Bangladesh’s overall inflation climbed to a 16-month high of 9.42 percent in May, driven largely by a sharp rise in food prices that is squeezing household budgets, particularly for low- and middle-income families.

According to data released by the Bangladesh Bureau of Statistics (BBS), food inflation rose to 9.06 percent in May from 8.39 percent in April, reflecting higher prices of essential commodities. Non-food inflation also increased, reaching 9.71 percent from 9.57 percent in April.

Rural areas bore the brunt of the rise, with inflation climbing to 9.48 percent from 9.05 percent the previous month. Urban inflation rose from 9.02 percent to 9.25 percent.

A BBS official, speaking on condition of anonymity, said the increase was spread across a range of commodities rather than concentrated in any single category of items.

“It increased in some places and decreased in others. For example, summer vegetable prices have been easing, but year-round and winter vegetables such as tomatoes and carrots are rising again. Egg prices have also gone up,” the official noted.

They added that the full effect of the recent fuel price adjustment had not yet been captured in the May figures, and that a further spike in inflation next month was likely as a result.

Analysts and policy researchers agree that the current trajectory is cause for concern, and that the risks ahead may be greater than the May figures alone suggest.

Ashikur Rahman, principal economist at the Policy Research Institute (PRI) of Bangladesh, said the government was compelled to adjust fuel and electricity prices to tackle the impacts of the US-Israel war on Iran.

It is natural that the impact will eventually spread across the entire supply chain and be reflected in higher prices, he noted.

“What is more concerning is that inflation may rise further in the coming days,” he said, arguing that the financial situation, combined with planned subsidy expansion in the budget, pointed in that direction.

Rahman said judging from the design of the budget, it could no longer be said that the country is pursuing a contractionary monetary policy, since such a policy required a tight fiscal stance alongside a high policy rate.

Instead, he said, the government was moving toward expansionary fiscal policy and a looser monetary environment simultaneously — a combination that carried significant inflation risk.

“If immediate attention is not given to this issue, inflation could rise sharply within a short period,” he cautioned, noting that similar situations have been observed in Pakistan and Sri Lanka.

“When an economy experiences a supply shock, some argue that there is no need for a contractionary monetary policy environment. This view is wrong,” he said. “To bring inflation under control, a tight monetary environment is necessary, accompanied by a correspondingly tight fiscal stance. Unfortunately, we are moving in the opposite direction on both fronts.”

The Centre for Policy Dialogue (CPD) has reached a similar conclusion about the underlying drivers.

In a recent report, the think-tank found that external shocks, including the Covid-19 outbreak, the Russia–Ukraine war, and the Middle East conflict, have exerted significant upward pressure on essential commodity prices in Bangladesh, exposing the economy’s growing vulnerability to international disruptions and their spillover effects on domestic inflation.

Both Rahman and CPD point to structural weaknesses in domestic markets as compounding the problem.

The CPD called for stronger monitoring and regulatory oversight of intermediaries, particularly those who trade in bulks, to curb collusive practices and artificial price manipulation in essential commodity markets.

It also recommended reducing excessive layers of intermediaries in supply chains to narrow the gap between farm-gate and retail prices.

The think-tank also urged the government to maintain strategic reserves of essential food items and release them during supply shocks to stabilise prices. It also recommended strengthening social protection schemes for low-income households in light of recent hikes in cooking gas and transportation costs.

PRI’s Ashikur, meanwhile, noted that with inflation approaching 10 percent, attempting to stimulate growth through expansionary policies was highly risky.

He recommended attracting investment through productivity-enhancing reforms instead, including privatisation of state-owned enterprises, easing of investment and business regulations, and prioritised spending in the energy and logistics sectors.

Experts, bankers, academics and policymakers yesterday called for the formation of a dedicated reform commission for the banking sector, warning that years of politically backed bank takeovers, weak oversight and regulatory failures have eroded public confidence in the financial system.

The call was made at a seminar titled “Good Governance in the Banking Sector and the Role of the Media”, organised by the Economic Reporters’ Forum (ERF) at its office in Paltan, Dhaka.

Speaking as the chief guest, Information and Broadcasting Minister Zahir Uddin Swapon said the government would bring banking sector reforms under a dedicated commission.

“When commissions have been formed for the media, anti-corruption efforts, and administrative reforms, why should such an important sector be left out? We will certainly do it,” he said.

He added that good governance in the banking sector cannot be achieved without broader reforms in the state and political system. He alleged that economic data had been manipulated in the past to hide the true condition of the economy.

“Without support from the state, it would not have been possible to alter performance-related statistics and information in this way,” he said.

Swapon also stressed the need to reduce the economy’s heavy reliance on bank financing and develop a stronger capital market.

At the seminar, Mohammad Mamdudur Rashid, managing director and CEO of United Commercial Bank (UCB), said the sector is facing multiple challenges due to governance failures, although some banks have continued to perform well.

He added that the industry had also been affected by the Covid-19 pandemic, the Russia-Ukraine war and developments after August 2024.

According to Rashid, accountability and transparency are the two foundations of good governance.

“The ratio of non-performing loans rose from 11 percent to 25 percent mainly because of greater transparency. In 2025, Bangladesh Bank instructed banks to disclose the actual figures, making the true picture visible,” he said.

He also said vested interests and weak ethics contributed to current problems, adding that the media had helped expose irregularities long before they became widely acknowledged. However, he warned that inaccurate reporting could weaken depositor confidence.

Shamsul Huq Zahid, editor of The Financial Express, said Bangladesh has too many banks.

“If the economy needed 15 banks, licenses were issued for around 60. Supervising such a large number of banks has become difficult,” he said, adding that comprehensive reforms are urgently needed.

DEPOSITORS’ HARDSHIP AND REGULATORY CONCERNS

Md Shahidul Islam Zahid, professor and chairman of the Department of Banking and Insurance at the University of Dhaka, said depositors are now being forced to queue up to access their own money, which shows the depth of the sector’s problems.

“We tried to build a strong economy while hiding enormous amounts of dirt under the carpet. The question is: where were the regulators?” he said.

He criticised regulators’ role during politically backed bank takeovers and questioned why Bangladesh Bank did not raise public concerns at the time.

Referring to audit irregularities, he said some banks reported profits that later turned into losses after independent audits.

“In one case, a bank reported a profit of Tk 450 crore in 2023, but an audit later found it had actually incurred a loss of Tk 250 crore. Such manipulation involved top-tier auditors and received regulatory approval,” he said, calling for accountability for all parties involved.

Md Ezazul Islam, director general of the Bangladesh Institute of Bank Management (BIBM), said shareholders provide only about 4 percent of funds in the banking sector, while depositors supply the remaining 96 percent.

“Yet those who own just 4 percent effectively control the banks, while depositors who provide most of the funds are struggling to access their money,” he said.

He called for greater autonomy, transparency and accountability at Bangladesh Bank, urging it to fully use its legal powers.

Sayema Haque Bidisha, professor in the Department of Economics at the University of Dhaka, stressed the need for objective analysis of financial data. She also urged the media to closely monitor how the newly announced Tk 60,000 crore stimulus package is used.

As a special guest, Nurun Nahar, deputy governor of Bangladesh Bank, said most bank funds belong to depositors, who keep their money in banks based on trust.

