Bangladesh is scheduled to sign a trade agreement with the United States tomorrow aimed at reducing reciprocal tariffs, with commitments to import more American goods to narrow a trade imbalance heavily favouring Bangladesh.

Under the proposed agreement, the US will not levy tariffs on garment items made from American raw materials such as cotton and exported to American markets, according to Commerce Secretary Mahbubur Rahman.

Besides, the Donald Trump administration will also reduce the reciprocal tariff rate further for Bangladesh as at least two advisers of the interim government said recently along with Secretary Rahman on several occasions. However, they did not say exactly what percentage of the reciprocal tariff may be reduced for Bangladesh.

The arrangement is expected to offer substantial relief for Bangladesh’s garment sector.

For instance, if a T-shirt contains 70 percent American cotton and yarn by value, US customs authorities will exempt that portion from the 20 percent reciprocal tariff imposed on Bangladeshi goods last year.

This matters significantly because garments account for nearly 95 percent of Bangladesh’s exports to the US, and many factories can use roughly 70 percent American materials in their products.

The prospect of preferential access has already shifted sourcing patterns. Imports of cotton and soybeans from America have increased as Bangladeshi millers and traders redirect their purchases from other countries.

The signing ceremony will be held in a hybrid format. Commerce Adviser Sk Bashir Uddin and Secretary Rahman will attend virtually, while a handful of senior commerce ministry officials will travel to Washington to attend in person alongside their American counterparts.

“We will send the documents to the US as only a few of our officials will fly there to attend the deal signing ceremony,” Secretary Rahman said.

The commerce adviser cannot attend in person because the government has only one working day before the national elections scheduled for February 12, he added.

The agreement follows intense negotiations to reduce the US tariff burden on Bangladesh. The country exports more than $8 billion worth of goods to the US but imports only $2 billion, creating a substantial trade gap.

In his Liberation Day announcement on April 2 last year, US President Donald Trump imposed a 37 percent additive reciprocal tariff on Bangladeshi exports. After negotiations, the Trump administration agreed to lower the rate to 20 percent in exchange for Bangladesh’s commitment to import more US products.

Bangladesh has pledged to buy American aircraft from Boeing, along with greater quantities of cotton, soybeans, liquefied petroleum gas and other goods to reduce the trade gap with the US. An agreement has been signed to import 3.5 million tonnes of wheat from America over five years, with approximately 660,000 tonnes already purchased.

Meanwhile, the Bangladesh Garment Manufacturers and Exporters Association said in a statement that negotiations with the Office of the United States Trade Representative (USTR) regarding the deal have been ongoing for over six months.

“Although we are informed that a formal trade deal will be signed on February 9, we urge the Ministry of Commerce and all parties negotiating with the USTR to ensure that the signing is completed within this timeframe so that Bangladesh can start preparing itself with the preferential deal of utilising US cotton to attain zero tariff access, which we understand as the centrepiece of the trade deal,” the association added.

Bangladesh’s food grain imports surged 42 percent year-on-year to 42 lakh tonnes in the first half of the current fiscal year (FY) owing to higher imports, particularly by the private sector.

Of the amount, 84 percent or 35 lakh tonnes were wheat, and the rest were rice brought in by the public and private sectors, according to data from the food ministry.

During the period, wheat imports by the private sector surged 31 percent year-on-year to 32.45 lakh tonnes, up from 24.69 lakh tonnes a year earlier.

Meanwhile, imports by the government dropped marginally.

Taslim Shahriar, senior assistant general manager at Meghna Group of Industries (MGI), said a decline in wheat prices in the international market has encouraged imports.

“High prices of rice also buoyed demand for wheat, as it is a substitute. Demand for wheat-based foods is growing, too. This is because people’s consumption behaviour has changed,” he said.

Market price data compiled by the Food and Agriculture Organization (FAO) showed that the national average retail price of wheat flour stayed below the rates of coarse rice between November 2024 and September 2025.

Later, prices of rice declined due to higher supply from increased domestic production and imports. At the same time, retail prices of wheat flour exceeded the prices of coarse rice.

In October 2025, the national average retail price of wheat flour was Tk 54.28 per kilogramme, and the rice price was Tk 52.20 per kilogramme.

Food ministry data showed that rice imports by both the public and private sectors shot up to 6.65 lakh tonnes in the July-December period of FY2025-26 from 1.75 lakh tonnes a year ago.

The food ministry, in its latest Bangladesh Food Situation Report, said the government undertook initiatives to import 15 lakh tonnes of food grains, including 7 lakh tonnes of rice and 8 lakh tonnes of wheat.

This import aimed to strengthen buffer stocks, mitigate market volatility, and safeguard national food security amid global uncertainties.

The government had imported 1 lakh tonnes of rice and 3 lakh tonnes of wheat, while the remaining quantities were in the import pipeline, the report added.

To stabilise domestic supply and prices, rice import duties were reduced, and the private sector was authorised to import 6 lakh tonnes of rice. Under this approval, the private sector imported nearly 4.9 lakh tonnes by November 2025, close to the scheduled target.

Recently, the government granted permission for the private sector to import an additional 2 lakh tonnes of rice.

The food ministry report projected that Bangladesh’s total rice import during FY26 would be more than 14 lakh tonnes, almost equal to the volume of imports in the previous year.

Wheat imports, which meet over 85 percent of the country’s demand, will rise to 71.75 lakh tonnes in the current FY26, registering a 17 percent year-on-year increase.

The MGI official Shahriar said the amount of wheat may be close to the projection of the food ministry.

Readymade garment exports from Bangladesh to the United States grew 12.43 percent to $7.6 billion in the first eleven months of 2025, according to the US Office of Textiles and Apparel (Otexa).

The growth came despite a sharp fall in November, when exports dropped 14.57 percent to $526.51 million compared with the same month a year earlier.

Overall, US apparel imports declined slightly during the January-November period, falling 1.44 percent in value and 3.23 percent in volume. Average prices rose 1.85 percent, Otexa data showed.

Bangladesh was not alone in expanding its US market share last year. Vietnam’s garment exports there grew 11.35 percent, India’s rose 6.04 percent, Pakistan’s by 11.82 percent, Indonesia’s by 9.79 percent, and Cambodia experienced a strong 26.18 percent increase. China’s exports, in contrast, fell sharply by 33.90 percent.

In terms of volume, Bangladesh recorded a strong growth of 13.30 percent, Vietnam 11.99 percent, India 4.73 percent, Pakistan 18.28 percent, Indonesia 13.39 percent, and Cambodia surged 35.40 percent. China saw a sharp decline of 25.86 percent, Otexa said.

Unit prices per garment piece from January to November 2025 varied across countries. Bangladesh experienced a slight drop of 0.77 percent, Vietnam 0.57 percent, China 10.84 percent, Cambodia 6.81 percent, Pakistan 5.46 percent, and Indonesia 3.18 percent. India was the only country to see a price increase, rising 1.25 percent, Otexa added.

