceptional future profit growth.

The company had earlier announced plans to issue 32.69 million ordinary shares at Tk15 each to repay a loan from Creative International and sought shareholder approval through an extraordinary general meeting (EGM).

However, on 21 May this year, the Bangladesh Securities and Exchange Commission (BSEC) declined to approve the proposed Tk49.04 crore share issuance.

In recent months, both the BSEC and the DSE have voiced concerns over sharp price increases in fundamentally weak stocks. The regulator has instructed the stock exchanges to strengthen market surveillance and investigate unusual trading activity where share prices rise significantly without any apparent reason.

Market analysts said Daffodil Computers' price movement appears disconnected from its financial fundamentals. They argued that, in the absence of any significant business development or material disclosure, such an extraordinary rally warrants closer regulatory scrutiny and raises concerns about possible market manipulation.

They also questioned why no visible regulatory action has been taken so far, noting that only the regulator can explain the absence of enforcement if irregularities are found.

Analysts advised investors not to chase rapidly rising stocks without assessing a company's earnings, asset value, financial health and long-term business prospects, warning that investments in heavily overvalued shares carry a high risk of significant losses.

The Asian Development Bank (ADB) has lowered Bangladesh’s economic growth forecast, projecting the country’s gross domestic product (GDP) to expand by 3.7 per cent in fiscal year (FY) 2026 and 4.5 per cent in FY2027.

The revised projections were published in ADB’s Asian Development Outlook (ADO) July 2026, released on Thursday, UNB reports.

The latest forecast reflects weaker export performance, sluggish private investment, elevated energy costs, persistent inflation, and a more challenging external environment.

“Bangladesh’s economy continues to show resilience amid a difficult global and domestic environment, supported by strong remittance inflows and steady services activity,” said Akira Matsunaga, Deputy Director (Officer-in-Charge) of ADB’s Bangladesh Resident Mission.

He said sustained reforms to strengthen macroeconomic stability, improve the investment climate, enhance financial sector governance, and address energy and infrastructure constraints would be critical to supporting a stronger and more inclusive recovery.

Such reforms would also help attract greater private investment, create quality jobs, and strengthen the country’s economic resilience, he added.

ADB expects inflation to remain high at 9.0 per cent in FY2026, unchanged from its April forecast, as recent increases in domestic petroleum, gas, and electricity prices continue to feed through to transport, utility, and other consumer costs.

Inflation is projected to ease slightly to 8.8 per cent in FY2027, higher than the 8.5 per cent forecast in April, owing to second-round effects from higher energy and transport costs, exchange rate pass-through, and persistent food and services inflation.

The report said economic growth in FY2026 would be supported by strong remittance inflows, steady expansion of the services sector, and targeted credit easing measures for priority sectors despite an overall tight macro-financial environment.

However, it noted that high inflation continues to erode household purchasing power and restrain private consumption, while weak exports and moderate import growth indicate subdued external demand and sluggish private investment.

On the supply side, export-oriented manufacturing is expected to remain under pressure from high energy prices, weak global demand, and structural bottlenecks. Agriculture also faces risks from fertiliser shortages, although the services sector is likely to support growth through remittance-backed household spending.

For FY2027, ADB expects moderate inflation, simplified business regulations, improved governance, tax administration reforms, and continued remittance incentives to support stronger consumption and investment.

Nevertheless, vulnerabilities in the banking sector, energy shortages, and weak competitiveness are expected to keep economic expansion gradual.

ADB also warned of significant downside risks to the outlook.

It said any further escalation of the conflict in the Middle East could push up global energy and shipping costs, intensify external pressures, weaken growth through higher inflation, and reduce remittance inflows.

The report added that higher global oil prices could widen Bangladesh’s import bill and increase fiscal pressure through larger energy subsidies, while higher tariffs, broader trade restrictions, or weaker growth in major economies could further dampen export demand and prolong weakness in the manufacturing sector.

Persistent exchange rate pressures, tight external financing conditions, and climate-related shocks also remain key risks to the country’s economic outlook.

The government has suspended spending on the purchase of all types of motor vehicles, watercraft and aircraft under both the development and operating budgets for the fiscal 2026-27 to ensure prudent use of limited public resources, bring inflation down to a tolerable level and maintain macroeconomic stability.

In a circular today (8 July), the Finance Division also announced that interest-free special loans for government employees to purchase vehicles will remain suspended.

The circular further states that all foreign travels funded by the government for training programmes, seminars, symposiums and workshops have been halted. However, officials may still travel abroad to pursue master's and PhD programmes under scholarships or fellowships offered by development partners, universities, institutions or foreign governments.

It also allows participation in overseas training programmes financed by foreign governments, institutions or development partners. The overseas components of mandatory foundation and essential training programmes may also be conducted at appropriate universities or institutions abroad.

The restrictions will apply to the operating and development budgets of all government ministries and agencies, autonomous bodies, state-owned enterprises, statutory organisations, public sector corporations, state-owned companies and financial institutions.

The circular also states that no funds allocated under lump-sum provisions in the operating budget may be spent during the current fiscal year.

Although purchases of all types of motor vehicles, watercraft and aircraft under the operating budget have been suspended, exceptions will be allowed for replacing vehicles that are more than 10 years old. Newly established government entities may also purchase vehicles with prior approval from the Finance Division.

It adds that except for ambulances and vehicles used for security purposes, all replacement or newly purchased SUVs and cars must be fully electric vehicles.

No new residential, non-residential or other buildings may be constructed using operating budget funds. However, projects that are at least 70% complete may be finished with the approval of the Finance Division.

The Division also barred spending from the operating budget on land acquisition.

The circular similarly prohibits vehicle purchases under the development budget, although projects approved before the issuance of this circular may be exempted from this restriction.

Land acquisition under the development budget will be permitted only after completing all legal formalities and obtaining approval from the Finance Division.

Funds reserved under the Planning Commission's "Special Development Assistance" allocation may be spent only with prior approval from the Finance Division.

For pre-shipment inspections (PSI) or factory acceptance tests (FAT) under both the operating and development budgets, overseas travel will be considered only for experts or technically certified officials where the products are highly specialised or where PSI is mandatory.

In such cases, the finance ministry has instructed agencies to give priority to testing through internationally recognised institutions.

For all other expenditures, the ministry directed government agencies to ensure the best use of public funds and achieve value for money.

Asked about the total allocation for the expenditure categories now subject to restrictions, and how much the government expects to save through these austerity measures, Mohammad Zakir Hossain, deputy secretary at the finance ministry and signatory to the circular, said he was unable to provide the figures immediately.

Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD), told The Business Standard that the government's decision appeared to be a positive one in light of the current economic situation, marked by high inflation and weak revenue mobilisation.

She said the economy could not afford additional spending under the present circumstances and that there was no room for wasting even a single taka. Spending on unproductive sectors would only fuel inflation further, she said, stressing that public expenditure should instead be directed towards productive sectors to boost investment, employment and people's incomes.

