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.

Bangladesh retained its position as the second-largest apparel supplier to the United States in the first five months of 2026, despite a dip in shipments, as American buyers continued to pivot away from China, official data showed.

According to the US Office of Textiles and Apparel (OTEXA), Bangladesh's garment exports to the US fell 8.1% year-on-year to $3.25 billion during the January-May period. However, the drop outperformed the overall US apparel import market, which contracted by 9.3%.

Vietnam extended its lead as the top supplier to the US, with exports rising 1.5% to $6.39 billion. Meanwhile, shipments from China plunged 42.8% to $2.80 billion, signaling an accelerating shift in global retail supply chains driven by US tariffs and diversification strategies. In volume terms, China's shipments sank nearly 30%.
Indonesia and Cambodia were among the biggest beneficiaries, recording growth of 5.5% and 14.9%, respectively, while India's shipments dropped 26.4%.Although Bangladesh maintained its market ranking, the figures indicate the country has yet to capture a significant share of the orders shifting away from China, with regional competitors expanding faster.The latest monthly data, however, showed a more encouraging sign. Bangladesh's exports to the US increased 6.0% in May from a year earlier, compared with a 2.8% rise in total US apparel imports, indicating demand may be recovering after a weak start to the year.In volume terms, Bangladesh shipped 1.09 billion square metre equivalents (SME) during the January-May period, down 6.2%, while its average unit price slipped 2% to $2.99 per SME, suggesting exporters largely maintained pricing amid softer demand.China suffered a dramatic collapse, both in value and volume. China saw nearly a 43% drop in value and nearly 30% in volume as the country continues to lose market share rapidly, largely because of US tariffs and sourcing diversification.

Indonesia rose as a big challenger as the country recorded 5.49% growth in value and over 13% in volume. While Cambodia emerged as the fastest-growing apparel exporter to the US as the country achieved nearly 15% in value growth and over 18% in volume growth.

Price comparison:

Bangladesh's garment export prices to the US market remained stable despite weaker demand, hinting exporters largely avoided deep discounting to retain orders.

The average unit price of Bangladesh-made apparel slipped 2% year-on-year to $2.99 per square metre equivalent (SME) during January-May 2026, compared with the global average of $3.14.

OTEXA data shows Bangladesh continued to command higher prices than China ($1.43), Pakistan ($2.59) and Cambodia ($2.91), but trailed Vietnam ($3.39), India ($3.41), Honduras ($3.64), Indonesia ($3.77) and Mexico ($4.45).

China recorded the lowest unit value among major suppliers, reflecting its focus on lower-priced, high-volume products, while Mexico maintained the highest average price, supported by its proximity to the US market and a greater share of value-added apparel. Bangladesh's relatively stable pricing indicates that the decline in exports was driven more by lower shipment volumes than by price erosion.

Bangladesh could see its trade with the European Union (EU) expand significantly over the next three to four years, but the country may not be fully prepared to capitalise on the opportunity, warned MA Razzaque, chairman of the Research and Policy Integration for Development (RAPID).

"Trade relations between Bangladesh and the EU are likely to deepen over the next three to four years in a way not seen over the past five decades. The question is whether Bangladesh has the capacity to absorb those opportunities," he said.

Razzaque was speaking at a seminar titled "The changing landscape of Bangladesh-EU trade relations: LDC graduation, preference erosion and intensifying competition", jointly organised by RAPID and the Friedrich-Ebert-Stiftung (FES) in Dhaka today.

He said Bangladesh has not been able to effectively present its own demands to the EU, even though the bloc has put forward extensive expectations on trade, governance and sustainability.

Referring to Bangladesh's graduation from the United Nations' least developed country (LDC) category, Razzaque said the Committee for Development Policy (CDP) had recommended a short deferment of the graduation process, which is currently scheduled for November this year.

"If the United Nations does not grant an extension, Bangladesh will graduate this year," he said.

Razzaque noted that Bangladesh currently exports around $22 billion worth of goods to the EU under duty-free access, making the bloc the country's largest export destination.

"Bangladesh definitely needs duty-free market access," he said, stressing that retaining preferential access to the EU market is crucial for sustaining the country's export competitiveness after LDC graduation.

He also highlighted the EU's broader economic contribution, saying around 30 percent of Bangladesh's foreign direct investment (FDI) originates from EU member states, while the bloc has provided about $3.4 billion in development assistance over the past five years.

Although Bangladesh does not enjoy duty-free access to the US market, Razzaque said the country still has scope to secure greater benefits from the EU market if it strengthens its competitiveness and preparedness.

"To remain competitive after LDC graduation, we will have to reduce our production costs," he said, adding that improving productivity and lowering business costs would be essential to maintaining Bangladesh's position in the EU market.

He added that the EU imports about 21 percent of its readymade garment products from Bangladesh under duty-free arrangements, while China's share of the EU apparel market has been declining, creating additional opportunities for Bangladeshi exporters.

The Insurance Development and Regulatory Authority (IDRA) has won the top innovation award in the regulatory agency category at the Innovation Showcasing 2025-26 for its mobile app, Insuplaint, which digitises insurance complaint management and claims monitoring.

Finance Minister Amir Khosru Mahmud Chowdhury handed over the award to IDRA Chairman Mir Nadia Nivin at the programme organised by the Financial Institutions Division (FID) on July 6.