US President Donald Trump moved Friday to lift an additional 25 percent tariff he imposed on goods from India over its purchases of Russian oil -- a step to implement a trade deal announced this week.

"India has committed to stop directly or indirectly importing Russian Federation oil," according to an executive order Trump signed.

New Delhi has also said that it will purchase US energy products, "and has recently committed to a framework with the United States to expand defense cooperation over the next 10 years," the order said.

The additional 25 percent US duty will be removed at 12:01 am Eastern Time on Saturday.

The executive order comes days after Trump announced a trade deal to reduce tariffs on India, saying that Prime Minister Narendra Modi had promised to stop buying Russian oil over the war in Ukraine.

The pact would also see Washington cutting so-called "reciprocal" levies on Indian products to 18 percent, down from a 25-percent level.

The rollout of this reduction is still to come.

Other terms of the agreement include the removal of tariffs on certain aircraft and parts, according to a separate joint statement released Friday by the White House.

The statement added that India intends to purchase $500 billion of US energy products, aircraft and parts, precious metals, tech products and coking coal over the next five years.

The shift marks a significant reduction in US tariffs on Indian products, down from a rate of 50 percent late last year.

The deal eases months of tensions over India's oil purchases, which Washington says fund a conflict it is trying to end.

It restores close ties between Trump and Modi, a fellow right-wing populist that the US leader has described as "one of my greatest friends."

The 18 percent tariff level also gives Indian exporters a slight edge in the US market over competitors in the region who secured duties of around 19 percent to 20 percent, said Wendy Cutler, senior vice president at the Asia Society Policy Institute, this week.

Bitcoin, the world’s biggest cryptocurrency, extended its price slump Thursday to trade under $70,000 for the first time since Donald Trump’s presidential election victory in November 2024.

The digital currency dropped as low as $69,821.18 before climbing back above $70,000.

Bitcoin has fallen sharply in recent weeks as investors pull back from risky assets. It had reached a record high above $126,000 in October.

“Bitcoin continues to suffer... caught up in the broader risk-off mood and geopolitical turmoil that has pushed investors away from riskier assets towards safe havens,” noted Victoria Scholar, head of investment at Interactive Investor.

The volatile cryptocurrency soared after Trump was elected as he was widely viewed as a strong supporter of the sector.

Bitcoin has fallen sharply in recent weeks as investors pull back from risky assets. It had reached a record high above $126,000 in October
He publicly celebrated bitcoin crossing $100,000 for the first time in December 2024.

However it suffered a sharp setback in April last year, falling below $75,000 after the president’s announcement of sweeping US tariffs rattled global markets. It went on to reach a record-high of $126,251.31 six months later.

The latest downturn is driven largely by regulatory uncertainty.

While the US Congress passed a law in July to regulate stablecoins -- a form of cryptocurrency backed by traditional assets -- a broader crypto bill, the Clarity Act, has stalled in the Senate.

Bitcoin’s has been hit also by Trump recently nominating former Federal Reserve governor Kevin Warsh to head of the US central bank.

Warsh, seen by observers as a defender of the Fed’s independence, reassured traditional markets, prompting investors to sell safe-haven assets such as gold and silver, whose prices plunged.

Many investors rushed also to sell cryptocurrencies and other risky assets to help raise cash.

Trump’s close ties to the crypto sector have sparked accusations of conflicts of interest, as he has promoted his own cryptocurrency-related ventures since returning to office.

According to recent Bloomberg estimates, his family’s fortune grew by $1.4 billion last year from digital assets alone.

Just hours before his inauguration in January 2025, the 79-year-old billionaire launched his own cryptocurrency, $TRUMP, which slumped after a blockbuster debut.

Gold and silver prices fell sharply in a broader market selloff on Thursday, as an advance in the dollar to a near two-week high and signs of easing US-China trade tensions added further pressure on the precious metals.

Spot gold declined 2.5 percent at $4,838.81 per ounce, as of 0535 GMT, retreating from a near one-week high hit earlier in the session.

US gold futures for April delivery dropped 1.9 percent to $4,855.60 per ounce.

“The dollar received a new lease of life with the (Kevin) Warsh nomination (as Federal Reserve chief), and the currency has been able to keep making forward progress ... traders are more circumspect now on gold in light of recent extreme volatility,” Tim Waterer, KCM chief trade analyst, said.

The dollar rose to a near two-week high on Thursday, making greenback-priced gold more expensive for other currency holders.

“Sentiment (has) turned soggy across most asset classes, including precious metals, cryptocurrencies and regional equities, with losses feeding into one another and creating a self-reinforcing feedback loop amid thin market liquidity,” said Christopher Wong, a strategist at OCBC. Asia stocks faltered, tracking their US peers as concerns about the exploding costs of AI investment hounded the tech sector.

Spot silver plummeted 14.9 percent to $74.94 an ounce. Last week, the precious metal touched a record high of $121.64.

“The industrial demand has vanished at the higher levels. Most of the industrial buyers have stopped buying silver, and even solar panel producers in China are looking for alternatives,” Shah added.

On the geopolitical front, Iran and the US have agreed to hold talks in Oman on Friday, officials on both sides said. China is considering buying more US-farmed soybeans, US President Donald Trump said after what he called “very positive” talks with his Chinese counterpart Xi Jinping on Wednesday.

“If you remove geopolitical tensions and the de-dollarisation trend for the time being ... the metals have little room to run,” said Kunal Shah, head of research at Nirmal Bang Commodities in Mumbai.

Bangladesh Bank (BB) has dissolved the existing board of directors of Uttara Finance and Investments Limited and formed a new board to rescue the struggling non-bank financial institution (NBFI) from deep-rooted loan irregularities.

The listed company shared this information through the Dhaka Stock Exchange (DSE) on Thursday (February 5).

Under the Financial Company Act, 2023, the central bank has appointed five new directors to the board. Md. Mukhtar Hossain has been named the new Chairman and will serve as an independent director.

Other newly appointed independent directors include Mohammad Shafiul Azam, Md. Niamul Kabir, Md. Rafiqul Islam (FCS). Additionally, Md. Mahbub Alam has joined the board as a director.

According to central bank sources, the move aims to ensure transparency and restore corporate governance within the institution.

Uttara Finance has been under scrutiny for failing to publish regular financial reports since 2019. However, an audit report for the year 2020, released on October 6 last year, revealed a staggering financial decline.

After taxes and expenses, the company recorded a net loss of Tk 435.54 crore in 2020. The annual operating loss stood at Tk 108.32 crore. By the end of 2020, the total capital shortfall reached Tk 711.55 crore. This includes a core capital deficit of Tk 59.34 crore and a risk-based capital deficit of Tk 652.21 crore.