“When people cannot withdraw their money when needed, a crisis arises,” she said.

She said some borrowers take loans without any intention of repaying them and are identified as wilful defaulters. She stressed the need for regular inspections and effective implementation of inspection reports to prevent irregularities.

She also acknowledged that many banking sector scandals were first exposed through media reports, adding that misuse or embezzlement of public money can never be justified.

Masrur Riyaz, chairman of Policy Exchange Bangladesh, also spoke at the event.

The keynote paper was jointly presented by Obaidullah Rony, special correspondent of Samakal, and Sanaullah Sakib, senior reporter of Prothom Alo.

The seminar was chaired by ERF President Doulot Akter Mala and moderated by ERF General Secretary Abul Kashem.

Bangladesh Bank (BB) on Sunday launched a Tk 30 billion (Tk 3,000 crore) export diversification refinance scheme aimed at strengthening production capacity and expanding the country’s export base beyond the ready-made garments (RMG) sector.

The Sustainable Finance Department of the central bank issued a circular in this regard, saying the scheme has been introduced to address product and market concentration risks arising from Bangladesh’s heavy dependence on RMG exports and to support the development of high-potential export sectors.

According to the circular, the refinance fund will be formed from the excess liquidity of scheduled banks and will operate as a revolving fund.

Bangladesh Bank will provide refinancing to participating financial institutions (PFIs) at an interest rate of 4 percent, while exporters will receive financing at a maximum rate of 7 percent.

The tenure of the facility has been fixed at three years, including a grace period of up to six months, with interest calculated under the reducing balance method.

The central bank said the scheme is designed to enhance export competitiveness, increase foreign exchange earnings, improve the country’s trade balance and create employment opportunities through the expansion of non-traditional export sectors.

Financing under the scheme will be available to industries identified as “Highest Priority” and “Special Development” sectors under the Export Policy 2024-27.

Preference will be given to exporters using locally sourced raw materials, while sectors such as jute and leather have been highlighted as key areas for export diversification.

The circular stipulates that exporters classified as loan defaulters in Credit Information Bureau (CIB) reports, businesses with overdue export proceeds and entities with a history of loan write-offs will not be eligible for financing under the scheme.

Banks and financial institutions willing to participate must sign a Participation Agreement with Bangladesh Bank’s Sustainable Finance Department.

Islamic banks will also be eligible to provide financing through Shariah-compliant investment modes, subject to compliance with the scheme’s pricing and tenure requirements.

To obtain refinancing, PFIs will have to submit applications for each disbursement within 90 days along with required documents, including demand promissory notes, letters of continuity, debit authority letters and updated CIB reports.

A minimum debt-equity ratio of 70:30 will be maintained for all investments financed under the facility.

The central bank has also introduced strict monitoring and accountability measures. PFIs will be required to submit quarterly reports within 15 days of the end of each quarter, while Bangladesh Bank will conduct regular inspections to ensure proper utilization of funds.

Under the penalty provisions, PFIs found providing false information or allowing misuse of funds will be charged a five percent penalty interest in addition to the normal refinance rate.

The amount will be recovered directly from the institution’s current account maintained with Bangladesh Bank.

The circular further states that if a borrower becomes classified as a defaulter, the concerned PFI must immediately inform the central bank.

In such cases, Bangladesh Bank may recover the entire outstanding refinance amount from the institution’s current account through a one-time deduction.

The scheme has been introduced under the powers conferred by Section 45 of the Bank Company Act, 1991, as amended in 2023, and has come into effect immediately.

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) will hold an emergency board meeting today to review the persistent decline in garment exports.

The meeting, to be held at the BGMEA office in Uttara, Dhaka, will primarily focus on the export downturn, BGMEA Director Faisal Samad said. It will also discuss the recent closure of several garment factories and the factors behind them.

The association will also engage with the government to address the challenges facing the garment sector and stem the decline in exports, he said.

Garment exports have been falling for nearly a year, Samad said, driven not only by tariff-related issues but also by geopolitical tensions, longer lead times and challenges associated with the country’s graduation from least-developed country (LDC) status.

In the July-May period of fiscal year 2025-26, garment exports totalled $35.31 billion, marking a 3.41 percent decline from $36.56 billion in the corresponding period of fiscal year 2024-25, according to data from the Export Promotion Bureau.

The meeting is also likely to discuss the US tariff issue, BGMEA President Mahmud Hasan Khan said, as it has created uncertainty among businesses.

A fund will also be created for members so that it can be used in emergencies, he said.

A major European clothing retailer operating in Bangladesh said, requesting anonymity, that the outlook for garment exports may not improve significantly in the next season due to continued volatility in the global market.

The longer lead time is a major problem in Bangladesh, he said. Shipments from Bangladesh take 30 to 40 days to reach Europe, and in some cases even longer. Longer lead times also increase operational costs, making it difficult for manufacturers to remain profitable on thin margins.

Bangladesh should sign a free trade agreement with the European Union or negotiate to secure GSP+ status, as preferential market access to the EU will end following the country’s LDC graduation, he suggested.

Formal credit growth in the private sector remains almost static, reaching 4.75 per cent in April, signalling a deep slowdown in the country's business activities.

The low trend in credit demand from private enterprises is attributed to banks becoming more cautious amid rising non-performing loans (NPLs) and private borrowers losing their credit appetite due to multiple anti-business factors, including the energy crisis, higher lending costs, and external shocks stemming from the Middle East crisis.

The Bangladesh Bank's (BB) private sector credit growth data, available since 2003, shows April growth was the second-lowest after the previous month's count of 4.72 per cent.

According to the BB, outstanding loans taken by private sector entrepreneurs reached Tk 18.03 trillion by the end of April, up 4.75 per cent from Tk 17.22 trillion a year earlier.

In fact, private credit growth has hovered around single digits since August 2024, reflecting prolonged sluggishness in the $460 billion economy that is largely private-sector-led.

Seeking anonymity, a central bank official says the banking regulator continues its contractionary monetary policy stance, keeping the policy rate at 10 per cent as part of its inflation control measures despite criticisms from business circles.

"The higher lending rate, energy crisis, and external shocks stemming from the Middle East crisis are major reasons behind the plummeting credit demand," he says.

He mentions the half-yearly monetary policy statement (MPS) projection for private credit growth up to June next year is 8.50 per cent, but the current growth remains below that.

However, growth could pick up in the last quarter of FY26, he adds.

President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Mohammad Hatem says entrepreneurs are struggling to survive in the market under the extreme business and investment climate that prevails.

He cites multiple factors like the prolonged energy crisis, higher borrowing costs, and anti-business taxation policy, saying these are making it difficult for businesspeople to survive.

"Under such circumstances, who dares to think of business expansion? I do not know how the growth (4.75 per cent) has happened and who the borrowers are. Will they be able to repay the loans? I have enough doubts," he adds.

With an upscale new budget coming in few days now, the government targets borrowing 8.0-percent higher from the banking sector and 20-percent bigger from savings schemes to finance deficit amid unpromising revenue-earning prospects, officials say.

According to Finance Division sources, in the next fiscal year, the government plans to borrow some Tk 1.12 trillion from banks compared to current year's budgetary target of Tk 1.04 trillion.

Data show that until May 10, the government had actually borrowed Tk 1.95 trillion from the banking sector to meet its needs.