"Although the government has announced an expansionary budget, it is also trying to exercise great caution in its spending. At the same time, it plans to implement a new pay structure for public sector employees at a substantial cost. In doing so, the government is having to make trade-offs in public spending to fulfil some of its political commitments," she added.

A high-level Bangladeshi delegation will travel to the United States next week to lobby 54 member-states of the UN Economic and Social Council (ECOSOC) for support to the country's request to defer its graduation from least- developed country (LDC) status by three years.Geographic Reference

The team, led by Commerce Minister Khandaker Abdul Muqtadir, is scheduled to leave Bangladesh on July 13 and return on July 19, officials said.

The delegation will also include ERD Secretary Shariar Kader Siddiky, Bangladesh's Permanent Representative to the United Nations, at least two private-sector business leaders and other government officials.

The Bangladesh delegation is scheduled to meet ECOSOC representatives at the UN headquarters in New York from July 15 to July 18, an official at the Economic Relations Division (ERD) said on Wednesday.

According to the ERD, the policy decision on LDC graduation rests with ECOSOC, acting on recommendations from the UN Committee for Development Policy (UNCDP), before being placed before the UN General Assembly for final approval.

"Our team will meet representatives of the 54 ECOSOC member countries at the UN headquarters. It will explain the reasons behind Bangladesh's request to defer its graduation," a commerce ministry official said.

An ECOSOC meeting is expected to be held on July 22, when Bangladesh's request could be considered. The council generally makes recommendations to the UNGA on requests for graduation deferrals.Economic Trend Analysis

Bangladesh formally requested the UNCDP several months ago to postpone its graduation from LDC status by three years.

The UNCDP is an expert subsidiary body of ECOSOC responsible for reviewing countries' eligibility for graduation from the LDC category.

The commerce ministry official said that although the timeline would become clearer after the ECOSOC meeting, the final decision would require approval by the UNGA.

Like Bangladesh, Nepal has also recently requested a three-year postponement of its graduation from LDC status.

Meanwhile, the government briefed foreign diplomats in Dhaka on July 2 in an effort to build international support for its request.

As the proposal will ultimately be placed before the UNGA, Bangladesh will need the backing of a majority of member states, the official added.

Government officials said Bangladesh's fate regarding the deferral request is likely to be decided at the UNGA session in September this year.

Although Bangladesh is scheduled to graduate from LDC status in November 2026, Dhaka has sought a three-year extension to better prepare for the transition in light of emerging domestic and global economic challenges.Time & Calendars

Citing external shocks, energy supply constraints, domestic political transition and other economic uncertainties, Bangladesh submitted its request to the UNCDP more than two months ago.

Another ERD official said that while ECOSOC's position would become clearer after its late-July meeting, the final decision would rest with the UNGA.

"Since Nepal has also sought a three-year deferral, the UN may adopt a common decision for both countries," he said.

Responding to Bangladesh's request, the UNCDP, in a letter dated June 1 to the ERD Secretary, expressed a positive view of the country's plea, although it did not specify any timeframe.

Earlier, the UNCDP recommended Bangladesh, Lao PDR and Nepal for graduation from LDC status in 2026.

The US dollar was steady at around its highest level in roughly a week on Wednesday.

This came after US President Donald Trump said an interim memorandum of understanding signed with Iran to end their conflict was “over”.

Meanwhile, New Zealand’s currency jumped after the country’s central bank lifted interest rates.

The US dollar index, which measures its strength against a basket of six currencies, was little changed on the day at 101.17.

It was last hovering around its highest since July 2, in a somewhat choppy session for the safe-haven currency.

“The USD has reacted, but the market has learnt to take Trump’s comments with a pinch of salt,” said Jane Foley, head of FX strategy at Rabobank.

“The remarks may be meant to bring the opposition to the table. Nevertheless, they will raise anxiety levels another notch,” Foley added.

Brent crude was last up 6.24 percent at $78.82 a barrel, extending a rally into a second day. Trump’s comments come after Iran’s Revolutionary Guards on Wednesday said they attacked US military sites in Bahrain and Kuwait.

This followed a wave of US airstrikes against Iran in response to attacks on tankers in the Strait of Hormuz.

Meanwhile, the kiwi dollar was last 0.26 percent higher at $0.5691, having pared earlier gains.

This occurred after the Reserve Bank of New Zealand hiked rates by 25 basis points to 2.5 percent to curb inflation pressures, as most economists had expected.

The central bank said “some further reduction in monetary stimulus is likely to be required” to control inflation.

“A key argument for the hike is a concern that financial conditions would have eased further if the OCR was left unchanged,” Westpac analysts wrote, referring to the official cash rate.

Later in the day, traders will be watching out for minutes from the Federal Reserve’s June meeting.

Power, Energy and Mineral Resources Minister Iqbal Hassan Mahmood yesterday said the government cannot cancel contracts with private power producers at will because they are backed by sovereign guarantees, making the process legally complex and time-consuming.

“The previous fascist government handed over several power plants to private companies,” he said while responding to a supplementary question from reserved-seat member of parliament Mardia Mumtaz during the question hour in parliament.

“In those agreements, sovereign guarantees were provided, meaning the state itself guaranteed the contracts. Cancelling such guarantees is a lengthy process. We are negotiating with the companies on several issues, particularly late payment fees, which we are refusing to pay. Hopefully, these discussions will be fruitful,” he said.

Mahmood said power plants already in operation could not be managed through ad hoc arrangements.

“As long as the contracts remain valid, we will work to reduce costs and ensure electricity is supplied at affordable rates,” he added.

Replying to a question from Mostafizur Rahman, a member of parliament from the Jamalpur-3 constituency, the minister said no quick rental power plants are currently operational, and there are no active contracts with such facilities.

However, he said the contracts of two rental power plants were renewed after expiry on a “no electricity, no payment” basis, and the plants remain in operation. Since no quick rental plants are operating, the government is not paying any capacity charges for them.

Responding to a question from Mohammad Kamal Hossain, the Dhaka-3 constituency MP, Mahmood said the country currently supplies around 2,700 million cubic feet of gas a day against a demand of about 3,800 million cubic feet.

The shortfall has left Dhaka and other parts of the country receiving significantly less gas than required, disrupting supply, he said.

Answering a question from Golam Rasool, the Jessore-4 constituency MP, the minister said transmission loss stood at 3.04 percent and distribution loss at 7.38 percent in fiscal year 2024-25 (FY25). Up to April of FY26, transmission loss was 3.27 percent, while distribution loss declined to 6.29 percent.

Replying to a question, Mahmood said international fuel prices had started to decline following the end of the Iran-Israel-US conflict.

However, he said prices remain above the break-even level, leaving the Bangladesh Petroleum Corporation to incur daily losses of Tk 78 crore on diesel, octane and petrol sales.

He said the BPC incurred total losses of Tk 18,699 crore between March and June 23.

“If international prices fall further to a sustainable level, the government will consider reducing domestic fuel prices to ease public hardship,” he said.