Central bank officials hope that the reconstitution of the board will bring positive changes to the management and financial health of the company, which has been reeling from years of mismanagement and unauthorized transactions.

Once thriving amid growing demand, Bangladesh's paper industry is now grappling with rising costs, shrinking sales, and gas shortages, raising fears of a sector-wide collapse. Most listed firms three out of five reported a decline in profit for the second quarter (October–December) of the current fiscal year, while market leader Bashundhara Paper Mills incurred a heavy loss.

Of the six paper firms listed on the bourses, five have published financial statements for the first six months through December 2025. Khulna Printing and Packaging, however, has remained non-functional and has not released its financials for a long time.

Industry insiders said high inflation, gas shortages, and banking constraints for importing raw materials have severely hurt the sector.

Sector under pressure

Mustafa Kamal Mohiuddin, secretary general of the Bangladesh Paper Mills Association (BPMA) and chairman of Magura Multiplex, told The Business Standard, "The country's paper industry is almost on the verge of collapse due to three main reasons: the dollar crisis for importing raw materials, the gas shortage, and banking constraints. Most mills are closed, and only 10–15 are operating at lower capacity. Entrepreneurs are struggling to stay afloat."

He added that insufficient gas supply has forced mills to seek alternatives like LNG and coal imports, but banking restrictions have hindered these efforts. Mohiuddin also noted that digitalization has reduced overall paper demand, though specialized papers such as colour, art paper, hardboard, and tissue continue to see steady demand.

Performance of listed firms

In Q2 (October–December), Sonali Paper & Board Mills reported a 20% decline in revenue to Tk77.22 crore and a 17% drop in net profit to Tk10.15 crore compared to the same period last fiscal year. In H1 (July–December), however, the company recorded modest growth, with revenue up 4% to Tk159.60 crore and profit rising 7.64% to Tk19.44 crore, driven largely by first-quarter performance.

Md. Rashedul Hossain, company secretary, attributed the Q2 decline to seasonal factors, including school closures.

Hakkani Pulp & Paper Mills saw an 18% fall in Q2 revenue to Tk26.75 crore and a 9% drop in profit to Tk32 lakh. H1 revenue declined 6.58% to Tk58.05 crore and profit fell 7% to Tk52 lakh. The company attributed the decline to higher costs of sales, despite an increase in tissue segment sales, while revenue from newsprint dropped.

Mixed results for Magura Group firms

Two Magura Group concerns posted mixed results. Magura Multiplex reported a 7.4% rise in profit in H1, while Monospool Bangladesh saw a 3.56% drop to Tk4.71 crore and Tk7.55 crore, respectively.

Both firms recorded growth in Q2, with chairman Mustafa Kamal Mohiuddin attributing H1 performance to effective cost control.

Bashundhara faces big los

Bashundhara Paper Mills suffered a massive Tk249 crore loss in H1 FY26, citing raw material shortages, rising utility and borrowing costs, and price hikes.

The company had also recorded a Tk330 crore loss in the previous fiscal year. Its loss per share in Q2 reached Tk14.34, up from Tk5.84 in the same period last year. H1 revenue plunged 72% to Tk113 crore, down from Tk410.47 crore in FY25, while finance costs soared 31% to Tk204 crore.

An official, speaking on condition of anonymity, said, "Operating profitability declined sharply due to raw material scarcity, higher utility costs, rising input prices, and increased borrowing costs. As a consequence, EPS has decreased significantly."

As of December, Bashundhara Paper Mills' long-term loans stood at Tk2,118 crore, with short-term borrowings of Tk581.85 crore.

Amid Bangladesh’s fragmented preparation for LDC graduation, and at a time when unpredictable global geopolitical dynamics are reshaping competitiveness, some quietly consequential and rather rare good news has emerged from the United Kingdom. It relates to recent changes under the UK’s Developing Countries Trading Scheme, known as the DCTS. The changes mean that even after graduation, Bangladesh will continue to access the UK apparel market on the same terms it currently enjoys as an LDC. Yet this development has attracted little attention, despite potentially far-reaching implications for Bangladesh’s post-graduation export competitiveness.

What changes after graduation and why it matters

Like the EU’s GSP system, the DCTS is a tiered arrangement, with different levels of market access linked to income level and development status. At the top tier are LDCs, which qualify for Comprehensive Preferences, offering duty-free market access with the least restrictive rules of origin, including single-stage transformation for apparel. The second tier, Enhanced Preferences, is intended for economically vulnerable non-LDC countries. It provides duty-free access to most products, but with tighter conditions. The third tier, Standard Preferences, applies to other countries and offers more limited tariff reductions.

LDC graduation means Bangladesh moves from Comprehensive to Enhanced Preferences. Earlier, the UK announced that there would be no safeguard mechanism attached to a non-LDC beneficiary receiving duty-free access for apparel under Enhanced Preferences. By contrast, under the EU system, non-LDC countries with a large share of EU apparel imports face automatic safeguard measures.

This means that even if Bangladesh qualifies for GSP Plus after graduation, its apparel exports could still face MFN tariffs.

Until recently, however, the UK, like the EU GSP Plus, applied double-transformation rules of origin for apparel. Countries under Enhanced and Standard Preferences were required to undertake both fabric production and garment assembly domestically to qualify for duty-free access. The latest changes allow Enhanced Preferences beneficiaries to source up to 100 percent of apparel inputs from abroad while still qualifying for duty-free entry to the UK.

This shift is particularly significant given the UK’s expanding network of free trade agreements with countries such as India and Vietnam, which have large-scale and deeply integrated supply capacities. Without greater flexibility, post-LDC countries like Bangladesh would have faced a far tougher competitive environment, where nominal duty-free access coexisted with binding origin constraints, while FTA partners benefited from full tariff elimination and stronger backward linkages. Such an outcome would risk turning LDC graduation into an economic penalty, contrary to long-standing commitments to ensure smooth transitions.

WHAT THIS MEANS FOR EXPORTS AND JOBS

The UK is Bangladesh’s third-largest export market, accounting for about 10 percent of total merchandise exports. Apparel makes up more than 90 percent of these shipments. In 2024, Bangladesh exported roughly $3.3 billion worth of clothing to the UK, including $2 billion in knitwear and $1.3 billion in woven garments.

This distinction matters. Knitwear benefits from stronger domestic backward linkages and generally meets origin requirements. Woven apparel depends heavily on imported fabrics and is therefore far more exposed to restrictive rules of origin.

Under double-transformation requirements, a large share of woven exports would fail to qualify for preferences and face standard tariffs. Extending single-stage transformation under Enhanced Preferences substantially reduces post-graduation risks and moderates competitive pressure from other exporters gaining tariff-free access through UK trade agreements.