Also, the government is targeting to borrow some Tk 150 billion from the national savings schemes to help finance the Tk 9.38-trillion largest-ever fiscal budget in Bangladesh.

In the outgoing fiscal year, the government had targeted borrowing Tk 125 billion from national savings schemes. However, due to selling pressure from the buyers, the government's net selling of savings instruments fell into negative territory by Tk 5.55 billion until February last.

Officials say that as the government is making a large-size budget without confirming adequate sources of earnings, it will have no option but to raise dependence on the banking sector to meet its financial needs.

In the next year's budget, the government is setting a target of collecting Tk 6.95 trillion as revenues, compared to its highest revenue collection in the recent past amounting to Tk 4.09 trillion.

The finance officials say the National Board of Revenue (NBR) alone is going to be given a target to collect Tk 6.04 trillion, higher by Tk 2.43 trillion than its previous records in revenue mobilisation.

So, they say, as revenue collection will fall short of its target and foreign fund flow is not promising in the coming year, government's net bank borrowings will mount in the next fiscal year, surpassing the target.

Dr Zahid Hussain, a former lead economist at the World Bank's Dhaka office, says it seems that "debt trap is now a matter of time" as the government is increasingly depending on loans instead of enhancing revenue earnings.

"The money the government is borrowing from the banks is being used for meeting its operational needs instead of using them in productive sectors," the economist notes.

Thus, he adds, the government's debt burden is increasing day by day.

Because, he says, the government will have to return the money with interest.

Mr Hussain also makes a point that high government borrowing from banking sector lessens fund flow for private-sector investment, thus lowering employment growth that ultimately impacts overall economic growth in the country.

The National Board of Revenue (NBR) is considering reducing the source tax on a range of non-core supply items – including packaging materials, office stationery, and administrative and marketing-related goods used in local industry and service sectors – from 5% to 4%. The advance income tax (AIT) levied at the import stage may also be trimmed by one percentage point.

A senior NBR official, speaking on condition of anonymity, said the proposal has been shaped by business demands and is expected to feature in the upcoming budget. "This may reduce costs for businesses and, ultimately, help protect consumers from rising prices of goods and services."

The move follows remarks by NBR Chairman Abdur Rahman Khan in March, when he signalled that source tax rates across sectors would be rationalised and aligned with firm and industry profitability to minimise refund complications.

Under the current framework, excess source tax deducted at the supply stage can be offset against future profits. In practice, however, many firms either fail to claim such adjustments or avoid doing so because of procedural complexity. The result: companies frequently pass on the burden through higher prices, while others underreport income to ease compliance pressure.

Business leaders and tax experts have broadly welcomed the proposal.

Debabrata Roy Chowdhury, Director of Nestlé Bangladesh, called it a positive development. "We deduct tax from our suppliers and deposit it. But at the current rate, suppliers need to earn more than 20% profit to absorb it, which is not realistic. They cannot adjust it, so they pass it on through higher prices," he told TBS.

Another entrepreneur noted that while compliant firms properly deduct and remit taxes, a significant portion of the market underreports income to sidestep the burden – a trend the higher rate has helped entrench. Chowdhury added that at the 5% rate, a substantial sum is withheld annually at the supply stage, squeezing cash flows across the chain.

Tax experts are calling for further refinement, suggesting that source tax rates be calibrated against corporate profitability based on financial statement analysis. They note that the rollout of the Document Verification System (DVS) has improved transparency, making such fine-tuning more feasible.

Snehasish Barua, managing director of SMAC Advisory Limited, backed the proposal, describing the cut as beneficial for both businesses and consumers. "Lowering the upfront tax on imports and supplies from 5% to 4% directly solves a major corporate headache: trapped cash flow," he said, adding that easing upfront tax pressure would improve liquidity, reduce transactional friction, and strengthen compliance.

On the question of fiscal impact, Barua acknowledged a likely short-term dip in revenue but argued that improved efficiency and stronger compliance would offset it over time. "With inflation squeezing everyday budgets, this policy acts as a shield against rising prices," he said.

Source tax collections currently account for more than 60% of the government's income tax revenue, though a detailed breakdown between local supply deductions and import-stage AIT is not publicly available.

According to NBR's 2022-23 financial statement, Tk15,728 crore was collected at the local supply stage and Tk11,866 crore at the import stage – a combined figure that experts say is substantially tied to the prevailing 5% rate.

Bangladesh’s point-to-point inflation rose to 9.42 per cent in May 2026, driven mainly by an increase in food prices, according to the latest data released by the Bangladesh Bureau of Statistics (BBS).

The inflation rate was 9.04 per cent in April 2026 and 9.05 per cent in May last year.

Food inflation climbed to 9.06 per cent in May from 8.39 per cent in April. The rate was 8.59 per cent in May 2025.

Non-food inflation also increased slightly to 9.71 per cent in May from 9.57 per cent in the previous month. It was 9.42 per cent in the same month a year ago.

Meanwhile, the 12-month moving average inflation declined to 8.63 per cent during the July 2025-May 2026 period, compared to 10.13 per cent recorded in the corresponding period a year earlier.

The BBS data showed that inflation increased in both rural and urban areas in May.

In rural areas, the general inflation rate rose to 9.48 per cent in May from 9.05 per cent in April. Food inflation in rural areas stood at 8.95 per cent, while non-food inflation was 9.98 per cent.

In urban areas, the general inflation rate increased to 9.25 per cent in May from 9.02 per cent in April. Urban food inflation stood at 9.29 per cent and non-food inflation at 9.24 per cent.

The latest inflation data came at a time when consumers across the country continue to face pressure from elevated prices of essential commodities and household expenses.

Despite vast potential for expanding local or native chicken production, rural farmers are being deprived of fair prices due to weak market systems, disease outbreak, a shortage of quality chicks, and the dominance of middlemen.

Against this backdrop, stakeholders believe that establishing an integrated value chain from production to marketing, directly connecting farmers to markets, and ensuring fair pricing could transform the local chicken sector into one of the key drivers of Bangladesh's rural economy.

These views emerged at a national-level roundtable discussion titled "Building a resilient Native Chicken Economy in Bangladesh," held yesterday (7 June) at the TBS conference room in the capital.

The event, which was jointly organised by Heifer International Bangladesh and The Business Standard, attended by government officials, researchers, poultry sector entrepreneurs, development organisations, and farmer representatives.

Presenting the keynote paper, Dr Md Mufazzal Hossain noted that nearly half of the country's total poultry population consists of indigenous or native chickens, and around 70% of rural households raise them in some form. Even a modest improvement in the sector's productivity, he said, could make a significant contribution to national animal protein production.

He pointed out that native chickens have stronger disease resistance and can be raised at relatively low cost. However, major challenges remain-including Newcastle disease, a shortage of quality chicks, inbreeding, and weak market linkages. While rural farmers sell local or indigenous chickens at around Tk450 a kg, the price in urban markets reaches up to Tk600-700 per kg.

He also called for cooperative-based marketing systems, linkages with supermarkets, easy access to credit, and a dedicated government project for the development of native chicken.

Sharing her experience, Roshni Akter, a farmer representative from Baraigram, Natore, said her income from raising native chickens has grown significantly through training and technical support.