In response to another question, Iqbal Hassan said two committees formed to review power purchase agreements signed under the Electricity and Energy Supply Enhancement (Special Provisions) Act, 2010, had submitted separate reports, and the government was taking necessary steps based on their recommendations.

Persistent inflation in Bangladesh is being driven largely by structural supply constraints and rising import costs, according to the latest Economic Update from the General Economics Division published today (8 July).

The report finds that inflationary pressures are no longer confined to a few sectors but have broadened across the economy, reflecting deeper underlying challenges. Headline inflation rose to 9.42% in May 2026, up from 9.04% in April, as both food and non-food components continued to climb.

Analysts at the GED point to a combination of supply-side disruptions, global price volatility, and higher energy import costs as key drivers behind the sustained inflation. These factors have intensified production and transportation expenses, which are gradually being passed on to consumers.

Food inflation, in particular, remains vulnerable to supply chain inefficiencies. While seasonal factors such as the Boro harvest provided some temporary relief in rice prices, inflation in other essential items – including vegetables, fish, and protein products – remains elevated. The report notes that inadequate storage facilities, weak logistics, and market inefficiencies continue to amplify price volatility in perishable goods.

At the same time, import-dependent inflationary pressures are becoming more pronounced. Rising global fuel prices have pushed up domestic energy and transport costs, contributing to a ripple effect across multiple sectors. Transport services and liquid fuel prices recorded sharp increases in May, reflecting the growing burden of imported inflation on the domestic economy.

Data from the Bangladesh Bureau of Statistics show that non-food inflation is also rising steadily, indicating that cost pressures are spreading beyond food into services and other consumer goods. This broad-based inflation suggests that both supply-side and cost-push factors are reinforcing each other.

The report further highlights that demand-side dynamics, while present, are not the primary drivers of current inflation trends. Instead, structural weaknesses – such as fragmented supply chains, limited market integration, and dependence on imported energy – are playing a dominant role.

Economists warn that without targeted reforms, inflation may remain sticky in the coming months. Suggested measures include improving agricultural supply chains, investing in cold storage and transport infrastructure, and reducing import dependency in key sectors where feasible.

The GED emphasises that addressing these structural issues is critical to restoring price stability. Otherwise, prolonged inflation could continue to erode purchasing power and complicate macroeconomic management in the near term.

Bangladesh's current- account deficit (CAD) narrowed sharply in the first 11 months of the fiscal year 2025-26, helped by record remittance inflows and slower import growth, according to the Bangladesh Bank data released Wednesday. Maps

The deficit narrowed to $301 million during the July-May period of FY26 from $1.23 billion in the first 10 months.

The improvement was driven largely by stronger remittance inflows and relatively contained import growth.

Expatriate Bangladeshis sent home $32.8 billion during the July-May period, up nearly 12 per cent from the July-April period of FY26 and more than 19 per cent higher than a year earlier.

Imports rose 5.9 per cent year on year to $67.7 billion in the said period, reflecting stronger domestic demand but remaining below the pace of remittance growth.

Energy imports remained broadly stable, although petroleum imports climbed 18.6 per cent to $9.0 billion during the period under review.

Exports increased more than 11 per cent from the previous months to $44.2 billion.

However, exports were still down about 2.0 per cent from a year earlier.

The current account measures a country's transactions with the rest of the world, including trade in goods and services, investment income, and transfers such as workers' remittances.

Bangladesh typically runs a current account deficit because it imports more than it exports.

The country's export-oriented manufacturing sector relies heavily on imported raw materials and intermediate goods, while consumers also depend on a wide range of imported products.

The improvement in the current account helped lift the overall balance of payments (BoP) surplus to $4.0 billion during the July-May period, compared with $3.7 billion in the first 10 months of the fiscal year.

A year earlier, the BoP recorded a $1.1 billion deficit.

The financial account posted a surplus of $4.16 billion, although it declined by about 8.0 per cent from the July-April period.

Meanwhile, the capital account surplus increased to $366 million from $325 million.

Economists said the stronger external position reflected robust remittance inflows and resilient export earnings, helping ease pressure on Bangladesh's foreign exchange reserves.

They cautioned, however, that sustaining the improvement would depend on continued export growth, stable energy prices, and a recovery in foreign direct investment.

They said there was another sign: the capital machinery import surged by both year-on-year and on a monthly basis, 11.5 per cent and 8.6 per cent, respectively.

Bangladesh’s economy is expected to grow by 4.4 percent in the current fiscal year 2026-27, supported by easing global headwinds and domestic economic reforms, according to HSBC.

Lower oil prices, a stabilising outlook for US tariffs and resilient global growth should help revive Bangladesh’s export sector, the multinational lender said, while reforms undertaken at home are expected to strengthen private investment and consumption.

“Bangladesh’s economy continues to impress with its resilience,” Frederic Neumann, chief Asia economist and co-head of global investment research for Asia at HSBC, said at an economic outlook event held at Sheraton Dhaka on Tuesday.

With oil prices easing, the outlook for US tariffs stabilising, and global growth remaining robust, garment exports are expected to recover in the second half of the year, he said.

“Ongoing economic reforms are also gaining traction domestically, ultimately supporting private investment and consumption. Bangladesh is, therefore, on a steady path to recovery, with growth expected to accelerate to 4.4 percent over the coming fiscal year,” Neumann said.

The forecast comes as Bangladesh seeks to consolidate its macroeconomic recovery following two years of high inflation, pressure on foreign exchange reserves and weaker economic activity.

The pace of reforms and the strength of external demand will remain key factors shaping the country’s growth outlook.

The country recorded 4.14 percent growth in its gross domestic product in FY26, up from 3.49 percent a year earlier, according to provisional data from the Bangladesh Bureau of Statistics (BBS).

The government has set a 6.5 percent GDP growth target for the current financial year.

At the event, Finance and Planning Minister Amir Khosru Mahmud Chowdhury acknowledged that restoring confidence while maintaining macroeconomic stability would be the government’s biggest challenge in implementing the national budget amid continued global uncertainty.

He said the government was working to strengthen institutions and reduce bureaucracy to improve the business environment and support investment.

The minister also stressed the need to diversify exports beyond the ready-made garment sector.

He said improving competitiveness, removing regulatory barriers, expanding market access and creating opportunities for new industries through economic zones and private-sector investment would be crucial to broadening Bangladesh’s export base.

Priya Kini, managing director and head of banking for international markets in Asia at HSBC, said businesses needed timely economic insights to navigate an increasingly uncertain global and geopolitical environment.

Md Mahbub ur Rahman, chief executive officer of HSBC Bangladesh, said the country’s next phase of development would depend not only on higher growth but also on improving its quality and sustainability.

He said Bangladesh would need stronger risk governance, greater competitiveness and progress up the global value chain to build a more diversified and resilient economy.

The country's financial account staged a major recovery to register a surplus of $4.16 billion during the first 11 months of the fiscal 2025-26, rebounding from a deficit of $214 million in the same period of the previous fiscal year.