Launched on June 23, the app enables policyholders across the country to submit insurance claims and lodge complaints remotely without visiting the regulator's office. Users can also track the progress of claim settlements and complaint resolution through the mobile application.

The platform also allows IDRA to monitor whether insurance companies are resolving customer complaints and claims in a timely manner, strengthening regulatory oversight and improving service delivery.

As part of its broader digital transformation efforts, IDRA is also implementing Bima Tathya App, a centralised digital platform designed to verify insurance policy information. The platform is expected to simplify policy verification, prevent fake and duplicate policies, enhance public confidence in the insurance sector and support higher premium collection.

The Innovation Showcasing 2025-26 featured 25 innovation initiatives from agencies and organisations under the Financial Institutions Division. Five organisations received awards in five separate categories.

The other award-winning initiatives were Janata Bank's "Janata-Pay" under the state-owned commercial bank category, Probashi Kallyan Bank's "e-Migration Loan Service" under the specialised bank category, Bangladesh House Building Finance Corporation's automated deed return process under the financial institution category, and Palli Karma-Sahayak Foundation's GIS-based Supervision and Monitoring System under the other institutions category.

Bangladesh's financial architecture is facing significant pressure as the state-backed contingent liabilities for underperforming State-Owned Enterprises (SOEs) and autonomous bodies reached Tk 400.12 billion in sovereign guarantees till the last fiscal year, officials say.

This massive debt pile, triggered by heavy overseas and domestic borrowing by core public sectors like Biman Bangladesh, Bangladesh Power Development Board (BPDB), and state-run fertiliser companies, has surfaced as a major macroeconomic threat, they add.

A series of independent reviews and global assessments warn that these liabilities are pushing public finances toward an unsustainable path.

A recent World Bank study jointly produced with the Policy Research Institute (PRI) reveals that structural inefficiencies, operational leaks, and subsidies to these SOEs cost the national exchequer nearly Tk 882 billion in a single fiscal year.

This massive drain accounts for roughly 1.7 per cent of the nation's gross domestic product (GDP), suffocating the budget available for critical sectors like education, healthcare, and social safety nets.

According to official sources, the concentrated accumulation of debt centres heavily on three capital-intensive sectors - power (BPDB and power plants), aviation (Biman Bangladesh), and agriculture (fertiliser/ Bangladesh Chemical Industries Corporation).

The energy and power sector stands as the single largest contributor to this fiscal risk with the highest amount of sovereign guarantees, bleeding the heaviest losses across the economy.

Driven by controversial contracts, independent power producer (IPP) capacities, and delays, the government has extended over Tk 416.9 billion in guarantees to back 16 massive projects, including the Patuakhali, Payra, and Rampal 1,320MW thermal plants.

Compounding the crisis, Energy Minister Iqbal Hassan Mahmood recently said in parliament that the state was legally bound by these sovereign guarantees, meaning the complex contracts could not be easily modified or cancelled, tying the government's hands over late payment fees and capacity charges.

The national flag carrier represents the second-highest consumer of government-backed security, officials say.

Biman Bangladesh Airlines has accumulated Tk 109.09 billion across 15 aircraft acquisition and engine procurement projects.

Despite massive state backing, the airline remains classified under "high to very high risk" due to operational mismanagement and poor revenue returns, officials say.

To insulate local farmers from international price volatility and ensure a steady domestic food supply, Bangladesh Chemical Industries Corporation (BCIC) and various state-run fertiliser entities secured Tk 64.38 billion in state-guaranteed loans, they say.

Operating on high-cost imports combined with heavily subsidised retail distribution, these corporations have been fundamentally unable to generate the independent revenues needed to clear their commercial liabilities. The Finance Division's latest audit outlines a bleak picture of the institutional stability of public assets.

Over 81 per cent of Bangladesh's SOEs are currently operating under moderate to very high levels of financial risk, the report says.

The World Bank performance index ranks Bangladesh's public enterprises significantly lower than its regional neighbours.

While state-backed entities in India recorded a positive 9.7 per cent return on assets (ROA) and Vietnam achieved an 11.9 per cent return, Bangladesh's non-financial SOEs crashed into the negative, posting a negative 5.2 per cent return on assets.

A Ministry of Finance official says amid a declining tax-to-GDP ratio, rising inflation, and tight foreign exchange reserves, the ministry has launched aggressive damage-control policies to rein in the long-term exposure like the Sovereign Guarantee Penalty Fees to disincentivise unchecked reliance on state cushions, while the government has introduced a 0.25 per cent upfront fee on all sovereign loan guarantees for state, autonomous, or government-controlled entities.Finance

A senior finance ministry official says although there was no incident of sovereign loan default by the SOEs, the government plans to amend the existing guideline to streamline the process and further strengthen the debt payment capacities of the SOEs.

While the total outstanding sovereign liabilities showed a microscopic dip by late last year due to temporary bank repayments, economists warn that without deep corporate governance changes, these Tk 400-billion-plus structural safety nets remain a critical ticking clock for the national economy.

Policy Exchange Bangladesh Chairman Masrur Reaz tells The Financial Express that although sovereign guarantees by the government of developing nations are not very unusual, the fruitful utilisation of the borrowing will have to be ensured.