She stressed that without adequate nutrition, egg production drops and profitable farm management becomes difficult, and called for affordable quality feed and market support for the small farmers.

President of the Bangladesh Poultry Industries Central Council (BPICC) Md Moshiur Rahman emphasised that ensuring biosecurity and rapidly delivering domestically produced vaccines to the field level are essential for the sustainable development of the poultry sector, noting that demand for eggs and poultry meat is rising rapidly, and consumer interest in native chicken has also grown noticeably – supermarkets that once stocked it occasionally now maintain near-regular supplies. He also called for waste management to be included as a condition of farm registration.

Shoshi Ahmed, a faculty member at Rajshahi University, said there is significant potential to substantially increase native chicken production at the rural level. While most households currently raise an average of 10 chickens, proper management and modest investment could raise that number up to 70–100. She stressed the importance of regular vaccination for disease control and ensuring improved housing conditions. She also emphasised the need to develop cooperative-based value chains to ensure the commercialisation of the native chickens and fair pricing for the farmers.

In her welcome address, Country Director of Heifer International Bangladesh Nurun Nahar said that strong partnerships among the government, private sector, research institutions, and development organisations are essential for the sustainable development of the indigenous chicken sector.

She said the time has come to move beyond isolated projects and adopt long-term, nationally coordinated programmes, with equal importance given to increasing production, improving market systems, ensuring fair pricing, and food security – alongside biosecurity and hygiene standards at the market level. Through coordinated efforts and effective policies, she added, it is possible to build a sustainable and safe production system for the indigenous chicken sector.

Speaking as chief guest, Md. Shahzaman Khan, Director General of the Department of Livestock Services, reaffirmed the government's commitment to developing indigenous breeds and local livestock.

He noted that through research, improved indigenous chicken breeds capable of laying 140-170 eggs per year have been developed. Since 80–90% of farmers in Bangladesh are still at the marginal level, building their capacity and increasing their income remains critical.

He stated that ensuring four key elements – improved breeds, proper housing, balanced feed, and regular vaccination — would make indigenous chicken farming more profitable, and that the Department of Livestock Services aims to work with all stakeholders toward this goal.

Participants collectively emphasised the need for coordinated policy support, stronger extension services, and accessible quality chicks and vaccines, as well as the development of cooperative-based marketing systems — all of which, they agreed, would enable the indigenous chicken sector to play a vital role in rural employment, nutrition security, and economic development.

A special parliamentary committee has recommended expanding Bangladesh's strategic fuel reserves to ensure a minimum three-month storage capacity and diversifying import sources to strengthen the country's energy security.

The committee also made 12 recommendations to address the recent energy situation and prevent similar crises in the future.

It emphasised introducing comprehensive digital monitoring of the supply system, expanding the use of renewable energy, and accelerating the implementation of key infrastructure projects.

Power and Energy Minister Iqbal Hasan Mahmud presented the committee's report in parliament today (7 June).

The report also incorporated 10 recommendations submitted by opposition members.

The committee stressed the need to increase the use of LNG and renewable energy as alternative energy sources. It also recommended the swift implementation of the Dhaka-Chattogram pipeline, the Single Point Mooring (SPM) project and the second unit of Eastern Refinery (ERL-2).

In addition, the committee highlighted the importance of making rooftop solar installations mandatory and ensuring regular monitoring of their effectiveness. It also advised adopting necessary plans and effective measures to reduce system losses in electricity distribution.

According to the report, pressure on the country's fuel supply system has been created by rising international fuel prices, the war situation in the Middle East, disruptions to shipping through the Strait of Hormuz, instability in global supply chains, and domestic factors such as panic buying, illegal stockpiling and black-market activities. As a result, concerns and uncertainty have emerged among the transport, agriculture and industrial sectors, as well as the general public.

The committee recommended adopting an integrated plan for power generation from a variety of sources, including oil, gas, coal, solar and wind energy.

The report stated that a study should be conducted to determine whether opportunities can be created for private companies, alongside Bangladesh Petroleum Corporation (BPC), to import fuel products.

It also recommended strengthening public awareness campaigns to reduce irrational stockpiling and panic buying during periods of crisis.

According to the report, in the context of volatility in global energy markets and prevailing geopolitical realities, there is a pressing need to make the country's long-term energy policy, infrastructure and supply system more stable, diversified and technology-driven.

The special committee believes that the recent situation has created an important opportunity to reassess Bangladesh's energy security framework.

Opposition's 10 recommendations

The opposition proposed conducting demand assessments for power and energy through an independent committee of experts free from political influence.
According to them, realistic planning is needed to avoid exaggerated demand forecasts.

They also recommended maximising the utilisation of coal-fired power plants, increasing domestic gas production, undertaking new gas exploration both onshore and offshore, continuing crude oil exploration, and accelerating the implementation of the SPM and Eastern Refinery-2 projects.

The opposition's recommendations also included large-scale expansion of solar power, assessing the feasibility of micro-hydro projects in the hill regions, exploring the potential for river-flow-based power generation, and reducing the use of government vehicles during energy crises.

They further proposed research into the potential of hydrogen fuel technology, biogas and waste-to-energy generation. According to the opposition, it is essential to diversify the power and energy sector and reduce excessive dependence on any single energy source.

On 26 April, the 10-member special committee comprising parliament members from both the government and opposition was formed to review the country's energy security and determine future actions in the national interest.

The National Board of Revenue (NBR) has extended the deadline for businesses to enter previously submitted paper-based VAT returns into the electronic VAT (e-VAT) system until June 30, 2026, ahead of the planned introduction of mandatory online VAT return filing from July.

According to an NBR press release issued on Sunday, a new sub-module titled "Hard Copy Return Entry" has been incorporated into the e-VAT system to facilitate the digital entry and preservation of all monthly VAT returns that had earlier been submitted in hard copy form.

The revenue authority said it had issued a circular on January 5, 2026 outlining the procedures for using the sub-module and had initially set March 31, 2026 as the deadline for entering all paper returns into the online system.

However, data from the e-VAT platform indicate that a significant number of hard-copy returns have yet to be entered electronically.

As part of its preparations to make online VAT return submission compulsory from July 2026, the NBR has decided to grant businesses additional time until June 30 to complete the process.

The NBR warned that businesses failing to enter their paper returns into the e-VAT system within the revised deadline would face restrictions.

In such cases, their closing balances as of May 2026 would be frozen, meaning no adjustments could be made against those balances in the future.

The revenue authority also noted that all VAT returns must be available in the online system for refund applications to be processed. As a result, businesses that do not enter all their previous VAT returns into the e-VAT platform will not be eligible to submit refund claims.

The NBR urged taxpayers to cooperate fully with its ongoing efforts to digitise all revenue-related activities, saying the initiative is aimed at enhancing transparency and accountability in the country's tax administration system.

To expand the tax base, the government is set to make Taxpayer Identification Number (TIN) mandatory for opening bank accounts. Existing account holders will also need a TIN to keep their accounts active.

However, exemptions may apply only to students, recipients of government allowances, and individuals or entities officially exempted through gazette notifications, according to sources at the National Board of Revenue (NBR).