The balance of payments data, released by the Bangladesh Bank yesterday (8 July), indicates that a sharp turnaround in trade credit was the primary driver behind this financial account surplus.

The trade credit position – which involves short-term capital flows from deferred payments on imports – surged to a surplus of $2.90 billion during the July-May period, recovering from a deep deficit of $2.57 billion recorded during the corresponding period of FY25.

Economists see stronger external financing

Former Bangladesh Bank governor Ahsan H Mansur said the financial account should remain in a healthy surplus as the trade credit position has turned positive after remaining in deficit in the previous fiscal year.

Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue, said the financial account had improved significantly, reflecting stronger external financing. However, he noted that a stronger financial account also implies higher debt obligations in the future because loans received today increase future debt servicing liabilities.

He added that inflows from development partners such as the World Bank, the Asian Development Bank and the International Monetary Fund also strengthen the financial account by increasing foreign currency inflows.

Trade deficit widens on weaker exports

Despite the improvement in the financial account, the country's trade deficit widened to $23.98 billion during the first 11 months of FY26 from $19.38 billion in the corresponding period of FY25.

Exports declined by 2% during the period, while imports rose by 6.30%.

Mansur said the larger trade deficit reflected sluggish export growth, adding that higher imports are generally positive for the economy as they support production and economic growth.

Remittances support current account

The current account deficit narrowed despite the widening trade gap, supported by robust remittance inflows.

The current account deficit stood at $301 million during July-May of FY26, compared with a deficit of $778 million in the same period of FY25.

Remittance inflows during the first 11 months of FY26 totalled $32.77 billion, marking a 19.10% year-on-year increase.

Mansur said remittances had played a key role in improving the current account balance. However, he cautioned that remittance inflows weakened in June after several months of stronger performance and said sustained inflows would be important for maintaining external sector stability.

He added that a prolonged decline in remittances could indicate a resurgence of informal channels for transferring funds abroad.

Depositors of troubled banks will receive their full deposits with interest, with no "haircut" imposed, Finance Minister Amir Khosru Mahmud Chowdhury told parliament today (8 July), adding that the process would take time due to the banks' mounting losses.

He made the remarks in response to an urgent public interest notice under the Rules of Procedure during the 21st working day of the 13th parliament's second session.

Earlier, reserved women's seat MP Rehana Akter Ranu demanded strict action against those involved in banking irregularities and money laundering, including auctioning their assets to repay depositors.Khosru said the government was implementing a multi-dimensional resolution framework under the Bank Resolution Act, 2026 to address the banking sector crisis. Under the framework, five troubled banks – EXIM Bank, First Security Islami Bank, Global Islami Bank, Social Islami Bank, and Union Bank – have been merged into Islami Bank PLC, with all depositors' claims transferred to and preserved under the new entity.

He said the Deposit Protection Act, 2026 raised the protected deposit limit to Tk2 lakh from Tk1 lakh. Special forensic audits into loan irregularities and money laundering involving the five banks are underway, with asset recovery and legal action to follow based on investigation findings.

He added that Section 57 of the Bank Resolution Act allows the government to take control of the assets and income of responsible individuals and recover depositors' money through sales or auctions. The government is also working to recover laundered money abroad through international legal firms.

Ranu said corruption and money laundering in the banking sector had left millions of depositors unable to access their savings, creating a humanitarian crisis affecting medical treatment, children's education, marriages and small businesses. She opposed any "haircut" policy, saying depositors should not bear the consequences of bank owners' misconduct.

The country’s current account deficit narrowed in the first 11 months of fiscal year 2025-26, helped by record remittance inflows, although weak economic activity continued to hold back trade and investment.

During the July-May period of FY26, the current account deficit stood at $301 million, down from $778 million in the same period of the previous fiscal year, according to the latest Bangladesh Bank (BB) data.
The current account measures a country’s trade in goods and services, cross-border income flows, and current transfers such as remittances and foreign aid. It tracks the net flow of goods, services and income between a country and the rest of the world.

“Remittances played the biggest role in narrowing the current account deficit,” said Ashikur Rahman, principal economist of the Policy Research Institute of Bangladesh (PRI).

Remittance inflows reached a record $35.5 billion in FY26 as Bangladeshis staying abroad sent more money home. The inflow rose 17.3 percent year-on-year from $30.3 billion in FY25.

Ashikur said that, apart from remittances, neither exports nor imports performed particularly strongly, while investment also failed to recover during FY26.

During the July-May period of the recently concluded fiscal year, the trade deficit widened to $23.98 billion from $19.37 billion in the same period a year earlier, mainly because imports grew faster while export earnings declined, according to BB data.

Import payments reached $64.02 billion in the first 11 months of FY26, up 6.3 percent from $60.25 billion in the corresponding period of the previous fiscal year.

Export earnings, by contrast, fell 2 percent to $40.03 billion from $40.87 billion over the same period, according to the central bank data.

The PRI economist said subdued economic growth made the external sector appear stronger than it actually was.

“In reality, remittances were the only strong pillar, while almost all other indicators remained weak,” he added.

During the July-May period of FY26, the financial account, which records cross-border investment and other capital flows, returned to surplus as net financial inflows exceeded outflows. It recorded a surplus of $4.16 billion during the period, compared with a deficit of $214 million in the same period of FY25.

The financial account is a key component of the balance of payments. It records transactions involving financial assets and liabilities between residents and non-residents, including foreign direct investment, medium- and long-term loans, trade credit, net aid flows, portfolio investment and reserve assets.

The overall balance of payments also returned to surplus, reaching $4.01 billion in the first 11 months of FY26, compared with a deficit of $1.15 billion in the same period of the previous fiscal year.

The overall balance of payments (BoP) shows the net result of all transactions between a country and the rest of the world over a given period. It shows whether the country records an overall surplus or deficit after accounting for the current account, capital account, financial account, and errors and omissions.

The IMF on Wednesday cut its 2026 growth projection for the world economy again, saying an AI boom has not fully offset the fallout from war in the Middle East.

Global economic growth is now estimated at 3.0 percent this year, the International Monetary Fund said, down from 3.1 percent in its April forecast. The estimate was made before fresh exchanges of fire between the United States and Iran in recent hours.

It is the second time this year that the fund has lowered its overall growth expectations. The latest estimate marks a cooling from the 2025 growth rate as well.

Global inflation meanwhile is anticipated to accelerate to 4.7 percent this year, a higher level than earlier projected. Still, the overall growth slowdown is modest, as momentum in artificial intelligence -- driven by demand -- partially offsets the effects of the war.

Global economic growth is now estimated at 3.0 percent this year, the International Monetary Fund said, down from 3.1 percent in its April forecast

The IMF said it expects global growth to pick up in 2027 to 3.4 percent.

Deniz Igan, division chief at the IMF’s research department, told AFP that its forecasts are “broadly unchanged” cumulatively for the next two years and described the bounceback as “a V-shaped recovery.”