If the return on the loans, where the government provides guarantees, is high, only those should be considered for providing the security, he says.Banking

He also says if the government goes for providing guarantees for the less important projects or programmes of the SOEs and autonomous bodies, the country's fiscal governance as well as the rating will be downgraded.

Five consecutive days of heavy rainfall and rough seas have severely disrupted cargo handling at Chattogram Port, slowing handling and deliveries and raising concerns among businesses over potential supply chain disruptions across the country.

The adverse weather has halted lighter vessel operations at the port's outer anchorage, preventing imported cargo from being transported to destinations nationwide.

At the same time, waterlogging at port terminals and inland container depots (ICDs) has allegedly damaged imported goods, prompting importers and customs clearing and forwarding (C&F) agents to seek compensation. However, the Chattogram Port Authority (CPA) has rejected liability, describing the damage as an "Act of God."

Business leaders warned that prolonged disruptions could lead to shortages of essential commodities, including wheat, edible oil, sugar, fertiliser, clinker and other industrial raw materials in regional markets.

The disruptions have already hit wholesale trade at Chattogram's Khatunganj, the country's largest food commodity market, where daily business has dropped sharply.

Cargo handling remains below normal

Port data show cargo handling and container delivery have remained significantly below normal levels over the past several days, although operations have gradually improved.

Container handling fell to 4,797 TEUs on 7 July, compared with the port's normal daily average of 9,000 to 11,000 TEUs. It increased to 5,230 TEUs on 8 July, 6,414 TEUs on 9 July and 7,146 TEUs on 10 July, yet well below the regular average.

Container deliveries also remained subdued. The port delivered only 2,606 TEUs on 8 July, rising to 2,820 TEUs on 9 July and 3,452 TEUs on 10 July, still well below normal operating capacity.

Businesses said the slower movement of cargo is delaying industrial production and affecting domestic distribution networks.

More than 60 ships stranded

Sarwar Hossain Sagar, president of the Bangladesh Berth Operator and Ship Handling Operators Association, said more than 60 vessels are currently waiting at Chattogram Port's outer anchorage because rough seas have prevented offshore cargo operations.

"Each idle vessel is incurring demurrage costs of around $25,000 to $30,000 per day," he said.

According to him, the industry is losing between $1.2 million and $1.5 million every day, equivalent to roughly Tk15 crore to Tk20 crore. Over the past five days, cumulative losses have exceeded Tk100 crore.

He added that between 4,000 and 5,000 workers involved in offshore cargo handling have remained without work during the suspension.

Parvez Ahmed, spokesperson for the Bangladesh Water Transport Cell, said no cargo has been transferred between mother vessels and lighter vessels for the past five days because of rough sea conditions.

"Lighter vessels are waiting in the Karnaphuli River and Patenga offshore until weather conditions improve," he said. "Cargo transportation through inland waterways will remain suspended as long as the sea remains rough."

He noted that more than 70% of the country's domestic cargo transportation moves through waterways. Continued disruption, he warned, could affect supplies in warehouses across the country, particularly for wheat, sugar, edible oil and other essential commodities.

The impact is already being felt at Khatunganj, Chattogram's largest wholesale market for food commodities.

Aminur Rahman Mintu, general secretary of Khatungonj Trade and Industry Association, said daily transactions that usually range between Tk200 crore and Tk250 crore have fallen to only around Tk30 crore because of transport disruptions and slower cargo arrivals.

He warned that if supplies from Chattogram continue to slow, rural markets may also experience shortages of essential food commodities.
Garment factories face production disruptions

The adverse weather has also affected the readymade garment sector.

SM Abu Tayyab, director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said flooding in low-lying residential areas prevented many workers from reporting to factories over the past five days.

"Attendance declined significantly on at least two working days, forcing some factories to reduce production while others temporarily suspended operations," he said.

Factories will have to operate additional shifts to recover lost production, he added.

He also warned that delays in releasing imported raw materials from the port could create shortages of industrial inputs and further disrupt garment manufacturing if normal operations are not restored quickly.

He urged authorities to ensure full-scale port operations as soon as weather conditions permit.
Importers seek compensation for damaged cargo

Importers and freight operators alleged that waterlogging at port yards and several private container terminals damaged imported cargo stored in containers.

Captain Salahuddin, president of the Bangladesh Shipping Agents Association, said water accumulated because of inadequate drainage facilities inside the port.

"A considerable amount of cargo has reportedly been damaged, but no formal assessment has yet been conducted," he said.

He urged the port authority to assess losses and compensate affected importers.

Khairul Alam Sujan, former vice-president of the Bangladesh Freight Forwarders Association, said the flooding exposed weaknesses in the port's drainage infrastructure.

"Modern ports should have alternative drainage systems capable of quickly removing rainwater during extreme weather," he said.

He alleged that waterlogging occurred not only inside the port yard but also at four or five private container depots, causing damage to importers' goods.

According to him, depot operators should also share responsibility where inadequate infrastructure contributed to the losses.

Despite repeated attempts, Ruhul Amin Sikder, secretary general of the Bangladesh Inland Container Depot Association (BICDA), could not be reached for comment on the alleged damage to goods at the depots as he did not respond to calls from this correspondent.
Port disclaims liability

On Friday, the Chattogram Port Authority issued a public notice informing importers, exporters, shipping agents and other port users that it would not accept responsibility for any losses or damages caused by continuous rainfall and flooding inside port-protected areas since 5 July.