Finance Minister Amir Khosru Mahmud Chowdhury is expected to propose the measure in the upcoming budget.Currently, a large number of bank account holders do not have TINs. In such cases, higher source tax is applied on interest income, although obtaining a TIN has never been mandatory for banking access.Bankers warned that the requirements could reduce the number of bank accounts and slow transactions through formal channels. However, experts argue that linking banking activities with tax compliance would improve monitoring and reduce tax evasion.The NBR is also planning wider data integration with banks. Beyond banking data, it aims to link its systems with National ID (NID), utility services, sub-registry offices, and other government databases through an online platform.

In addition, the tax authority is considering several new measures to widen the tax net, including making TIN mandatory for registering motorcycles with engine capacity of 150cc or above, introducing a Withholders Registration Number (WIN) for entities deducting source tax, and imposing a 0.20% tax on retailers.

Syed Mahbubur Rahman, managing director of Mutual Trust Bank, told TBS that previous moves to make TIN mandatory for credit card holders had reduced uptake. A similar impact could be seen in banking transactions if account opening is tied to TIN requirements.

"There is already a degree of fear about the banking sector. The NBR should address these concerns before introducing further mandatory requirements," he said.

Bangladesh currently has around 17 crore bank accounts, although many individuals or institutions hold multiple accounts. The exact number of account holders remains unclear.

Tax expert and Managing Director of SMAC Advisory Limited Snehasish Barua said mandatory electronic TIN (e-TIN) requirements risk reversing financial inclusion in Bangladesh's cash-heavy economy.

He said such a barrier could push entrepreneurs away from formal banking, increase reliance on cash, ultimately affecting bank deposit growth and liquidity.

He added that instead of strict mandates, the state should first move towards a cashless ecosystem, allow digital disclosure of bank accounts in tax returns, and gradually integrate tax and banking systems within a defined timeframe.

"Full integration of national asset databases with tax returns would help curb evasion and expand the tax base," he added.

The country's private sector credit growth stood at a historic low of 4.75% in April this year, reflecting weak business confidence, slowing investment, and mounting global economic challenges.

Private sector credit growth stood at 4.72% in March, indicating a slight increase. Central bank data shows that growth remained below 5% for two consecutive months.

Economists and bankers said that following the February national election, the overall political environment has improved comparatively. However, the global economic situation and fuel crisis have disrupted demand and supply chains. As a result, investment has remained subdued.Mohammad Ali, Managing Director of Pubali Bank, believes there are several reasons behind the record-low private sector credit growth. He said that while there are many barriers to doing business in the country, the global fuel crisis significantly affected economic activity in March and April. The situation created concern among businesspeople and disrupted the private sector as well.

"Businessmen consider fuel costs when starting a new business or expanding an existing one. The country's businesspeople were reluctant to expand their operations due to the fuel crisis stemming from the Middle East war," he said.

He further said the export situation is not encouraging either. Exporters are not receiving more orders from abroad, while production costs have increased. As a result, costs are rising but even minimum profit margins are not being ensured.Ezazul Islam, Director of BIBM, said there are many challenges to making new investments in the country, and the fuel crisis has become an additional obstacle. Currently, growth remains slow due to weak demand.Private sector credit growth had been declining steadily in recent months, falling from 6.58% in November 2025 to 6.20% in December, and then to 6.03% in both January and February 2026, before dropping sharply in March, according to central bank sources.Bangladesh Bank has been publishing private sector credit growth data since 2003. A review of the data shows that March recorded the second-lowest growth rate in the past 24 years.

A deputy managing director of a private bank told TBS that many businesses shut down after the fall of the Awami League government, while others are operating far below capacity.

He said several factories owned by large business groups, including Nassa Group, Beximco Group and Gazi Group, had closed, reducing demand for bank borrowing.

"When the factories were operational, they imported capital machinery. But even the firms that are still running have reduced production by 60-70%," he said.

The government is set to announce corporate tax rates for the next five years, offering the long-term policy certainty businesses and investors have long sought for.

Tax rates, however, are unlikely to increase. Finance ministry officials familiar with the matter say the government plans to keep rates unchanged until fiscal year 2030-31.

Finance Minister Amir Khosru Mahmud Chowdhury is expected to go further in his first national budget, due on June 11, by introducing a broader three-year predictable tax framework, extending beyond the two years already announced by the interim government.

Prime Minister Tarique Rahman approved the proposal in principle on May 14 during a high-level meeting at the Secretariat, according to finance ministry officials who attended.

Under the proposed roadmap, listed companies would pay a corporate tax rate of 22.5 percent, while non-listed firms would be taxed at 27.5 percent. Both categories could qualify for reduced rates of 20 percent and 25 percent, respectively, if all income is channelled through banking transactions.

One Person Companies (OPCs) are likely to face a tax rate of 27.5 percent. Banks, insurance companies and other financial institutions would pay 37.5 percent if listed and 40 percent if non-listed.

Mobile operators are likely to be taxed at a flat 45 percent, while private universities and colleges could benefit from a reduced rate of 10 percent. Tobacco products and cigarettes would remain subject to a 45 percent tax plus a 2.5 percent surcharge.

“There will be an indication in the budget to reduce corporate tax gradually as the government looks to expand its coverage,” a senior finance ministry official said, requesting anonymity.

The official added that companies currently paying the highest rates are likely to see gradual reductions in the coming years.

In fiscal year 2021-22, the corporate tax rate for non-listed companies was reduced to 30 percent from 32.5 percent, while the rate for listed firms was cut to 22.5 percent from 25 percent.

Rupali Chowdhury, president of the Foreign Investors’ Chamber of Commerce and Industry (FICCI), welcomed the move, saying policy predictability is essential for business planning and investment decisions.

“We like predictability very much. Predictability is good. Businesses need certainty to make long-term investment decisions,” said Chowdhury.

She argued that recent increases in supplementary duties have offset the benefits of lower corporate tax rates.

“Corporate tax is imposed on profits, but supplementary duty is imposed on revenue. On one hand, the tax rate is being reduced, but on the other hand, the government is taking back more through higher supplementary duties,” she said.

Chowdhury said businesses often have little choice but to pass the additional costs on to consumers, contributing to inflation and raising operating costs.

She also expressed concern that compliant companies bear a disproportionate share of the tax burden while non-compliant firms continue to evade taxes, undermining fair competition and reducing government revenue.

Snehasish Barua, managing director of SMAC Advisory Services, said the roadmap would provide much-needed certainty but warned against locking in tax rates for an extended period.

“Globally, corporate tax rates are falling. Locking Bangladesh’s private company tax rate at 27.5 percent until assessment year 2030-31 risks severely damaging our competitiveness against regional peers such as Vietnam and Indonesia,” he said.

He noted that international practice usually limits such policy commitments to two or three years.

Barua said maintaining relatively high corporate tax rates over the long term could discourage private investment at a time when Bangladesh needs stronger economic growth and job creation.

“If the government’s ultimate goal is to create employment, it must rethink locking in uncompetitive long-term rates and instead design an agile fiscal strategy that stimulates domestic investment and robust job growth,” he added.

Masrur Reaz, chairman of Policy Exchange Bangladesh, also welcomed the proposal, saying it addresses longstanding concerns about policy inconsistency. However, he said Bangladesh’s corporate tax rates and overall tax burden are high compared with regional competitors such as Vietnam, Indonesia, Thailand and India.