Quantitative modelling by Research and Policy Integration for Development (RAPID) shows that rules of origin matter at least as much as tariffs in determining competitiveness. Under a counterfactual scenario with double-transformation requirements, annual apparel export losses were estimated at $283 to $350 million, mainly in woven garments. The UK’s decision removes this barrier and averts these losses.

General equilibrium simulations using the GTAP framework suggest that without the DCTS changes, Bangladesh’s apparel exports to the UK could have fallen by more than 25 percent as graduation coincided with stronger competition from FTA partners. With single-stage transformation retained, projected losses fall from about $1.18 billion to around $150 million, reflecting competition rather than binding origin rules.

Based on current employment intensity, this policy shift is estimated to safeguard close to 100,000 jobs, more than half held by women. This is significant amid a sharp decline in female participation in manufacturing over the past decade.

WHAT THE UK GOT RIGHT

Allowing single-stage transformation under Enhanced Preferences reduces the risk of abrupt export losses after LDC graduation and supports a more predictable adjustment. It sets a constructive benchmark for post-LDC trade engagement and offers a reference point for discussions with other partners, particularly the European Union.

Rules of origin flexibility, however, should be seen as a transition tool rather than an endpoint. Long-term competitiveness will still depend on strengthening domestic textile capacity and backward linkages.

The UK’s approach shows that LDC graduation need not be economically punitive if trade preferences are designed with the evolving competitive landscape in mind. It also raises the bar for other partners, where rigid origin rules risk turning graduation into a disruptive shock rather than a managed transition.

The author is an economist and chairman of Research and Policy Integration for Development (RAPID). He can be reached at m.a.razzaque@gmail.com.

Bangladesh and Japan's Economic Partnership Agreement (EPA), signed yesterday (6 February), is a wide-ranging deal that goes beyond tariff reductions to cover trade procedures, investment protection, labour mobility and digital cooperation.

The agreement introduces new commitments aimed at simplifying business operations, strengthening legal certainty for investors and expanding cooperation in emerging sectors.

The main chapters are outlined below.

Trade facilitation and anti-corruption measures

The EPA contains a trade facilitation chapter that requires Bangladesh to simplify business procedures and improve the overall trade environment.

It introduces the Authorised Economic Operator (AEO) system, under which approved importers can assess and pay customs duties themselves, allowing goods to clear more quickly.

According to officials involved in negotiations, 10 firms have already been certified as AEOs, while applications from about 70 others are pending.

The agreement also includes a dedicated chapter on corruption and unlawful financial transactions, outlining enforcement mechanisms not previously included in Bangladesh's bilateral trade agreements.

Another provision revises customs penalty rules, limiting fines to the actual revenue loss rather than allowing blanket penalties of up to 200%, which is expected to reduce complications for businesses.

Legal certainty and investor protection

The investment chapter establishes a structured dispute resolution mechanism.

Parties must first attempt to resolve disagreements through internal consultations within 60 days before seeking arbitration at the International Centre for Settlement of Investment Disputes (ICSID).

The agreement also requires imports to be valued at the actual transaction price, leaving no scope for minimum import prices or tariff values.

In addition, the EPA introduces mutual participation in government procurement, enabling Japanese companies to take part in Bangladeshi tenders and Bangladeshi firms to compete for contracts in Japan, with certain concessions for local companies.

Officials believe these provisions could strengthen investor confidence and encourage further Japanese investment.

Skilled labour mobility

Unlike traditional labour agreements, the EPA focuses on skilled and semi-skilled professionals, including engineers, IT specialists and culinary workers.

Analysts say the inclusion reflects Japan's demographic pressures and Bangladesh's interest in expanding higher-value overseas employment.

However, strict language requirements, professional certification standards and employer-led recruitment mean the number of workers is likely to remain limited.

Despite these constraints, the provision is viewed as symbolically important, signalling Bangladesh's gradual move toward exporting more specialised human capital.

Procurement and digital trade

The agreement also covers government procurement and digital trade, areas that developing countries have traditionally approached cautiously.

Commitments to transparency and clear procedures in public procurement could improve governance and efficiency but may reduce the scope for domestic preference policies.

In digital trade, provisions supporting electronic transactions and cross-border data flows align Bangladesh with emerging global norms.

Experts note that implementing these commitments will require careful balancing of openness with data sovereignty and cybersecurity priorities.

Curbing wasteful spending by slashing populist development projects was a stated economic priority of the interim government as it sought to ease the fiscal strain inherited from the ousted previous regime. That goal was largely achieved through a sharp cut in development expenditure.

What the interim administration failed to rein in, however, was recurrent spending.

Economists warn that a series of expenditure-heavy decisions taken towards the end of the government's tenure including proposed pay hikes, expanded allowances and widened social safety-net coverage, will leave a substantial fiscal burden for the next elected government, expected to take office after the 12 February election.

They argue that while development spending was curtailed aggressively, operating expenditure has continued to rise at a time when revenue mobilisation remains weak, deepening the long-standing imbalance between income and expenditure.

As a result, the incoming government is likely to face severe pressure to implement politically and socially sensitive commitments without having the fiscal space to finance them.

Rising commitments, weak revenues

According to economists, the next administration will inherit pressure to implement decisions such as a proposed new pay scale for government employees, expanded allowances and beneficiary coverage under social safety-net programmes, a 20% electricity bill rebate for the fisheries sector, and the repayment of dues to customers of Sammilito Islami Bank and several non-bank financial institutions currently under liquidation.

If these commitments cannot be politically managed or fiscally phased, the country's already fragile fiscal balance could deteriorate further, economists warn, with potential consequences for growth, employment and macroeconomic stability.

Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD), told The Business Standard that the next elected government would face "massive pressure" if the newly announced expenditure initiatives were implemented in full.

"Resource mobilisation and expenditure management will face new challenges," she said. "Revenue collection has again fallen short, while operating expenditure is increasing at a time when it ideally should have been restrained."

She added that the scope for financing additional expenditure is extremely limited.

A budget meant to fix, not to dream

"No agency provides loans to pay salaries. Government borrowing from banks has already risen sharply, and further borrowing will crowd out private-sector credit. The options for meeting this extra expenditure are therefore very limited," she said.

Pay Commission: the biggest pressure point

One of the most significant sources of potential fiscal stress is the recommendation of the Pay Commission formed to revise salaries of government employees.

Estimates suggest that implementing the proposed pay structure for employees of ministries, divisions, offices and directorates alone would require additional spending of about Tk1.06 lakh crore. Extending the new scale to the armed forces, autonomous bodies and MPO-listed teachers would push the overall cost even higher.

On 27 January, Power and Energy Adviser Muhammad Fouzul Kabir Khan said the interim government would not implement the Pay Commission's recommendations, leaving the final decision to the next administration.

Economists warn that even postponing the decision does not eliminate the pressure.