The notice described the incident as an "Act of God" and cited Regulation 199(14) of the Regulations for Working of Chittagong Port (Cargo & Container), 2001, stating that the authority is legally immune from compensation claims arising from such natural calamities.

The notice further said the CPA disclaims any liability for compensation under both the Chittagong Port Authority Act, 2022 and the Regulations for Working of Chittagong Port (Cargo & Container), 2001.

Despite repeated attempts, CPA Secretary Refayet Hamim could not be reached for comment on the alleged damage to goods at the port terminals as he did not respond to calls from this correspondent.

A significant amendment to Bangladesh's income-tax law has paved the way for taxing foreign digital businesses that have no physical presence in the country but serve 0.1 million or above Bangladeshi users.

The new provision, effective from July 1, targets non-resident entities-both companies and individuals -- that earn income from digital activities involving users in Bangladesh. Only the portion of income attributable to Bangladesh would be subject to tax.

Under the amendment, a non-resident entity will be deemed to have a permanent establishment (PE) in Bangladesh if it has 100,000 or more digital or online customers or subscribers in the country.

Tax officials say information on the subscriber base of such digital businesses, including online content creators and "view-based" businesses, would be obtained from the Bangladesh Telecommunication Regulatory Commission (BTRC).

However, Bangladeshi freelancers and local content creators will not fall within the scope of the new provision.

A senior tax official says view-based businesses, including YouTube channels, have grown rapidly in recent years, with many individuals and companies attracting millions of subscribers or viewers.

"The owners of such pages will be taxed under the new provision if they are non-resident entities and meet the prescribed threshold," says the official.

He adds that identifying the number of subscribers would not be difficult because subscriber counts are publicly displayed on most digital platforms.

"Bangladesh is already collecting tax at source on payments made to Google, YouTube, Netflix, Meta and other global technology companies when users pay subscription fees," he told The Financial Express.

The change has been introduced through the Finance Act 2026 by expanding the definition of Permanent Establishment under Section 2(92) of the Income Tax Act.

The amended provision now includes: "Any digital or online activity or presence in Bangladesh by a non-resident entity where such entity has 100,000 or more digital or online customers or subscribers."

Tax experts say the amendment represents one of Bangladesh's most significant attempts to bring the digital economy within the tax net by recognising a substantial digital presence even without a physical office.

Adeeb H. Khan, Senior Partner at Rahman Rahman Huq, says the measure could be viewed as a step forward in taxing digital businesses at a time when countries worldwide are struggling to determine how to tax cross-border digital activities.

"However, it could also give rise to double-taxation issues, depending on the provisions of Bangladesh's tax treaties with other countries," he notes.

Bangladesh currently has Double Taxation Avoidance Agreements (DTAAs) with 36 countries to prevent taxpayers from being taxed on the same income in both jurisdictions.

Snehasish Barua, Chartered Accountant and Partner at Snehasish Mahmud & Co., thinks the practical effectiveness of the new provision could be limited by those international tax treaties.

"Under Bangladesh's income tax law, the provisions of Double Taxation Avoidance Agreements prevail over domestic law," he says.

"Most existing tax treaties require a physical presence before a country can impose tax. Therefore, unless these treaties are amended, the new provision may not, in practice, enable Bangladesh to collect taxes from many foreign digital businesses."

He also cautions that implementing the measure without adequate research and careful consideration could create complications with Bangladesh's trading partners.

The amendment strengthens Bangladesh's legal framework for taxing the digital economy. Although the income-tax law already taxes income derived from electronic sales and digital services connected to Bangladesh, the revised definition of permanent establishment provides a stronger legal basis by treating a significant digital user base as creating a taxable presence.

The key challenge, however, will be implementation.

Tax analysts say the success of the measure will depend on whether the National Board of Revenue (NBR) can identify qualifying individuals and companies, determine the portion of profits attributable to Bangladesh, and enforce tax collection from non-resident digital businesses, particularly where tax treaty-obligations apply.

Bangladesh's apparel exports to the United States declined more than 8 per cent in the first five months of 2026 as weaker consumer demand weighed on imports, although a rebound in May signalled a potential recovery in export orders.

Data from the US Office of Textiles and Apparel (OTEXA) showed Bangladesh exported apparel worth US$3.25 billion to the US during January-May 2026, down 8.08 per cent from the same period a year earlier.

The decline came as the overall US apparel import market contracted sharply.

Total US apparel imports fell 9.25 per cent year-on-year to $28.78 billion during the five-month period, while import volumes dropped 9.48 per cent, reflecting softer consumer demand.

Average import prices edged up just 0.25 per cent.

Despite the weak cumulative performance, Bangladesh recorded a turnaround in May, with apparel exports rising 6.04 per cent year-on-year to $582 million, indicating improving sourcing demand.

In volume terms, Bangladesh shipped 6.21 per cent fewer garment pieces to the US market during January-May, while the average unit price declined by 2.0 per cent, underscoring continued pressure on both shipment volumes and prices.

The OTEXA data also pointed to an ongoing reshuffle in global sourcing patterns.