“This is the first positive step, but the next important step should be rationalising the corporate tax rate, which is still quite high compared to comparable economies,” he said.

He added that advance income tax and other mechanisms increase the effective tax burden beyond the headline rate. “While predictability is welcome, the next step must be rationalisation of tax rates to improve competitiveness,” he said.

The government is planning to exempt individual content creators and freelancers from the existing 7.5 percent source tax in the 2026–27 budget, in a move aimed at supporting the country’s growing digital economy and encouraging online entrepreneurship.

Under the proposal, income earned through digital platforms such as YouTube, Facebook, TikTok and other online channels will no longer be subject to the source tax currently applied to remittances received from abroad, according to officials involved in budget preparations.

“A provision will be incorporated into the Finance Bill 2026 to provide this exemption under the existing source tax framework,” said a finance ministry official, requesting anonymity.

The National Board of Revenue may define a “content creator” as a person who produces content independently, meaning only individuals will qualify under this category. According to an official, media houses or other institutional entities will not be included within this definition.

At present, a 7.5 percent source tax is deducted from income remitted from abroad for services, revenue-sharing arrangements and similar activities under the Income Tax Act 2023.

Finance Minister Amir Khosru Mahmud Chowdhury is expected to formally propose the measure while presenting the national budget in parliament on June 11.

Officials said the proposal has already received in-principle approval from Prime Minister Tarique Rahman at a high-level meeting.

The initiative is part of the government’s wider efforts to promote the information technology and digital services sectors, which have become key sources of jobs, entrepreneurship and foreign exchange earnings.

Officials added that the tax relief is expected to encourage young entrepreneurs, freelancers and digital content creators to expand their activities, while also helping to formalise the country’s fast-growing creator economy.

The move gained momentum after the prime minister recently met content creator Zuel Rana, owner of “Citto Media,” who produces nature-related content on social media. Following the meeting, the creator said the government had assured steps to withdraw the source tax on freelance and content-creation income.

Meanwhile, Dutch-Bangla Bank has formally suspended the deduction of withholding tax on freelance earnings. It also said it has started the process of refunding taxes previously deducted from freelancers’ accounts.

Bangladesh currently has around 500,000 freelancers working in digital services and content creation, making it one of the largest freelance talent pools in the region.

METRO RAIL VAT EXEMPTION LIKELY TO CONTINUE

The government is likely to extend the existing value-added tax (VAT) exemption on fares of the Dhaka metro rail for another year, as the service continues to gain strong popularity since its launch.

The finance minister is expected to include the proposal in the upcoming budget. The current exemption is set to expire in June this year.

Dhaka metro rail began commercial operations in late December 2022 and quickly became popular among commuters, especially office workers and students seeking relief from crowded and congested bus travel.

Since its launch, the government has maintained tax exemptions on metro rail fares. Around 3.5 lakh passengers now use the service daily.

Agricultural products must be transformed into value-added agro-industrial products in order to transition from an agriculture-based economy to an industrial one, Information and Broadcasting Minister Zahir Uddin Swapan said yesterday. “Achieving this transformation requires the effective integration of technology, innovation, and knowledge,” the minister said at the award ceremony of the Bangladesh Agro-Industry Media Award 2025, organised by Pran-RFL Group, at the MCCI Conference Hall of Police Plaza Concord in Dhaka.

“It will strengthen domestic markets, enhance export competitiveness, and contribute significantly to economic growth,” he also said, adding that investigative journalism can play a crucial role in promoting the development of the agriculture and agro-processing sectors.

“I believe that journalists’ investigative reports will not only inspire entrepreneurs to explore new opportunities but also help the government formulate more effective agriculture- and industry-friendly policies,” he said.

Referring to the government’s development agenda, the minister said, “Our government was elected through a credible electoral process. Before assuming office, Prime Minister Tarique Rahman declared, ‘I have a plan.’ Today, that vision has evolved into ‘We have a plan,’ with agriculture occupying a central place in our national development strategy.”

He also highlighted the government’s decision to waive interest on agricultural loans of up to Tk 10,000 shortly after taking office.

“At a time when the country faces substantial domestic and external debt obligations, along with nearly Tk 600,000 crore in non-performing loans, this initiative carries considerable strategic importance,” he said.

Calling on the media to focus greater attention on the sector, Swapan urged journalists to produce more in-depth reports on the opportunities and challenges facing the agriculture and agro-processing industries.

“Such reporting can contribute to more informed policymaking. As the information minister, I will make every effort to compile these reports and ensure they reach the relevant policymakers,” he added.

Speaking at the event, Pran Group Managing Director Ilias Mridha described agro-processing as one of Bangladesh’s most promising industries.

“In a country where agriculture remains a key pillar of the economy, the agro-processing sector can make an even greater contribution to economic development if supported by the right policies and direction,” he said.

“It also has the potential to emerge as one of the country’s leading export sectors after the ready-made garment industry,” he added.

Mridha said the award aims to encourage journalists to explore and highlight both the opportunities and challenges within Bangladesh’s agro-processing industry.

Among others present at the event were Hasan Hafiz, president of the National Press Club and editor of the Bangla daily Kaler Kantho, and Kamruzzaman Kamal, marketing director of Pran-RFL Group.

In the print media category, awards were given to Sukanta Halder, staff reporter at The Daily Star, and Rafikul Islam and M Munir Hossain of The Daily Sun.

In the television category, the winners were Delowar Hossain Dolon of Channel 24 and Rakib Hossain of Ekattor TV.

In the online media category, the award winners were Nazmul Hossain of Jagonews24.com and Shariful Rukon of Ekusheypatrika.com.

The winners were selected by a three-member jury board based on special reports focusing on the agro-processing sector.

The jury board members were Professor Robaet Ferdous of the Department of Mass Communication and Journalism at the University of Dhaka; Khurshid Ahmad Farhad, general manager of Bombay Sweets & Co Ltd; and Mohammad Touhidul Islam, director of outreach and communication at Transparency International Bangladesh.

Introduced for the first time by Pran Group, the Bangladesh Agro-Industry Media Award aims to recognise journalists whose reporting contributes to greater awareness, innovation, and development within Bangladesh’s agriculture and agro-processing industries.

The government has formed a Tk20,000 crore pre-financing scheme to revive closed industrial and service sector enterprises, aimed at bringing idle units back into operation through liquidity support from banks' surplus funds.

The fund is part of the government's earlier-announced Tk60,000 crore "production and employment revival" stimulus package, designed to restart shuttered factories, revive stalled exports, and generate jobs for unemployed youth through targeted credit support.

A central bank circular yesterday said the pre-financing scheme will run for three years. Borrowers involved in loan default, money laundering, fraud, or misuse of earlier credit facilities will not be eligible.

Banks will pay interest at a rate of 4%, while borrowers will be charged up to 7%. Interests will be waived for the first six months, after which regular repayment will begin.

The maximum loan ceiling under the scheme is Tk200 crore per entity or group. Each loan will have a tenure of up to one year, with renewal possible depending on fund availability and satisfactory repayment performance.

Who can participate

All scheduled banks may participate, but must sign agreements with Bangladesh Bank.

Eligible borrowers include large-scale industrial and service sector entities that are partially or fully shut, or operating below capacity due to working capital shortages.