The delayed recovery from war on Iran, longer disruptions and higher prices is part of the reason the world economy will take a bigger hit this year, she added.

The IMF flagged that fallout varies widely.

“Energy exporters outside the conflict zone benefit from favorable terms of trade, whereas economies plugged into the technology-led upturn experience stronger activity even if they are energy importers,” the fund said.

“In contrast, activity weakens for energy importers with limited participation in the technology value chain,” it added.

US-Israeli strikes targeting Iran since February 28 sparked Tehran’s retaliation in virtually blocking off the Strait of Hormuz, while plunging the Middle East into war.

As traffic stalled in the key waterway for energy transit, global oil prices soared -- weighing on economies.

Oil and gas shipments resumed as a temporary US-Iran deal paused hostilities, but temperatures are again rising.

Igan -- speaking before hostilities resumed, sparked by Iranian attacks on ships in the strait -- said she expected the normalization of traffic through the waterway by 2027.

- ‘Glaring differences’ -

Although the world economy has weathered the shock from the war so far better than feared, the IMF warned: “The global picture blurs glaring differences across countries.” Retail gasoline costs jumped by 30 percent in emerging Asia after the onset of war, and only by 15 percent in Latin America.

While the US economy is still set to expand 2.3 percent this year, growth in the Middle East and central Asia was downgraded by 1.2 percentage points to 0.7 percent.

The downgrade is “consistent with a longer closure of the Strait of Hormuz,” the IMF said, but it added that it expects a larger rebound in the future.

The euro area is set to grow 0.9 percent this year, also a downward revision. Growth in France is pegged at 0.6 percent -- 0.3 percentage points lower than earlier expected.

The world’s second biggest economy, China, saw its growth projection adjusted upwards slightly to 4.6 percent.

Yet, the effects of the war have not fully passed through, the IMF said.

The release of strategic reserves has provided some relief amid reduced energy flows, but there could still be weakness ahead.

The IMF also warned that the possibility of a “renewed Middle East conflict looms large and could extend commodity price volatility, further threaten supply chains, raise prices, and weigh on financial conditions.”

Trade fragmentation could accelerate too, risking higher prices.

Nonetheless, there were some bright spots, the IMF said.

There was a “positive surprise” from some economies key to the global technology supply chain, despite their exposure to disruptions from the war.

The top four net exporters of AI-related hardware -- Taiwan, South Korea, Thailand and Malaysia -- saw resilient growth.

Igan added that expectations of higher inflation this year merely mark a pause, “not a break from the disinflation trend.”

Umpteen differences of opinion between the Asian Development Bank and the Bangladeshi financial-sector regulatory agencies delay the launch of ADB-sponsored taka-denominated bonds for both local and global subscriptions, officials say.
The Manila-based lender plans to introduce the local-currency bonds first on the domestic market and later for overseas subscription.Bangladesh Investment GuideBack in December 2019, the ADB in a letter to the government first expressed interest in issuing both onshore and offshore taka bonds in and outside Bangladesh. Earlier, an ADB delegation, led by then ADB country director Manmohan Parkash, met then finance minister AHM Mustafa Kamal late November discussing the matter.

However, things didn't progress as expected.

In a latest bout, the ADB in May last year submitted its proposal to the Economic Relations Division (ERD) on the issuance of bonds. Later, the Economic Relations Division forwarded the proposal to the Finance Division, Bangladesh Securities and Exchange Commission (BSEC), the National Board of Revenue (NBR), Bangladesh Bank, and the Financial Institutions Division for their opinion.

The ERD later forwarded the regulatory bodies' opinion to the ADB in November last year seeking its response on the opinions. The ADB in the first week of May forwarded its response to the ERD.

A senior official at the Economic Relations Division told The Financial Express an inter-ministerial meeting was scheduled to be held on June 14 last with ERD secretary Shahriar Kader Siddiky in the chair to discuss the regulatory agencies' comments on ADB's proposal and the subsequent response from the Asian Bank.

The meeting was organised to discuss how to lessen the differences of opinion between the ADB and the government bodies on the lender's proposal. However, the meeting was later postponed.Economic Trend Analysis

Sources say in the proposal the ADB has sought an evergreen approval from the ministry of finance to undertake local-currency operations on a recurring basis as its bond issuances are linked to multiple projects that may require extended implementation periods.

However, Bangladeshi officials argue that the sale of BDT bonds on the international market can play a positive role in familiarising the country to investors and investing the proceeds within Bangladesh can help increase foreign-currency reserves. "Nonetheless, approval granted should have a defined time limit."

Also, the ADB has sought permission from the government to allow local investors or resident institutions to buy local-currency bond without prior approval from the regulator concerned.

However, the government agencies say resident institutions do not have a general authority to purchase bonds from a non-resident institution like the ADB. They say, it is essential for local investors/resident institutions to obtain approval from central bank to invest in ADB's bonds as it is identified as a capital account transaction.

In response, the ADB fears that the requirement to obtain prior approval before investing in ADB bonds "would effectively limit ADB's potential investor base".

The ADB also sought approval for exchange of bonds proceeds into other currencies which the government agencies find the basis for this request "not clear" as the funds are intended for investment in Bangladesh.Financial News Subscription

In response, the ADB says, the ability to freely exchange proceeds of its debt enables ADB to efficiently manage liquidity, meet debt service obligations, and allocate funding in support of development operations.

"For onshore bonds, ADB shall reserve the right to convert the bond proceeds. For offshore bonds, ADB will need to convert the USD proceeds into BDT in order to support loan operations in Bangladesh and thereafter convert BDT back into USD to redeem the offshore BDT-linked bond," said the lender.

Also, the ADB has sought confirmation of tax exemption to all investment income arising from its investments in Bangladesh and also interest payments by ADB on its local currency bonds.

The ADB also demands that its local-currency bonds be exempt from local-registration requirements as "this will limit ADB's Taka bond operations". The ADB also wants permission to use the word 'Bank' in its marketing material without having a domestic banking licence.

The regulatory bodies have opined that using the word 'bank' without a banking licence is not allowed in the Bank Company Act 1991.

Furthermore, the Bank seeks confirmation that all domestic institutional investors, including pension funds, provident funds, insurance companies and financial institutions, may invest in the local-currency bonds.Bangladesh Investment Guide

However, the financial-sector regulators say the pension funds, provident funds, insurance companies, banks and financial institutions are the main investors in government bills and bonds. "Therefore, raising fund from these investors by onshore bond and investing that fund in the government bill/bonds could be recognised redundant and not viable for market development."

However, the ADB says its bonds are "not meant to compete with local government bonds/bills. ADB bonds will only be issued on the back of ADB projects".

The sponsor also seeks confirmation that the local-currency bonds will be eligible instruments for reserve requirement purposes of commercial banks in Bangladesh.

In response, the regulatory bodies mention that according to the current policies, no bank, financial institution, or any other international organisation is allowed to participate in Central Bank Repo or Reverse Repo/Standing Lending Facility using any securities other than government securities which are the eligible instrument for statutory reserves.