Vietnam, the largest apparel supplier to the US, recorded 1.46 per cent growth during the period, while Cambodia emerged as the fastest-growing major supplier with exports rising 14.9 per cent. Indonesia also expanded its apparel exports by 5.49 per cent.

By contrast, China's apparel exports to the US plunged 42.75 per cent, highlighting the continued impact of trade tensions and buyers' diversification strategies. India's exports declined 26.37 per cent, while Pakistan recorded a 12.35 per cent fall.

Cambodia also led volume growth, with shipments increasing 18.03 per cent, followed by Indonesia (13.16 per cent) and Vietnam (3.01 per cent). Bangladesh's export volume declined 6.21 per cent, while China's plunged 29.67 per cent.

Average unit prices fell across most major suppliers. China recorded the steepest decline at 18.59 per cent, followed by Pakistan (6.84 per cent) and Indonesia (6.78 per cent). Bangladesh's average unit price fell by a comparatively modest 2.0 per cent.

Mohiuddin Rubel, former director of BGMEA, said the latest figures reflected both weaker US import demand and an ongoing shift in global sourcing.

"The sharp contraction in China's exports and the continued growth of Cambodia and Vietnam suggest buyers are actively diversifying their sourcing. Bangladesh has also benefited from this trend to some extent, but the overall decline in US imports has constrained its export performance," he said.

He said Bangladesh's return to positive growth in May was an encouraging sign, but sustaining the momentum would require stronger competitiveness, shorter lead times and higher productivity.

"With China's share of the US market shrinking rapidly, Bangladesh has an opportunity to secure additional orders if it can strengthen logistics, enhance compliance and maintain competitive pricing," he added.

Rubel also expressed optimism that exports to the US market would continue to improve in the coming months as order inflows strengthened, a trend that is also reflected in Export Promotion Bureau (EPB) data.

Non-performing loans (NPLs) in banks with significantly higher trade-finance exposure range between 40 per cent and 50 per cent, according to a study of the Bangladesh Institute of Bank Management (BIBM).
And the rate exceeds 80 per cent in banks having both high overall NPLs and substantial trade-finance exposure, it revealed.

The study paper titled 'Trader Services Operations of Banks' was presented at a review workshop organised by the BIBM at its campus at the city's Mirpur area on Wednesday.

Presenting the findings, he said discussions with banks having significant trade finance exposure indicate that asset quality pressure has already become evident in trade-related portfolios.

The BIBM also identified the conversion of non-funded liabilities into forced loans as one of the principal drivers of trade finance-related Non-Performing Loans (NPLs).

Besides, financing associated with imports of capital machinery, raw materials such as cotton, commodities including sugar and fertiliser, fuel, and scrap vessels has significantly contributed to the deterioration of asset quality, it revealed.

The workshop brought together senior bankers, policymakers, regulators, academics, and researchers to deliberate on the emerging challenges and future direction of trade finance in Bangladesh.

Dr. Md. Ezazul Islam, Director General of BIBM presided over the workshop while the keynote paper was presented by Dr. Shah Md. Ahsan Habib, Professor (Selection Grade), BIBM, on behalf of the research team.

The research further identified structural weaknesses in export finance. Findings from the opinion survey showed that nearly all bankers considered the use of back-to-back letters of credit (LCs) without legally enforceable sale-purchase contracts to be a major cause of NPL formation.

According to the study, while back-to-back LC arrangements are designed to support export production by linking input procurement with confirmed export orders, weak or disputed underlying contracts can undermine the financing chain.

Delays or failures in realising export proceeds may quickly transform transaction-based trade finance facilities into forced loans, eliminating their self-liquidating nature and leaving banks exposed to significant credit risk.

In his address, Ezazul Islam emphasised the need for modernising the legal and digital infrastructure for electronic trade documents to facilitate faster, more secure, and paperless trade transactions.

He also stressed the importance of strengthening Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) measures and reinforcing controls against Trade-Based Money Laundering (TBML), while ensuring efficient and customer-friendly banking services.

Dr. Ezazul Islam further highlighted the importance of expanding the access of Small and Medium Enterprise (SME) to trade finance through innovative financial products and risk-sharing mechanisms.

He also underscored the need for improving product-level data, strengthening risk management practices, and enhancing asset quality monitoring.

He also called for stronger coordination among Bangladesh Bank, commercial banks, customs authorities, and other relevant stakeholders to develop a resilient, transparent, and efficient trade finance ecosystem capable of supporting Bangladesh's growing international trade.

The keynote paper was jointly prepared by Dr. Shah Md. Ahsan Habib, Professor (Selection Grade), BIBM; Tofayel Ahmed, Assistant Professor, BIBM; Rahat Banu, Assistant Professor, BIBM; Rajib Kumar Das, Lecturer, BIBM; Mohammad Arafat Ali, Additional Director, Foreign Exchange Policy Department-1, Bangladesh Bank; and A.T.M. Nesarul Hoque, Executive Vice President, Mutual Trust Bank PLC. All members of the research team were present at the workshop.

The workshop also featured comments from distinguished panellists, including Md. Ali Hossain Prodhania, Supernumerary Professor, BIBM and Chairman, NRBC Bank PLC; Mahmudur Rahman, CDCS, Deputy Managing Director, Islami Bank Bangladesh PLC; . Syed Sazzad Haider Chowdhury, Deputy Managing Director, Prime Bank PLC; and Faruk Ahmed, Deputy Managing Director, City Bank PLC.