Export-oriented firms and those with high export potential will receive priority. Investors taking over or leasing closed units to restart operations will also be prioritised.

Before approving loans, banks must assess the actual condition of the enterprise, production capacity, capital needs, and repayment ability. Support is intended only to address working capital gaps, not structural failures caused by mismanagement, or technical inefficiency.

Certification from relevant trade bodies such as the FBCCI, BGMEA, and BKMEA will be required to verify operational capacity. However, banks may also approve loans based on their own due diligence and investigation.

Loan proceeds cannot be used to adjust or repay existing loans. Instead, funds may be used for wages and salaries, utility bills, raw material procurement, execution of export orders, and other production-related costs.

Wage payments must be made through bank accounts or mobile financial services, not in cash. Verification of national identity cards for workers is mandatory. Salary support will be limited to a maximum of four months.

The circular said borrowers identified as loan defaulters, or individuals and entities involved in money laundering, fraud, embezzlement, or misuse of loan funds, will not be eligible.

Recovery, supervision

On recovery and supervision, the circular states that interest or profit on the borrowed funds must be paid quarterly to Bangladesh Bank.

In case of default, funds may be recovered directly from banks' current accounts held with the central bank, along with an additional 2% penalty interest.

Banks will bear full credit risk and remain solely responsible for loan recovery. The central bank will not be linked to recovery from customers under any circumstances. Defaulting borrowers will be treated under existing classification and provisioning rules.

To ensure proper use of funds, banks must submit weekly reports on beneficiary enterprises and conduct quarterly factory inspections. Bangladesh Bank may also carry out on-site inspections at any time.

Any misuse detected during inspection or audit will result in direct recovery from the bank's account, including interest and an additional 2% penalty.

Banks must follow their internal policies for borrower selection, approval, disbursement, documentation, and monitoring. They may take collateral against working capital loans, subject to existing single borrower exposure limits.

Even previously written-off loans may be considered for rescheduling or policy support under specific conditions. Such borrowers will not be classified as defaulters initially but will be recorded as SMA accounts. However, failure to repay six consecutive monthly or two quarterly instalments will result in reclassification as substandard or bad loans.

If fraud, false information, irregularities, or misuse is detected, the borrower's details may be shared with relevant government agencies for legal and punitive action. Disciplinary measures will also be taken against any bank officials found involved.

The second session of the 13th Jatiya Sangsad, which will serve as its maiden budget session, is set to begin today at 3:00 pm.

President Mohammed Shahabuddin has convened the session under Article 72(1) of the Constitution. The sitting will take place in the parliament chamber at the Jatiya Sangsad Bhaban in Dhaka's Sher-e-Bangla Nagar.

According to the Parliament Secretariat, all necessary preparations have been completed to ensure smooth conduct of the session.

The session is expected to focus primarily on the presentation, discussion and passage of the national budget for the 2026-27 fiscal year, the first of the current government.

In addition to budget-related business, the House may consider several important constitutional amendments in line with recommendations contained in the July Charter.

Ahead of the session, the ruling party held a parliamentary party meeting on Saturday under the chairmanship of Prime Minister and Leader of the House Tarique Rahman to determine its parliamentary strategy.

The meeting, held at the parliament complex, reviewed the performance of seven ministries. Briefing reporters afterwards, Chief Whip Md Nurul Islam said ministers presented reports on their activities over the past month, existing challenges and measures taken to address them.

Regarding the health sector, he said preparations have been strengthened to tackle dengue and preventive measures have been taken nationwide against measles outbreaks. The meeting was also informed that the Health Ministry is taking strict steps to ensure the presence of doctors at the upazila level.

On infrastructure development, the Chief Whip said the Ministry of Road Transport and Bridges had already floated tenders for the construction of 1,000 kilometres of new roads.

"The Prime Minister directed authorities to ensure cost-effective and corruption-free implementation of the projects."

The meeting also reviewed progress in the development of terminals at Chattogram and Mongla seaports and discussed issues related to the Teesta Barrage project.

In the power sector, ministers reported that a significant number of people had been brought under electricity coverage, while some adjustments in electricity tariffs were also under consideration.

Meanwhile, the Dhaka Metropolitan Police (DMP) has imposed restrictions on carrying weapons, explosives and hazardous materials, as well as on all forms of rallies, processions, demonstrations and public gatherings in and around the parliament area during the session.

According to a public notice signed by DMP Commissioner Mosleh Uddin Ahmed, the restrictions took effect from midnight Saturday and cover several key roads surrounding the National Parliament complex and adjacent areas.

"The order will remain in force throughout the parliamentary session."

The budget session is traditionally held in June each year to discuss and approve the national budget. Members of Parliament are expected to participate in extensive debates on the government's economic policies, development priorities and fiscal plans for the upcoming financial year.

The first session of the 13th Parliament began on March 12 and concluded on April 30.

Bangladesh is expected to learn by September whether it will get additional time before graduating from Least- Developed Country (LDC) status, with United Nations bodies currently reviewing its request for a deferral amid economic challenges and ongoing reform efforts.Economics

The United Nations General Assembly (UNGA) is expected to take the final decision in this regard in September this year, officials said on Thursday.

The country may receive an additional two to two-and-a-half years to prepare for its transition to developing-country status from its current LDC classification, they said.

Officials at the Economic Relations Division (ERD) said the executive body of the United Nations Committee for Development Policy (UNCDP) -- the Economic and Social Council (ECOSOC) -- would determine the deferral request and specify the length of the extended preparatory period.

The decision would then be submitted to the UNGA for final approval, likely at its session in September this year, they added.

"An ECOSOC meeting will be held on 12 June. Bangladesh's issue may not be placed at the immediate next meeting. It could instead be discussed at a meeting in late July. We will then know the specific duration of the LDC graduation deferral," a senior ERD official said.

He said that although the proposed extension period was likely to become clear following the ECOSOC meeting in July, the final decision would require approval by the UN General Assembly.

Bangladesh's fellow graduating LDC, Nepal, has also applied for a two-and-a-half-year deferral of its graduation.

"Since Nepal has requested a two-and-a-half-year extension, the UN may adopt a common approach for both countries. The deferral period could therefore be between two and two-and-a-half years," another ERD official said.

In response to Bangladesh's request for a three-year extension of the preparatory period, the UNCDP, in a letter sent to the ERD Secretary on June 1, expressed a positive view of the request but did not specify any timeframe.

Bangladesh is currently scheduled to graduate from LDC status in November 2026.

Amid global economic shocks, energy supply constraints, domestic political transition and other external challenges, Bangladesh submitted its request to the United Nations more than two months ago, seeking additional time before graduation.

Meanwhile, the UNCDP has attached several conditions to its consideration of Bangladesh's request.Politics

The Committee underscored the importance of domestic reforms, including measures to stabilise the financial sector, strengthen domestic resource mobilisation through higher tax revenue collection, and prioritise expenditures that enhance resilience and support economic transformation.

"Without significantly advancing on such reforms, it is difficult to see how an extension of the preparatory period requested by Bangladesh would contribute to a more sustainable graduation and a smooth transition. Hence, the extension should not be viewed as a pause or justification for delaying reforms," the Committee said.

The Committee advised that any extension should serve as a catalyst for accelerating reforms and implementing smooth transition measures, particularly those aimed at strengthening productive capacities, promoting economic diversification and preparing the private sector for graduation.