35.33% of govt's operating expenditure goes to interest payments in Q1

Zahid Hussain, former lead economist at the World Bank's Dhaka office, said raising sufficient revenue to support such measures would be extremely difficult.

"These expenditures cannot be financed by borrowing or printing money, as that would fuel inflation," he said. "That leaves only two options: earning more revenue or cutting other spending."

But he added that savings of this magnitude are unlikely to come from other public expenditures. "So revenue mobilisation remains the only option and that is far harder than announcing a new pay scale."

Bangladesh's tax-to-GDP ratio currently stands at around 7%, one of the lowest globally, while government revenue remains insufficient to fully cover operating expenses. Debt-servicing costs are also projected to rise in the coming years, further shrinking fiscal space.

"In this context, introducing a new salary scale without a substantial increase in revenue would severely constrain development spending," economists warn, undermining efforts to boost investment, growth and job creation.

Safety-net expansion before budget

Alongside salary-related pressures, the interim government has expanded several social safety-net programmes during its tenure, increasing both the number of beneficiaries and allowance amounts for old-age pensions, widow and disability allowances, education stipends, healthcare support and other welfare schemes.

It has also decided to add five lakh families to the food-friendly programme, increase allowances for freedom fighters, expand the Vulnerable Group Feeding programme, and introduce a 20% electricity bill rebate for marginal fish, livestock and poultry farmers requiring a Tk100 crore fund.

Govt approves hike in social safety net benefits for FY27

While economists acknowledge the social importance of these measures, they caution that they will add several thousand crore taka to recurrent expenditure in the next fiscal year.

Fahmida Khatun described the timing of these decisions as unprecedented.

"Such measures are usually taken during budget formulation by an elected government," she said. "The interim government should have limited itself to making recommendations instead of creating invisible pressure on the next administration by announcing these decisions in advance."

Development spending squeezed

The fiscal pressure is compounded by weak development spending.

In FY2024-25, implementation of the Annual Development Programme (ADP) stood at 67.85% — the lowest rate in one and a half decades. In the current fiscal year, despite a reduced allocation, only 17% of the ADP was spent in the first half, the lowest on record.

Economists and planners say the next government will face strong pressure to increase development expenditure to revive growth, employment and private investment, even as revenue income is almost entirely consumed by operating expenses.

ADP spending drops Tk24,718cr in Jul-Mar

Planning Adviser Wahiduddin Mahmud warned on 28 January that no development strategy could succeed with revenue collection stuck at 7–8% of GDP, noting that the revised development budget for the current fiscal year is being financed through loans.

"There are no global examples of countries achieving sustainable development by relying on debt to fund education, health and social security," he said.

Fiscal measures way before budget

With the next budget still five months away, the interim government increased both the number of beneficiaries and the allowance amounts under various social safety net programmes.

Fahmida Khatun described the move as unprecedented, noting that such decisions are typically taken during budget formulation by an elected government.

Expressing concern, the CPD executive director said the interim government should have limited itself to making recommendations for the next administration.

Further fiscal pressure is expected as the fisheries and livestock ministry announced a 20% rebate on electricity bill for marginal fish, livestock and poultry farmers, which would require creation of a Tk100 crore fund.

Political parties must pledge specific banking reforms in election manifestos: CPD's Fahmida

Since assuming office, the interim government has also increased operating expenditure by accepting various demands following protests by different professional groups and employees.

One such decision involves salary and allowance increases for a large number of MPO-listed teachers.

More than Tk20,000 crore in unpaid electricity bills remain outstanding, a liability that economists say will fall on the next government.

Pressure from weak development spending

In the 2024-25 fiscal year, implementation of the Annual Development Programme (ADP) stood at 67.85% of the allocation, the lowest rate in the past one and a half decades.

In the current fiscal year, despite a reduced ADP allocation, implementation has remained sluggish. The outlay has been slashed to Tk2 lakh crore as only 17% of the development budget was spent in the first half, the lowest on record.

Mobilising resources to finance development spending remains a challenge as the revenue income is almost entirely exhausted in operating expenses.

How Bangladesh engineered a power crisis it can no longer afford

During the tenure of the interim government, the tax-to-GDP ratio has declined to 7%. In the first five months of the current fiscal year (July to November), the NBR's revenue collection grew by over 15% compared to the same period of the previous fiscal year; nevertheless, collection remained below the projected target.

"No development strategy can succeed with this level (7% to 8% of GDP) of revenue collection," Planning Adviser Wahiduddin Mahmud said at an event on 28 January, adding the revised development budget for the current fiscal is being financed through loans.

Will higher pay curb corruption?

The last public-sector pay scale was announced in 2015, raising salaries by 70% to 100%. A decade later, the current Pay Commission has proposed similar increases, partly justified by claims that higher pay would reduce corruption and improve service delivery.

Transparency International Bangladesh (TIB) executive director Iftekharuzzaman rejected that argument.

"There is no evidence that corruption declined or service quality improved after the 2015 pay hike," he said. "Without strong accountability mechanisms, higher salaries alone do not reduce corruption. In fact, illegal transactions often rise faster than pay."

Creative destruction, Bangladeshi style

Zahid Hussain echoed the concern, noting that the idea of "self-financing" salary hikes — where reduced corruption boosts revenue — has little support in Bangladesh's past experience.

"From a fiscal perspective, implementing such recommendations without structural reforms in revenue mobilisation and accountability is nearly impossible," he said.

Taken together, economists warn that the interim government's end-of-term spending decisions have significantly narrowed the fiscal room available to the next administration, underscoring the urgency of revenue reforms and tougher expenditure prioritisation to avoid deeper strain on public finances.

The United States and India today (7 February) released a joint statement outlining a framework for an interim bilateral trade agreement under which New Delhi will eliminate or reduce tariffs on all US industrial goods and a wide range of US food and agricultural products, while Washington will apply a reciprocal tariff rate of 18% on Indian goods, including textiles.

The joint statement, released simultaneously in New Delhi and Washington, said India intends to purchase $500 billion worth of US energy products, aircraft and aircraft parts, precious metals, technology products, and coking coal over the next five years.

The announcement follows nearly a year of trade tensions between the two countries, sparked by the Trump administration's imposition of tariffs on Indian goods, which were later doubled to 50% as a penalty over India's purchase of Russian oil.

Earlier today, President Donald Trump also signed an executive order lifting the punitive additional 25% tariff imposed on India over its Russian oil imports.

The joint statement said, "India and the United States will significantly increase trade in technology products, including Graphics Processing Units (GPUs) and other goods used in data centres, and expand joint technology cooperation."

"Today's framework reaffirms the countries' commitment to the broader US-India Bilateral Trade Agreement (BTA) negotiations, launched by President Donald Trump and Prime Minister Narendra Modi on 13 February 2025, which will include additional market access commitments and support more resilient supply chains," it added.