"If bonds issued by the ADB were allowed for use in central bank Repo and Standing Lending Facilities and eligible instrument for statutory reserves, it could substitute the demand for government securities and impede the government's ability to finance its budget deficit, thus hinder government's debt-servicing and-fiscal planning," they say in their opinion.

"Granting ADB bonds this facility as an alternative instrument to government securities could have a negative impact on the government's debt management and fiscal policy," they add.

A senior ERD official says the differences have to be minimised between the two parties through discussions for a way forward.

Contacted Wednesday, ERD secretary Shahriar Kader Siddiky told The Financial Express that a special assistant to the Prime Minister is working on the local-currency- bond issue alongside different bodies under the Ministry of Finance.

"They can give an idea how it is advancing," he says, expressing his lack of knowledge about the progress on the matter.

Prime Minister Tarique Rahman on Wednesday unveiled a wide-ranging reform agenda to restore stability in the country’s stock market, rebuild investor confidence and bring to justice those responsible for market manipulation that left thousands of investors financially ruined.
Replying to a written question during the 21st sitting of the first budget session of the 13th Jatiya Sangsad, the prime minister said the government has a plan to identify all those responsible for the prolonged decline of the stock market and take legal action against them.

He said investigations into stock market scandals have already been conducted through the Anti-Corruption Commission (ACC), leading to the identification of several individuals and the filing of cases against them. Investigations are continuing to determine whether other individuals or institutions were involved.

The parliamentary sitting, chaired by Speaker Hafiz Uddin Ahmed, took up the question raised by lawmaker ABM Mosharraf Hossain on behalf of Khulna-4 MP SK Azizul Bari.

The prime minister said various experts, investors’ associations and investigative bodies had examined the reasons behind the persistent downturn of the capital market during the previous Bangladesh Awami League government.Stock Market Research

According to those findings, the principal causes included market manipulation and artificial price inflation or suppression, irregularities in initial public offerings (IPOs), bond issues and other securities, weak regulatory oversight, delayed enforcement actions, poor corporate governance, lack of transparency in financial reporting, limited participation by institutional investors, declining investor confidence, policy inconsistencies and the absence of an investor-friendly tax regime, he added.

He said the Bangladesh Securities and Exchange Commission (BSEC) has imposed fines amounting to Tk 14.97 billion on individuals and institutions involved in market manipulation, irregularities and corruption. Reports prepared by investigation committees identifying those responsible have also been forwarded to the ACC for further legal action.

The prime minister said the government is determined to restore stability in the capital market and strengthen investor confidence by promoting good governance, transparency, accountability, greater market depth through product diversification and wider investor education.

As part of that effort, he announced a series of priority programmes, saying that, “The government appointed a new BSEC chairman and three commissioners on June 4 to strengthen the regulator with experienced professionals. Soon after taking office, the new commission withdrew the long-standing floor price mechanism.”

The government will encourage profitable state-owned enterprises to list on the stock exchanges through direct share offloading, while creating opportunities for multinational corporations and other large-cap companies to do the same, the PM said.Investing

“It will also encourage fundamentally strong companies, including small and medium-sized enterprises (SMEs), to enter the capital market.”

“To curb market manipulation, legal protection and incentives will be introduced for whistleblowers reporting irregularities.”

“The government also plans to introduce a new policy for the enlistment of approved auditors and audit firms to strengthen the auditing of listed companies and market intermediaries.”

“Other initiatives include launching a Foreign Portfolio Investment (FPI) onboarding portal, reforming regulations in line with international standards, introducing a one-stop securities custodian service, reducing capital gains tax, abolishing double taxation on dividend income and digitalising the process of opening Beneficiary Owner (BO) accounts and repatriating investment capital.”

The government will amend securities laws to allow direct filing of cases before special capital market tribunals and establish both a Capital Market Reform Commission and a Special Investigation Commission to oversee reforms and investigate irregularities, the prime minister added.

The reform package also includes the use of blockchain technology to expand market infrastructure and investment products, the introduction of online and mobile-based BO account opening and trading through electronic Know Your Customer (e-KYC) services, investment-friendly tax reforms, banking and mobile financial services (MFS)-based BO account transactions, artificial intelligence-powered market surveillance, stronger corporate governance standards, enhanced investor protection measures, modernisation of securities laws and trading of government securities—including Treasury bonds, Treasury bills and government Sukuk—through the stock exchanges to broaden retail investor participation

Multilateral financial institutions have failed to address the economic fallout of geopolitical conflicts, leaving developing countries to bear billions of dollars in additional costs without adequate international support, said Rashed Al Mahmud Titumir, the prime minister’s adviser on finance and planning.

The global development finance system must adapt to a “new normal” of repeated geopolitical and economic shocks, he said at the launch of the Organisation for Economic Co-operation and Development (OECD)’s Multilateral Development Finance 2026 report yesterday, organised by the Centre for Policy Dialogue (CPD).

“Countries like Bangladesh, which are accountable to their citizens, cannot simply pass on higher global energy prices overnight,” Titumir added.

Referring to the recent Middle East conflict, he said Bangladesh had to absorb an additional $3.46 billion in energy costs until June as the government did not fully pass on higher global fuel prices to consumers.

“Imagine what an additional $3.46 billion means for a developing country,” he said.

“If we raise domestic energy prices immediately, inflation will rise further. If we keep prices stable, the government will have to bear higher subsidies.”

GLOBAL INSTITUTIONS NEED TO REBUILD TRUST

Titumir said international organisations had remained largely silent despite the pressure on import-dependent economies.

“I have not seen organisations such as the OECD, the IMF or others actively addressing this challenge,” he said. “This does not frustrate us, but it shows that multilateralism must reclaim its moral authority.”

He said discussions on development finance often focus on declining aid flows, but international financial institutions have failed to address the direct costs of geopolitical conflicts, including higher energy prices, freight charges and supply-chain disruptions.

Many low- and middle-income countries depend heavily on imported fuel and food and have limited capacity to absorb such shocks without affecting economic stability, he added.

“The recent Spring Meetings ended without any proposal for an automatic debt suspension mechanism during global crises,” Titumir said.

“I also saw no meaningful initiative from the OECD or other international organisations to create secure energy and food corridors, despite many developing countries being net food importers and heavily dependent on global supply chains.”

He said freight costs had also surged during recent conflicts, further increasing import bills for countries like Bangladesh, while the international response remained limited.

Titumir warned that multilateral institutions could lose credibility if they failed to respond to the challenges faced by developing countries.

“If they remain silent during times of crisis, how can they continue to earn the trust of people around the world?” he asked.

He called for reforms, including temporary debt relief measures and coordinated efforts to protect energy and food supply chains during conflicts.

The adviser also questioned whether current climate finance systems properly consider the vulnerability of recipient countries.

“We often discuss climate change, but is there a clear link between a country’s vulnerability and the amount of climate finance it receives? I do not think so,” he said.