It noted that these measures require careful sequencing and sustained attention throughout both the preparatory and post-graduation transition periods.

In its letter to the ERD Secretary dated June 1, the CDP also indicated that a shorter extension of the preparatory period would appear more conducive to ensuring a sustainable graduation process.

Earlier, on Tuesday, the ERD said in a statement that the UNCDP had expressed a "positive position regarding Bangladesh's request to extend its preparatory period for graduation from the LDC category until November 24, 2029".

In its assessment report, however, the CDP noted that Bangladesh's request for a three-year extension was consistent with the approach taken in all five previous cases where graduating countries had received extensions to their preparatory periods.

The Committee acknowledged the heightened uncertainty arising from external shocks and recognised the need for additional time to adjust policies and establish priorities under the Smooth Transition Strategy (STS).

At the same time, it highlighted the risk that, for a country that had met the graduation criteria by a comfortable margin, prolonging its stay in the LDC category could delay the benefits associated with graduation.

The UNCDP has already recommended three countries for graduation from LDC status in 2026 -- Bangladesh, Nepal and Lao PDR.

Business relief will take center stage in the upcoming national budget, which is expected to introduce a series of measures aimed at removing barriers to doing business, with a strong focus on trade facilitation rather than imposing new taxes.

Proposed reforms on the table include shifting to quarterly VAT return filings instead of monthly, implementing a fully automated VAT registration system, and easier access to fast-track port clearance schemes, according to National Board of Revenue sources involved in the preparations.

Sources said businesses may be allowed to submit VAT returns every three months instead of monthly, while continuing to pay VAT on a monthly basis. This would reduce filing requirements from 12 returns a year to four for around 500,000 businesses that file VAT returns every month.
Infograph: TBS
Infograph: TBS

The budget may also introduce provisions allowing companies using NBR-approved Enterprise Resource Planning (ERP) software to avoid submitting hard copies of VAT returns and audit-related documents.

In addition, online VAT registration could be made fully automated, removing the requirement for approval from VAT officials.

Another major proposal aims to drastically cut customs clearance times at ports. Currently, imported products and chemical samples can only be tested by the Bangladesh Standards and Testing Institution (BSTI) and the Bangladesh Atomic Energy Commission – a bottleneck that routinely drags the process out for two weeks.

Under the proposed changes, testing could also be conducted by any institution accredited by the International Organization for Standardization (ISO) and the Bangladesh Accreditation Board, which officials believe would significantly reduce delays.

The NBR is also considering relaxing the conditions for obtaining Authorised Economic Operator (AEO) licences, allowing more businesses to qualify as trusted traders and enjoy faster customs clearance. Physical examination requirements for AEO licence holders may also be reduced further.

Existing requirements related to declarations and approvals for input-output coefficients – which determine the amount of raw materials used to produce finished goods – may also be eased.

An NBR senior official, speaking on condition of anonymity, said, "There are plans in this budget to simplify areas where trade currently faces obstacles…This will be a budget of 'no imposition, fewer exemptions – only trade facilitation'."

NBR Chairman Abdur Rahman Khan had also assured business leaders in meetings in March and April that the upcoming budget would prioritise removing barriers to business activity.

The NBR is also expected to move away from the widely criticised minimum tax regime. Budget proposals may include provisions allowing refunds of advance taxes or tax deducted at source once taxpayers become eligible for repayment after a specified period.

The finance minister's budget speech may also include a commitment to a more predictable tax regime, with newly announced tax rates for both individual and corporate taxpayers potentially fixed for the next five years.

Business leaders and economists have welcomed the proposed reforms.

Debabrata Roy Chowdhury, director of Nestlé Bangladesh PLC, told The Business Standard, "What we are hearing regarding VAT and customs reforms will genuinely support trade facilitation if implemented.

"It is becoming clear that the government is trying to understand the challenges faced by businesses."

He noted that while monthly VAT return submission may not be a major burden for large companies, it creates difficulties for smaller firms.

"Businesses also have to visit VAT offices with documents, which often involves additional costs. Effective implementation of a paperless system would benefit both businesses and the NBR," he added.

Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), described the proposals as a positive step. "If such measures are announced in the budget, we will welcome them," he said.

"The government has spoken about trade facilitation since taking office. If these proposals are included, it will demonstrate that commitment in practice."

He argued that the current tax collection system puts excessive pressure on businesses. "Businesses will not survive under the present system of tax collection. Investment will not come either," he said.

Former NBR chairman Muhammad Abdul Mazid also backed the proposed reforms. He previously led a committee formed during the interim government's tenure to recommend reforms for the NBR.

"Trade facilitation is essential. There is no alternative," he told TBS. "If ease of doing business cannot be ensured, the economy will not function properly. And if the economy does not function, revenue collection will also suffer."

He said both his committee and subsequent reform bodies had consistently emphasised improving the business environment.

"If these issues receive importance in the budget, it will be positive for both the economy and revenue collection," he said. "Revenue cannot be increased through fear."

Business leaders say the current requirement to submit VAT returns every month forces companies of all sizes to prepare and file large volumes of documentation.

Many believe reducing submissions from 12 to four per year would be a significant improvement, though some, including Mohammad Hatem, argue returns should ultimately be filed annually, similar to income tax.

The NBR-approved ERP system is a business management software solution that centralises data, reduces duplication and improves operational efficiency. Officials say companies using it would no longer need to submit hard-copy documents with VAT returns, supporting the government's paperless administration drive.

At present, even after online submission, businesses are often required to submit physical documents to VAT offices. Officials acknowledge this can create opportunities for harassment and procedural delays due to in-person visits.

Businesses have also long raised concerns over approval processes for input-output coefficients. The budget may simplify both the approval mechanism and conditions for exemption from such declarations.

Faster testing, customs clearance

Under current rules, disputes over classification of imported goods or chemicals often require laboratory testing, which is limited to BSTI and the Bangladesh Atomic Energy Commission.

This frequently results in shipments being sent to Dhaka for testing, causing delays while consignments remain stuck at ports and importers incur demurrage charges.

The proposed reforms would allow testing by any ISO-certified and Bangladesh Accreditation Board (BAB)-accredited institution. Officials expect this to reduce testing time, speed up customs clearance and lower business costs.

The Authorised Economic Operator (AEO) programme, introduced in 2019, allows trusted importers and exporters to move goods directly from ports to warehouses without immediate inspection.

However, despite its intended benefits, only 20 companies have obtained AEO licences in more than six years.

Businesses say eligibility requirements remain too strict, limiting participation. The budget may therefore relax these conditions and reduce the frequency of physical inspections for certified firms.

Businesses call for faster release of consignments

While expanded testing options are welcomed, business leaders argue a more effective solution would be to allow consignments to be released from ports while testing is carried out.

Debabrata Roy Chowdhury said, "When consignments remain at the port while samples are tested, it can take around 15 days to receive the report. Demurrage charges begin after four days."

"Our company alone pays around Tk10 crore in demurrage annually because of such delays."

"If the NBR allows consignments to be cleared while samples are being tested, importers would not have to bear additional demurrage costs. That would be a more effective system."

Mohammad Hatem echoed the view, saying faster release of consignments would significantly reduce costs and improve trade efficiency.