"The interim agreement between the United States and India will represent a historic milestone in our countries' partnership, demonstrating a common commitment to reciprocal and balanced trade based on mutual interests and concrete outcomes," the statement said.

According to the joint statement, key terms of the interim trade agreement will include India eliminating or reducing tariffs on all US industrial goods and a wide range of US food and agricultural products, including dried distillers' grains, red sorghum for animal feed, tree nuts, fresh and processed fruit, soybean oil, wine and spirits, and additional products.

The United States will apply a reciprocal tariff rate of 18% under an executive order on originating goods from India, including textiles and apparel, leather and footwear, plastic and rubber products, organic chemicals, home décor, artisanal products, and certain machinery.

The United States will also remove tariffs on certain Indian aircraft and aircraft parts. Similarly, India will receive a preferential tariff-rate quota for automotive parts.

The two countries commit to providing each other with preferential market access in sectors of mutual interest on a sustained basis.

They will also establish rules of origin to ensure that the benefits of the bilateral trade agreement accrue predominantly to the United States and India.

According to the statement, both sides will address non-tariff barriers affecting bilateral trade. "India agrees to address long-standing barriers to trade in US medical devices and to eliminate restrictive import licensing procedures that delay market access for, or impose quantitative restrictions on, US Information and Communication Technology (ICT) goods," it said.

India will also determine, within six months of the agreement's entry into force and with a view towards a positive outcome, whether US-developed or international standards, including testing requirements, are acceptable for US exports entering the Indian market in identified sectors.

India further agreed to address long-standing non-tariff barriers affecting US food and agricultural products.

To enhance ease of compliance with applicable technical regulations, the United States and India intend to discuss their respective standards and conformity assessment procedures for mutually agreed sectors.

In the event of changes to agreed-upon tariffs by either country, both sides agree that the other may modify its commitments accordingly.

The United States and India will work towards expanding market access opportunities through continued negotiations under the bilateral trade agreement.

The United States affirmed that it intends to take into consideration India's request to continue working toward lowering tariffs on Indian goods.

Both countries also agreed to strengthen economic security alignment to enhance supply chain resilience and innovation through complementary actions to address non-market policies of third parties, as well as cooperation on inbound and outbound investment reviews and export controls.

The two sides committed to addressing discriminatory or burdensome practices and other barriers to digital trade, and to setting a clear pathway toward robust, ambitious, and mutually beneficial digital trade rules as part of the bilateral trade agreement.

Indian Prime Minister Narendra Modi welcomed the framework for the interim trade agreement, saying it reflects the growing depth, trust, and dynamism of the bilateral partnership.

Modi said the agreement would strengthen the Make in India initiative by opening new opportunities for farmers, entrepreneurs, MSMEs, startup innovators, and fishermen, while generating large-scale employment for women and youth.

He added that the framework would deepen investment and technology partnerships, strengthen resilient and trusted supply chains, and contribute to global growth.

The prime minister reiterated India's commitment to future-oriented global partnerships that empower people and promote shared prosperity, and thanked President Trump "for his personal commitment to strengthening ties between the two countries."

"This framework reflects the growing depth, trust, and dynamism of our partnership. It strengthens Make in India by opening new opportunities for India's hardworking farmers, entrepreneurs, MSMEs, startup innovators, fishermen, and more. It will generate large-scale employment for women and youngsters," Modi said.

"India and the United States share a commitment to promoting innovation, and this framework will further deepen investment and technology partnerships between us," he added in a post on X.

Modi said the framework for the bilateral trade deal would also strengthen resilient and trusted supply chains and contribute to global growth.

Palli Karma-Sahayak Foundation (PKSF) will increase financing and other support to promote Bangladeshi handicrafts in the nearly $1 trillion global export market while taking initiatives to expand the domestic market.

The information was disclosed in a press release issued today (5 February).

During a visit to export-oriented handicraft enterprise Taranga in Mirpur, PKSF Chairman Zakir Ahmed Khan said that handicrafts are a promising sector but face challenges such as financing constraints, skilled manpower shortages, infrastructural gaps and weak branding, which PKSF plans to address through specialized programs.

Bangladesh's domestic handicrafts market is estimated at Tk100–150 billion, while its global exports remain minimal, at $29.75 million in FY 2022–23. Major buyers include the United States, Europe, and the Middle East.

PKSF Managing Director Md Fazlul Kader said women artisans produce high-quality export products locally, raising family incomes.

He added that PKSF aims to help Bangladesh achieve $1 billion in handicraft exports through financing and technical support.

Taranga, backed by PKSF, employs around 32,000 women and allocates over 40% of sales revenue to workers' wages.

Following fair trade principles, it exports jute, water hyacinth, hogla leaves, bamboo, banana fiber, and natural dye products to 50 countries.

Leaders of ten major trade bodies have demanded immediate government intervention to resolve the ongoing deadlock at Chattogram port, which handles over 90 percent of the country’s maritime trade, terming it a “great disaster”.

This is the first time in the country’s history that all vessels have remained at a standstill at the port, they claimed in a joint statement at a press conference at the Gulshan office of the Bangladesh Textile Mills Association (BTMA) in Dhaka yesterday.

“This is not a normal strike; it is equivalent to destroying the country’s heart of business and trade by creating a deadlock at Chattogram port,” the statement said.

The economy suffers losses of several thousand crores of taka even from a single day’s deadlock at the port, they added.

Operations at the port came to a halt after workers and employees of the seaport enforced indefinite work abstention from February 3, opposing the move by the interim government to hand over the operation of the New Mooring Container Terminal (NCT) at the port to UAE-based firm DP World.

Goods from export and import vessels have not been loaded or unloaded for nearly a week.

The joint statement was issued by top trade bodies, including the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), Bangladesh Textile Mills Association (BTMA), Metropolitan Chamber of Commerce and Industry (MCCI), Dhaka Chamber of Commerce and Industry (DCCI), and Bangladesh Employers’ Federation (BEF).

The Bangladesh Chamber of Industries, Bangladesh Garment Buying House Association, Bangladesh Garments Accessories & Packaging Manufacturers & Exporters Association (BGAPMEA) and Bangladesh Terry Towel & Linen Manufacturers & Exporters Association (BTTLMEA) also signed the statement.

The country’s external trade, including the main export earner garments, has been facing irrecoverable losses due to the situation, they noted.

Operations at the port came to a halt after workers and employees of the seaport enforced indefinite work abstention from February 3
Exportable goods cannot be shipped, and imported goods cannot be released from vessels, which will make it difficult to meet strict delivery deadlines for international buyers.

The business leaders warned that Bangladesh risks losing work orders if the crisis continues, as international buyers may shift to alternative sourcing countries.

They also noted that export and industrial production are already under pressure due to falling demand, geopolitical crises, and rising production costs.