He argued that countries most affected by climate risks should receive greater financial support. He also expressed concern over the slow progress in making the Loss and Damage Fund operational, saying developing countries were under pressure to pursue low-carbon growth while facing increasingly costly borrowing.

Titumir said multilateral development institutions should be held to the same accountability standards expected from national governments.

“Just as national governments must remain accountable to their citizens, multilateral development institutions must also be accountable to the countries and people they serve,” he said.

Referring to the OECD report, he said it should be viewed not only as a warning about declining aid flows but also as a call to rethink the global development finance system.

“The institutions that shape this system must also rethink how they operate,” he said.

“We need a multilateral development financing system that is more resilient, inclusive and better prepared to address the challenges of the twenty-first century, especially in a world where uncertainty has become the new normal.”

According to the OECD report, the multilateral development system has reached a critical turning point. Contributions from Development Assistance Committee members fell by more than 15 percent in 2024 and are projected to decline by 23 to 30 percent by 2027, signalling a prolonged downturn.

The report warned that the system’s dependence on a few major donors has increased its vulnerability. Eleven DAC members, accounting for about two-thirds of total contributions, announced aid cuts in 2025.

CPD Executive Director Fahmida Khatun moderated the event, which was attended by economists from South Asian countries.

Foreign portfolio investors (FPIs) are steadily pulling out funds from Bangladesh's equity market as they have been moving assets to developed markets amid persistent macroeconomic challenges stemming from geopolitical tensions.

Net investment by overseas investors in the 12 months to May this year stood at negative Tk 4.30 billion, meaning they sold more shares than they bought. Foreign investors purchased shares worth Tk 21.12 billion, while selling shares worth Tk 25.42 billion during the period, according to market data.

Market analysts said the sustained outflow reflects a cautious stance among foreign investors as uncertainty over global economic growth, geopolitical conflicts and relatively attractive returns in developed markets continue to weigh on investment decisions.

Md Akramul Alam, head of research at Royal Capital, said multiple factors, including persistent macroeconomic challenges and global factors, have driven the prolonged foreign fund outflow.

"The overall economic activity remained sluggish, while profitability of major listed companies, including multinational firms, stayed subdued due to high input costs," he said.

The private sector credit growth remained low at 4.98 per cent in May this year, reflecting weak business confidence and tighter lending conditions.

The prospect of a sharp recovery in private sector credit demand looked slim, and that discouraged fresh investments, said Mr Alam.

Moreover, the US-Israel war on Iran has already triggered volatility in global oil prices, raising concerns about inflation and broader economic spillovers in Bangladesh.

Inflation hovered around 9 per cent during the time, and analysts warned that price pressures may persist in the coming months due to continuing global uncertainties, supply disruptions and elevated import costs.

The trend is not unique to Bangladesh. Global fund managers withdrew a record US$137.36 billion from major Asian equity markets during the first half of 2026, marking the fastest six-month capital outflow from the region since at least 2010 after strong gains over the previous two years, according to international media reports.

The outflows reflect concerns over slowing global growth, geopolitical tensions across regions and volatile crude oil prices, reducing investors' appetite for frontier and emerging markets.

Countries including India, South Korea, Taiwan, Thailand, Indonesia, Malaysia, the Philippines and Vietnam have also witnessed foreign fund withdrawals, although the scale has varied across markets.

Analysts said one of the key drivers behind the shift is the relatively higher return available in the United States. Elevated US Treasury yields have encouraged many global investors to move funds into American government securities, which offer attractive returns with lower risk.

The strength of the US dollar has further reinforced the trend by making developed markets more attractive than emerging economies.

Mr Alam also pointed to a global transition in investment towards artificial intelligence-focused companies, reducing portfolio allocations to markets such as Bangladesh and India, which are perceived to be lagging in the AI-driven investment cycle.Economic Trend Analysis

"This trend could reverse once the AI trade, which appears to be in bubble territory, eventually cools off," he said.

Mir Ariful Islam, managing director and chief executive officer of Sandhani Asset Management, attributed the foreign fund outflow to weak investor confidence, a strong US dollar and instability in the financial sector.

When the local currency weakens, foreign investors incur losses as the value of their assets falls even when share prices remain unchanged.

Moreover, foreign investors typically seek a stable, predictable, and long-term policy environment to ensure the safety of their investments, he said.

The newly elected government has yet to present a clear economic roadmap, while the Middle East conflict has further increased global uncertainty.

"Foreign investors are likely to look for greater policy clarity and consistency before increasing their exposure to Bangladesh's equity market," Mr Islam told The FE over the phone.

When it comes to investing in stocks in Bangladesh, foreigners usually prefer multinational companies. Currently, they are not interested in putting their money into these companies either, owing to lower-than-expected earnings in recent quarters.

After a significant decline in annual profit in 2025, the aggregate profits of the 11 multinational companies fell 6 per cent year-on-year to Tk 12.20 billion in January-March this year, according to company disclosures.

BAT Bangladesh's profit nosedived to Tk 5.84 billion in 2025, the lowest since its listing, due to lower sales, higher excise duty, and one-off costs for its Dhaka factory closure.

The tobacco leader's first quarter profit also dropped 34 per cent year-on-year to Tk 2.10 billion through March this year.

As a result, BAT's foreign stake dropped from 3.73 per cent to 2.99 per cent between June last year and June this year.

Grameenphone, the largest stock in terms of market capitalisation, reported its lowest annual profit in 2025 in eight years. However, its first quarter profit grew 4.4 per cent through March this year.

In the meantime, foreign stakes in GP fell to 0.33 per cent in June this year from 0.98 per cent in June last year.

Among the local firms, Olympic Industries experienced a similar trend. Its foreign stake fell to 27.62 per cent in June this year from 34.2 per cent in June last year.

Despite persistent selling of foreign holdings, Mr Islam said the domestic stock market has remained resilient in recent months, supported by strong participation of local institutional and retail investors amid falling Treasury bond yields.

However, he said foreign investors are closely monitoring Bangladesh. "Portfolio investment may pick up again if macroeconomic indicators improve and geopolitical tensions ease."

The government has imposed a fresh round of austerity measures for the fiscal year 2026-27, restricting spending on new vehicles, buildings, land acquisition and most foreign travel to rein in public expenditure, curb inflation and preserve macroeconomic stability.

In a circular issued yesterday, the Finance Division directed all ministries, departments, autonomous bodies, state-owned enterprises, statutory organisations and public sector corporations to cut costs from both operating and development budgets.

The move comes as the government faces mounting challenges in maintaining public expenditure amid slower-than-expected revenue growth.

BORROWING OVERSHOOTS AMID REVENUE SHORTFALL

In the just-concluded fiscal year, government borrowing from the banking sector exceeded its initial target of Tk 104,000 crore.

Last month, the National Board of Revenue (NBR) said its total collection might reach Tk 415,000 crore in the 2025-26 financial year, falling Tk 88,000 crore short of its target.

The tax authority, which generates 86 percent of the country’s annual revenue, recorded 10 percent year-on-year growth to Tk 360,642 crore during the July-May period of the 2025-26 fiscal year.