The event concluded with an interactive open-floor discussion, where senior executives from commercial banks, Bangladesh Bank, and other stakeholders exchanged their views on strengthening trade finance operations and improving asset quality in the banking sector.

Bangladesh Economic Zones Authority (BEZA) is seeking approval for a Tk19.18-billion infrastructure-development project to carve out three sub-zones in the National Special Economic Zone (NSEZ) in Mirsarai ready for industrial operations.

The Prime Minister's Office has sent the development project proposal (DPP) titled "Infrastructure Development at Sub-Zones 6, 11 and 12 in National Special Economic Zone Project" to the Planning Commission for approval, officials say.

The proposed scheme will cover 1,292.08 acres of land, where investors have already received industrial plots but have been unable to set up factories for the absence of essential infrastructures, including roads, electricity and gas facilities, according to the DPP.

The proposed investment comes as BEZA is already implementing five projects for the NSEZ with a combined estimated cost of Tk57.55 billion, raising concerns over project-execution capacity and resource utilisation.

Experts have called for prioritising completion of ongoing schemes and ensuring effective use of public funds before taking up new projects to maintain discipline in public investment.

Under the proposed project, BEZA will construct 35.26 kilometres of roads, 49.36 kilometres of drainage networks and 51.11 kilometres of footpaths, along with bridges, to improve connectivity within the economic zone.

The scheme also includes a 22-kilometre gas-distribution network with two District Regulating Stations (DRS), a 21.15-kilometre electricity network with three substations, and development of 1.13 million cubic metres of land for industrial use.

Besides utility infrastructure, two residential buildings and a complex area will be developed for officials and employees working in the zone.

The DPP says, "The project aims to create an investment-friendly environment by ensuring basic services needed for factory establishment."

The NSEZ, being developed close by the port city of Chattogram, is the country's largest economic zone. BEZA has already acquired or received allocation of around 17,000 acres of land for the zone, which has been divided into 30 sub-zones under a master plan.

The authority expects the development to accelerate industrial expansion and create employment opportunities in Mirsarai and Sitakunda of Chattogram and Sonagazi of Feni.

However, the new project is being proposed while several major NSEZ-related schemes remain under implementation.

These include Tk7.62 -billion water-treatment plant and deep tube-well project launched in July 2019, Tk2.74-billion road and drainage infrastructure project started in April 2020, and Tk41.40-billion NSEZ development project initiated in January 2021.

The continuation of multiple large-scale schemes highlights the infrastructure needs of the country's largest economic zone but also raises questions over coordination, implementation efficiency and timely completion.

Dr Mustafa K Mujeri, former director-general of Bangladesh Institute of Development Studies (BIDS), says the government should prioritise completing ongoing projects and ensuring proper utilisation of existing investments before taking up new ones.

"Taking up a large number of projects at the same time creates pressure on public resources and reduces the expected economic benefits. Effective project selection, timely implementation and stronger monitoring are essential to maintain discipline in public investment," he adds.

A high-level International Monetary Fund (IMF) delegation will arrive in Dhaka tomorrow (12 July) for a five-day fact-finding mission to assess the feasibility of a fresh loan package worth nearly $4.5 billion proposed by the government.

On the first day of the visit, IMF officials are scheduled to hold meetings with representatives from the finance ministry, Bangladesh Bank and other relevant agencies.
During the mission, which runs through 16 July, the delegation, led by IMF Bangladesh Mission Chief Ivo Krznar, will assess the government's economic reform agenda, policy priorities and the current macroeconomic situation.In tomorrow's meetings, the IMF is expected to seek the government's position on its reform plans, revenue mobilisation, subsidy reforms, banking sector restructuring, exchange rate policy and broader macroeconomic objectives.Finance ministry officials said the IMF will review Bangladesh's current economic conditions before deciding whether the institution will formally consider the country's request for a new lending programme.
Finance ministry officials expect that, if the current mission delivers a favourable assessment, formal negotiations on a new lending programme could begin after the IMF-World Bank Annual Meetings in October.During the five-day visit, the IMF will also review the BNP government's FY2026-27 budget, the medium-term budget framework, the Annual Development Programme (ADP) and major infrastructure projects.

The discussions will also cover revenue collection, tax policy, public expenditure, social safety net programmes, public sector wages and recruitment, as well as subsidies for electricity, gas, fuel, fertiliser and food. Officials will also discuss power sector capacity payments, banking reforms, implementation of the Bank Resolution Act, financing of state-owned enterprises, external debt management, commercial borrowing and risks related to foreign financing.

The IMF delegation is also scheduled to hold a separate roundtable discussion on Bangladesh's banking sector.

In an email sent on 26 June to the finance secretary and the Bangladesh Bank governor, Ivo Krznar wrote: "This is not a loan negotiation mission, but rather a 'fact-finding staff visit'. The purpose of the visit is to gain a direct understanding of the government's policy objectives, reform agenda and priorities, and to prepare the IMF's internal assessment based on that information."

Krznar added: "The information gathered during this visit will form the basis for the IMF's macroeconomic assessment and policy assumptions before any potential loan negotiations begin. It will also help determine where technical assistance may be required."