In such a situation, port demurrage charges, port fees, and storage costs are increasing, directly affecting production costs. Consequently, export prices will rise, negatively impacting international trade.

Additional costs on imported goods may also affect the prices of essential commodities meant for Ramadan sales. Any delay in releasing imported goods could disrupt the timely supply to consumers and raise price levels if the stalemate is not resolved quickly.

An unstable situation has also been created in obtaining bank loans and opening Letters of Credit (LCs) for importing goods.

The business leaders urged the government to resolve the port crisis immediately, considering the greater interest of the country and the economy.

In the statement, the business leaders urged the union leaders to call off the strike. They also suggested that the issue of renting the NCT can be postponed, and the union leaders can have the chance to discuss it with the next elected government.

“It is our firm belief that the government will sit with the labour leaders soon and solve the crisis immediately,” the statement reads.

In a separate statement, the DCCI urged the immediate restoration of normal operations at Chattogram port.

“Approximately 54,000 containers of goods have been stranded at the port so far,” it said.

Due to this delay in clearance, businesspeople are incurring additional costs of Tk 10,000 to Tk 15,000 per day. This ongoing shutdown is having a severe impact on the country’s export sector in particular.

“Moreover, if the situation continues, it will adversely affect the national economy. There is also a growing concern of cancellation or diversion of purchase orders to competitor countries, as we are unable to process shipment of goods in time,” it added.

In addition, this unexpected deadlock in cargo handling is likely to increase operational costs across trade and investment activities, creating an extra burden on both businesses and consumers.

The statement called for urgent government intervention to resolve the problem as soon as possible through discussions with all stakeholders concerned with Chattogram port.

The chamber also stressed the need for collective efforts involving the business community, the Chittagong Port Authority and all relevant stakeholders.

India’s trade pact with the US leaves much to be desired but will ease a crushing overhang on the rupee. Ten months into President Donald Trump’s trade war, the South Asian country is emerging bruised but at least more integrated into the global economy.

Washington is slashing its tariff on imported Indian goods to 18 percent from 50 percent in exchange for a promise from Prime Minister Narendra Modi’s administration to halt buying Russian oil, Trump announced late on Monday, adding that India has committed to buy $500 billion of US-made goods. Modi’s own post did not mention what India has conceded, but it appears to fulfil Washington’s demand for lower Indian tariffs on sectors like autos and includes petroleum and defence goods.

Still, even by Trump’s standards, the arrangement is short on details. Washington’s approach appears slapdash ahead of an expected US Supreme Court ruling on the lawfulness of Trump’s trade regime. As of Tuesday afternoon India time, there was no timeline for when the lower tariff would take effect. The purchasing commitment Trump says India has agreed to also seems absurd: the US currently supplies just $46 billion of India’s $690 billion annual imports, of which only $192 billion is fuel.

Nonetheless, the broad contours were positive enough to support Indian markets: the rupee , the worst-performing Asian currency of 2025, moved over 1 percent higher to 90.37 against the US dollar, while the benchmark Nifty 50 Index of stocks rose 5 percent. The revised tariff imposed by India’s largest trading partner is lower than the 20 percent Washington charges shipments from Vietnam and Bangladesh. That restores a potential advantage for India that global investors first expected back in April. It will also ease fears that the Trump administration will turn hostile on India’s IT services, a much larger-value export to the United States.

New Delhi may eventually rue giving up autonomy on its global energy purchases, a pillar of its attempt to maintain a non-aligned foreign policy. But in the short term, the US pact removes the biggest external roadblock to India’s growth and will reduce the need for the government to borrow more to prop up employment-intensive industries like textiles. One day, India might even thank Trump for spurring it to shore up its trade ties. Including a deal struck last week with the European Union after years of delays, Modi has secured agreements with its two largest markets together taking 36 percent of Indian exports, BNP Paribas analysts note. That’s some consolation for a bullied partner.

US President Donald Trump on February 2 said Washington will slash its tariff on Indian goods to 18 percent from 50 percent in exchange for India halting purchases of Russian oil and lowering trade barriers.

Trump said Indian Prime Minister Narendra Modi also committed that India would buy American goods worth more than $500 billion, including energy, coal, technology, agricultural and other products. Trump did not provide a timeline for those purchases, nor for when the lower tariff would go into effect.

Modi announced the revised US tariff in a separate post on social media platform X, without mentioning any concessions made by India.

The US deal addresses Washington’s ask to cut high Indian tariffs on sectors like autos, petroleum, defence, electronics, pharma, telecom products, aircraft and some agriculture products, and that talks for a more comprehensive deal with more sectors are to continue, an unnamed Indian government official told Reuters on Tuesday.

The Trump administration has been racing to complete framework trade deals with major trading partners before the US Supreme Court rules on whether to strike down Trump’s “reciprocal” tariffs under the International Emergency Economic Powers Act.

Booming exports are pushing up China's currency and while analysts think authorities will resist further gains, risks are to the upside and could test the country's fragile economy.

As the yuan exchange rate tiptoed toward and then passed the strong side of 7-per-dollar last year, foreign currency flows into Chinese banks hit a record $452 billion in December.

The amount converted to yuan also hit a record of $311 billion, figures from the State Administration of Foreign Exchange showed, with the flow sending the exchange rate to its strongest point since 2023 at 6.9378 per dollar yesterday (3 February).

Bank analysts think that is more or less enough and say a toolkit of semi-official yuan selling, restraining the trading band, persuasive arguments from authorities and tweaks to reserve ratios for the banking system can be rolled out to keep it from gaining further.

An average of 13 forecasts from global investment banks has the currency at 6.92 to the dollar by year's end, while market pricing points to around 6.8 in the derivatives market.

That sort of level is likely to frustrate the country's trading partners, where manufacturers are under pressure from Chinese rivals, and add more fuel to a boom in offshore yuan borrowing.

But out-of-consensus calls point to it rising further if exporters ramp up their yuan conversions, with Goldman Sachs this week raising its 12-month yuan forecast to 6.7 per dollar, about 3.5% firmer than Tuesday's trading level.

"The pace of appreciation has exceeded our expectations and that is even before the sharp move lower in the broad dollar," said Goldman analysts, who based their outlook on record flows and what they viewed as a shift in tone from the central bank.

The People's Bank of China manages the yuan by keeping it inside a band that is 2% on either side of a midpoint that it announces each trading day. It declined to comment on its stance on the currency or on analyst forecasts when contacted by Reuters.

Last month, central bank Deputy Governor Zou Lan said the yuan is expected to experience two-way fluctuations while maintaining flexibility.

Base Case

A stronger yuan erodes a competitive advantage for exporters, so analysts believe a runaway rally is unlikely. They point to state bank selling and signals from the PBOC's midpoint settings as evidence authorities will weigh in against gains.