For the current fiscal year, the government has set the NBR a revenue collection target of Tk 604,000 crore to help finance the Tk 938,000 crore budget.

Analysts have said achieving the target will be challenging given the current pace of revenue growth and the absence of reforms.

The economy is also grappling with high inflation, which averaged 8.68 percent in the 2025-26 fiscal year, subdued private investment and renewed global uncertainty caused by the US-Israel-Iran conflict. The BNP-led government, which was sworn in this February, first tightened public spending through a directive issued in March.

SPENDING FREEZE HITS PURCHASES, ALLOCATIONS

In its latest directive, issued yesterday, the Finance Division said all block allocations under the operating budget have been frozen, while the purchase of motor vehicles, vessels and aircraft has been suspended.

However, exceptions will be allowed for replacing government vehicles that are more than 10 years old and for newly established government institutions, subject to prior approval from the Finance Division.

Except for ambulances and security vehicles, all replacement or newly purchased government cars and jeeps must be fully electric.

The government has also suspended spending on the construction of new residential, non-residential and other government buildings.

Only projects where construction has reached at least 70 percent completion will be allowed to continue, subject to Finance Division approval.

The circular also suspended spending on land acquisition under the operating budget and discontinued interest-free loans for government employees to purchase private vehicles.

Under the Annual Development Programme (ADP), the government has also banned the purchase of vehicles for development projects. The restriction, however, will not apply to projects where vehicle procurement had already been approved before the circular was issued.

Land acquisition under development projects will require prior approval from the Finance Division after all legal and administrative formalities have been completed.

Similarly, any spending from the government’s reserved allocation for “development assistance for special needs” under the Planning Commission will require prior approval from the Finance Division.

The government has also significantly tightened rules governing overseas travel by public officials.

All government-funded foreign training programmes, seminars, symposiums and workshops have been suspended.

Officials will still be allowed to travel abroad for master’s and PhD programmes funded through scholarships or fellowships provided by foreign governments, universities or development partners.

Participation in overseas training programmes financed entirely by foreign governments, international organisations or development partners will also remain permissible.

The foreign component of mandatory and basic training programmes may continue if organised by appropriate overseas universities or institutions.

The circular also permits overseas travel for highly specialised inspections, such as Pre-shipment Inspection (PSI) and Factory Acceptance Tests (FAT), but only where the products are technically complex, or such inspections are mandatory.

In such cases, only relevant experts or technically certified officials may undertake the visits.

Benapole Customs House, the country's largest land port, missed its revised revenue target by Tk4,731 crore in FY2025-26, amid lower imports, slower trade and growing concerns over alleged irregularities in customs management.The revised revenue target for the fiscal year was Tk11,290 crore. However, the actual collection stood at Tk6,559 crore, according to customs data. In FY2024-25, revenue collection was Tk7,029.38 crore.Imports through the port also declined to 1.40 million tonnes in FY2025-26 from 1.60 million tonnes a year earlier, a drop of nearly 197,000 tonnes. NBR data also show lower imports of high-duty items, including fruits, sarees and three-piece suits.While officials cite lower imports, sluggish international trade and changes in the tariff structure as reasons for the shortfall, recent allegations of weighbridge manipulation, customs evasion, undeclared imports, misuse of South Asian Free Trade Area (SAFTA) facilities and theft of goods from port sheds have raised fresh concerns.Business leaders and customs-related stakeholders claim better control of such irregularities could have positively affected revenue collection.

According to traders and importers, an organised syndicate has long been exploiting false declarations, weight manipulation and duty concessions to evade customs duties.

Data from Benapole Land Port show duty rates on SAFTA imports rose from 7% in FY2023-24 to 11% in FY2024-25 and 35% in FY2025-26. Traders allege the increase has encouraged attempts to clear high-duty goods under declarations for lower-duty items.

A recent letter signed by Benapole Customs Assistant Commissioner Atal Goswami triggered fresh scrutiny. On 14 June, two different empty-weight records were generated at the same time for the same Indian truck at a digital weighbridge. One record showed 4,880kg and the other 4,920kg.

Customs sought a written explanation from port authorities within three working days. A customs official, speaking on condition of anonymity, said the consignment contained bicycle parts and was later detained for investigation.

Several incidents between March and June have intensified concerns. On 12 March, customs uncovered the alleged theft of Indian sarees and three-pieces worth nearly Tk6 crore, imported under a declaration for baking powder. After an investigation, customs filed a case against 18 people on 10 June.

Five days later, goods worth about Tk1.5 crore were seized from Shed No. 26 after being imported under declarations for erasers and pencils.

On 25 April, customs detected weight discrepancies involving a truck carrying imported grapes. Although an investigation followed, those concerned attributed the issue to a technical fault in the weighing equipment.

On 21 June, BGB seized a truck carrying Indian sarees and cosmetics worth about Tk2.5 crore. Assistant Revenue Officer Indrajit Mukherjee was detained, while Assistant Revenue Officer Ariful Islam Chowdhury, customs sepoy Mohammad Sagar and several others faced departmental action.

On 25 June, CCTV footage captured the transfer of 40 packages from an Indian truck to a Bangladeshi truck in the chemical zone. Customs later found a discrepancy involving 2,784kg of goods.

Port authorities filed a case against 10 people, including Ansar members, private security personnel, truck drivers, helpers and customs officials. The FIR claimed that goods had been removed from within the port using counterfeit entry passes, contravening established security protocols.

Between March and June, four separate cases were filed over customs evasion, theft of goods and security breaches. A total of 54 people, including unidentified suspects, were accused. During this time, the licences of nine clearing and forwarding agents were suspended on a temporary basis.

While departmental action has been initiated against several customs officials, investigations into the majority of the high-profile incidents remain ongoing.

Benapole Import-Export Association General Secretary Ziaur Rahman said incidents of theft or duty evasion inside port sheds should be investigated impartially, including the role of those responsible for supervision. "Unless the actual culprits are identified, such irregularities will persist," he stated.

Businessman Habibur Rahman Hobi said even minor manipulation of digital weighbridges could cause the government to lose crores of taka in revenue and called for round-the-clock technology-based monitoring.

Benapole Land Port Director Shamim Hossain stated that allegations of weighbridge manipulation and other irregularities are being taken with the utmost seriousness. An inquiry committee has been formed, and action will be taken if wrongdoing is found.

Benapole Customs Commissioner Md Faizur Rahman said customs remained fully committed to preventing revenue leakage. "No one involved in weighbridge manipulation, false declarations or duty evasion will be spared," he said, adding that criminal as well as departmental action would be taken if evidence is found.

Jashore Chamber of Commerce Secretary Tanvirul Islam Sohan said repeated allegations involving weight discrepancies, recovery of high-duty goods, theft, duty evasion and administrative action had naturally raised questions about revenue management at the country's largest land port.

He called for impartial investigations, stronger technology-based monitoring and visible action against those responsible, alongside improved port facilities.