In 2023, the then Awami League government signed a $4.7 billion loan agreement with the IMF to address Bangladesh's foreign exchange reserve crisis. During the tenure of the interim government, additional financing under the Resilience and Sustainability Facility (RSF) increased the total programme size to $5.5 billion.

However, after disbursing $3.595 billion in five tranches, the IMF suspended further disbursements in December last year because Bangladesh failed to meet programme conditions. After taking office, the BNP government cancelled the previous programme and applied for a new loan package after accepting those conditions.

In his email, the IMF mission chief also referred to recommendations made in the latest Article IV Consultation report, which called for stronger revenue mobilisation, rationalisation of subsidies, accelerated banking sector reforms and a more market-based exchange rate regime.

The letter said the mission will examine how the current government plans to implement those recommendations, making the issue one of the central topics of the visit.

Krznar also wrote that the IMF primarily wants to listen to the government's views. The delegation will seek to understand the government's policy priorities, reform plans and responses to recent global and regional economic developments.

A senior finance division official, speaking on condition of anonymity, told The Business Standard that the government will highlight progress on adopting a market-based exchange rate, modernising monetary policy, implementing the Bank Resolution and Deposit Protection Act, introducing risk-based supervision and advancing climate-related reforms.

Several finance ministry officials said that if the mission's assessment is positive, formal negotiations on a new lending programme could begin after the IMF and World Bank Annual Meetings in Thailand in October. The government is seeking between $4 billion and $4.5 billion under the new programme.

A finance division official said, "If the IMF concludes that the government's reform agenda is realistic, its economic policy direction is credible and the foundation for a new programme has been established, it may send a negotiation mission to Bangladesh after the IMF-World Bank Annual Meetings in October. Formal discussions would then begin on the size of the new lending programme, reform conditions and the disbursement schedule."

The government should craft a single, comprehensive strategy covering every sector of the creative economy, from film and theatre to crafts and publishing, according to industry insiders.

Building a supportive policy ecosystem and setting clear result benchmarks are central to unlocking the sector’s potential nationally, they said at a virtual event organised by the Power and Participation Research Centre (PPRC) today.

The national budget for FY2026-27 has, for the first time, set aside Tk 800 crore for the creative economy -- Tk 300 crore in direct allocation and a further Tk 500 crore through Bangladesh Bank’s CSR fund.

The initiative aims to lift the sector's GDP contribution, create jobs for nearly five lakh people, and build a "Created in Bangladesh" brand spanning film, music, publishing, digital content, and design.

Redoan Rony, film director, producer, and CEO of streaming platform Chorki, said the country needs “a core strategy across all sectors, not just film or theatre, but crafts as well.”

He believes that Bangladesh has many talented people, but they need better skills development and training based on successful international models “We have a large workforce and low labour costs, from film to every other area. We can do this.”

Tanim Noor, film director and producer, said a dedicated taxation policy, such as a 50 percent tax exemption for the film industry, could significantly boost investment in Bangladeshi cinema.

He noted that nearly 200,000 people were directly employed in the industry during its golden era in the 1970s and '80s, counting cinema halls and related sub-sectors. Today, combining OTT platforms, cinema halls, and technologies like post-production and VFX, the sector could employ up to 10 lakh people.

The market size of this sector could be expanded to Tk 5,000 to Tk 10,000 crore, he said, adding that this would generate Tk 500 to Tk 1,000 crore in annual government revenue.

Luva Nahid Choudhury, director general of Bengal Foundation, called structural reforms and a central commission essential for the sector's sustainable development, along with legal enforcement of artists' intellectual property rights and royalties.

She noted that Indian artists have a right to non-transferable remuneration, while Bangladesh lacks proper copyright enforcement.

Mahrukh Mohiuddin, managing director of publishing company University Press Limited, said piracy, both traditional and digital, particularly the illegal spread of books online, has taken on epidemic proportions, breaking the backbone of publishers.

She blamed the country's “weak” copyright law and lack of proper enforcement for the rise in the illegal activity.

Bakar Bokul, playwright and creative director of theatre troupe Tarua, said governments have historically used the arts as a "propaganda machine," implementing their own agendas under the guise of cultural activism while genuine artists go unsupported, leaving theatre and other art forms trapped in this cycle.

Tauhid Bin Abdus Salam, managing director of Classical Handmade Products BD Limited, said expanding handicrafts into international markets requires blending traditional skills with designs and colours that meet global demand.

Hossain Zillur Rahman, executive chairman of PPRC, said Bangladesh's creative economy now needs a policy ecosystem to match its potential.

"A one-dimensional infrastructure approach will not take us forward. We need quality infrastructure supported by sustainable management models built on public-private partnerships," he said.

The government will adopt a comprehensive roadmap this month to transform Bangladesh's leather industry into a more competitive and environmentally sustainable sector in the global market, Industries Minister Khandakar Abdul Muktadir told parliament today (8 July).

"The roadmap will help raise annual leather export earnings to $10-12 billion by improving environmental compliance, waste management, and global standards," he said while replying to a question from Sirajganj-4 lawmaker Rafiqul Islam Khan.

He also said the government has been taking technological and administrative measures as well.

As part of the initiative, an Italian firm, Italprogetti, has completed a technical assessment of the Central Effluent Treatment Plant (CETP) at Savar BSCIC Leather Industrial City, he added.

"Based on the assessment, the CETP's treatment capacity will be urgently increased to 25,000 cubic metres. We also plan to prepare designs to gradually raise the capacity to 40,000 cubic metres and eventually to 50,000 cubic metres to meet future demand," he mentioned.

The minister said six tanneries have been allowed to set up their own effluent treatment plants (ETPs) to reduce pressure on the central treatment facility. Two of them are already operational, while another 20-25 large tanneries have been encouraged to install their own ETPs.

Highlighting the government's efforts to turn waste management into a value-added industry, Muktadir said production of industrial-grade protein powder from chrome shaving dust has already started.

He further said that initiatives are also underway to produce tallow and organic fertiliser from fleshing waste and gelatin from raw cutting waste for export.

Consumer lending in the country's banking sector continued its upward trajectory in the January-March quarter of FY26, with outstanding loans surpassing Tk 1.58 trillion despite elevated lending rates and persistent inflation.

The steady increase indicates that households are increasingly relying on bank financing to meet housing, education, healthcare and other personal expenses as rising living costs continue to strain purchasing power.

According to the latest Bangladesh Bank (BB) data, outstanding consumer loans climbed to more than Tk 1.58 trillion during the January-March quarter, up from Tk 1.51 trillion in the October-December quarter and Tk 1.50 trillion in the July-September quarter of FY26.Maps

The figure was also higher than Tk 1.47 trillion recorded in the same quarter of FY25. The quarter-on-quarter growth was driven mainly by higher borrowing for housing, salary-backed loans, credit cards, land purchases and other personal financing.

Loans for purchasing flats and apartments increased to Tk 320 billion in the January-March quarter from Tk 310.85 billion in the previous quarter, while outstanding salary-backed loans rose to Tk 232.35 billion from Tk 225.95 billion.

Credit card loans climbed to Tk 135.19 billion from Tk 131.03 billion, while loans for land purchases increased to Tk 71.81 billion from Tk 69.36 billion. Financing for motor vehicles and motorcycles also rose to Tk 63.74 billion from Tk 60.85 billion.

One of the sharpest increases was recorded in personal loans secured against fixed deposits and other savings instruments, which jumped to Tk 276.25 billion from Tk 225.91 billion.

Doctors' and professional loans edged up to Tk 10.63 billion from Tk 10.38 billion, while loans against provident funds rose to Tk 18.87 billion from Tk 17.50 billion. Other personal loans also increased to Tk 30.66 billion from Tk 29.90 billion.Credit & Lending.

However, financing for household appliances, including televisions, refrigerators and computers, declined slightly to Tk 345.35 billion from Tk 346.62 billion.

Bankers said consumer loans are increasingly being used to finance essential spending rather than discretionary purchases, as many households seek credit to cover education, healthcare, marriage, travel and other day-to-day expenses amid persistent inflation and erosion of purchasing power.

They also noted that banks have expanded their consumer lending portfolios as demand remains resilient despite relatively high lending rates.

Arif Hossain Khan, spokesperson for Bangladesh Bank, said rising consumer demand for small-ticket financing, coupled with aggressive promotional campaigns by banks, has contributed to the continued growth in consumer lending.

"Banks have faced challenges in expanding corporate lending amid weak private-sector investment and rising credit risks. As a result, many lenders are increasingly focusing on consumer finance, which offers relatively quicker loan disbursement and diversification of their credit portfolio," he said.

Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank PLC, said rising living costs and persistent inflation were prompting more people to rely on consumer loans to meet everyday expenses.

Banks are also diversifying their loan portfolios by expanding consumer lending as private-sector credit growth had remained below 5.0 per cent amid weak demand for business loans, Rahman said, adding that at the same time, lenders have stepped up promotional activities to attract retail borrowers.Business & Corporate Law

Mutual Trust Bank alone disbursed around Tk 1.0 billion in consumer loans over the past three months, reflecting growing demand for such financing, he added.

Economists, however, warned that while consumer credit can provide short-term financial relief to households, excessive reliance on borrowing could increase debt burdens and financial vulnerability over time.

They also cautioned that if a growing share of bank lending continues to flow into consumption rather than productive sectors, it could undermine private investment, employment generation and long-term economic growth.

Dr Masrur Reaz, chairman of Policy Exchange Bangladesh, said the continued growth in consumer lending suggests many households are increasingly relying on bank borrowing to cope with rising living costs rather than finance discretionary spending.

"Inflation has eroded purchasing power, prompting consumers to borrow for essential expenses such as education, healthcare and housing," he said.

While consumer credit can support domestic demand in the short term, excessive dependence on such borrowing could increase household debt and financial vulnerability if income growth fails to keep pace, he added. Economic Revival Strategies

Dr Reaz said banks should ensure credit expansion remains balanced by directing a larger share of lending to productive sectors to stimulate private investment, create jobs and sustain long-term economic growth.

Otherwise, an economy driven mainly by consumption-led credit may not be sustainable, he added.

He suggested that lenders should strengthen their credit assessment and risk management, warning that high interest rates and weak economic conditions could affect borrowers' repayment capacity in the coming months.

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.

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.

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.

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.