"Given that China's economic growth is still highly dependent on exports, the People's Bank of China may not yet be willing to risk a more significant appreciation of the currency," said Wei He, an economist at Gavekal Dragonomics.

The PBOC midpoint has been weaker than market estimates since November and – traders say – state banks have been dollar buyers whenever the yuan has started to rise too sharply.

Analysts also expect authorities to adjust foreign exchange reserve requirements, since they could force banks to buy and hold more dollars and offset yuan buying.

"We see a high chance for the 20% risk reserve on banks' forward FX sale to be removed and expect FX reserve requirement ratio to be raised," said Janice Xue, a strategist at Bank of America Global Research.

China's 5% gross domestic product growth last year rested upon an export surge that delivered a record trade surplus of $1.2 trillion, up around 20% from a year earlier.

"Our base scenario remains a strong export performance, which could support the yuan," said Chaoping Zhu, global market strategist at J.P. Morgan Asset Management. "However, as foreign governments become more cautious (about) the impacts on their economies, uncertainties are rising for Chinese export growth."

"This might suggest a higher two-way volatility in the exchange rate," he said, which he thinks is likely to fluctuate in a range around 7-per-dollar. On a trade-weighted basis, the yuan is at the lower end of a range that it has kept since the pandemic, which provides support for exporters.

Upside Risks

Stability has also been the defining feature of the nine-month rally that has lifted the yuan nearly 6% against the dollar, which traders say is aimed at boosting the currency's appeal for investment, lending and reliability for settling trade.

That also holds momentum in check against the risk that a rising currency drives a positive feedback loop where buying from exporters sends it higher, encouraging more buying.

Ding, a Shanghai-based electrical industry exporter who only provided his surname, said his firm was already converting more dollars to yuan more quickly because of recent exchange rate moves.

To be sure, at 68.8%, the proportion of export receipts converted to yuan in December was on the rise, but it was not a record, and analysts believe authorities can manage even bigger flows.

"We expect the level of surplus to go beyond $1 trillion again in 2026," said Kelvin Lam, senior China+ economist at Pantheon Macroeconomics, who expects the exchange rate to be at 6.85 at the end of the year.

"Repatriation of the USD piled outside of China because of trading activity will continue to be a driving force to push (the yuan) to the stronger end, but the PBOC will make sure the appreciation (is) on a gradual, measured pace."

At the Singapore Airshow, exhibition halls are filled with aircraft models, simulated cockpits and interactive displays showcasing the latest advances in commercial aviation. Among them, one stand has drawn particular interest: Comac, China's state-owned aircraft manufacturer.

Comac has made notable progress since its C919 passenger jet flew to Singapore two years ago, marking its first journey outside China. Designed to rival Airbus's A320neo and Boeing's 737 MAX, the aircraft is increasingly being promoted to markets beyond China, reports the BBC.

For Comac, the Singapore Airshow offers an opportunity to present itself as a future challenger to the long-dominant Airbus-Boeing duopoly in the Asia-Pacific region - the world's fastest-growing aviation market - at a time when airlines are struggling with aircraft shortages, delivery delays and supply chain disruptions.

"I think over time Comac will become a global competitor, but it will take years," Willie Walsh, director general of the International Air Transport Association (IATA), told the BBC.

"In 10 or 15 years, we'll likely be talking about Boeing, Airbus and Comac together."

Industry analysts say the region urgently needs another aircraft manufacturer. Airlines across Asia-Pacific have been affected by delays at both Boeing and Airbus, compounded by engine shortages and broader supply chain constraints. Trade tensions and tariff uncertainties have added further pressure to manufacturers and airlines alike.

According to IATA data, airlines worldwide are waiting longer than ever for new aircraft, pushing up the average age of fleets and increasing costs, as older planes burn more fuel. Walsh said Asia-Pacific airlines could achieve double-digit growth in 2026 if enough aircraft were available. "The waiting time between ordering a plane and receiving it is now around seven years, which is incredibly frustrating," he said.

This situation has helped position Comac as an alternative option. More than 150 Comac aircraft are currently in service within China, while its planes are also flying in Laos, Indonesia and Vietnam. Brunei's GallopAir has placed a significant order, and Cambodia has indicated plans to acquire around 20 aircraft.

"We need more suppliers," said Subhas Menon, director general of the Association of Asia Pacific Airlines (AAPA). "This industry operates as an oligopoly, and at times almost a duopoly. Comac's entry is long overdue and very welcome."

Strong backing from the Chinese government and comparatively lower prices could make Comac aircraft attractive, particularly to low-cost carriers in developing markets.

Mike Szucs, chief executive of Philippines-based budget airline Cebu Pacific, told the BBC that while Comac is not yet an immediate option, it could become one in the next decade. "Once certification hurdles are cleared in the 2030s, it could be a compelling choice for us and other airlines," he said.

Beyond Asia-Pacific, Comac is also pursuing European certification, with regulators already conducting test flights of the C919. Approval would allow the company to sell aircraft to European airlines, though officials say certification could take until 2028 or even the early 2030s.

Significant challenges remain, including integrating Chinese and Western components, developing global maintenance and repair networks, and establishing pilot training systems—areas where Airbus and Boeing benefit from decades of experience.

Comac also faces competition in the region from Brazil's Embraer, which has secured orders from carriers such as Scoot, Virgin Australia and Japan's ANA.

Meanwhile, Airbus and Boeing continue to dominate the region and maintain a strong presence at the Singapore Airshow. Both manufacturers have signalled that delivery delays, which have plagued airlines in recent years, may soon begin to ease.

Despite Comac's claim of more than 1,000 orders for the C919 from Chinese airlines, only around a dozen aircraft have been delivered so far. Verifying these figures is difficult, as Comac is state-owned and not publicly listed.

Unless Comac can overcome certification, infrastructure and delivery challenges, analysts say Airbus and Boeing are likely to retain control of Asia-Pacific skies for the foreseeable future, the BBC reports.

The United States will host more than 50 countries on Wednesday (4 February) for talks aimed at boosting their access to critical minerals, in a bid to loosen China's grip over vital industrial inputs that has allowed it to control global supply chains.

The gathering comes after President Donald Trump on Monday launched a strategic stockpile of critical minerals, called Project Vault, backed by $10 billion in seed funding from the US Export-Import Bank and $2 billion in private funding.

China has wielded its chokehold on the processing of many minerals as geo-economic leverage, at times curbing exports and suppressing prices and undercutting other countries' ability to diversify sources of the materials used to make semiconductors, electric vehicles and advanced weapons.

South Korea, India, Thailand, Japan, Germany, Australia, and the Democratic Republic of Congo are among countries attending the Washington meeting, though the US has not released a full list.

Beijing's expanded export controls on rare earths last year caused production delays and shutdowns for auto manufacturers in Europe and the US, and a China-generated glut of lithium has stalled plans to expand production in the US.

Such dependencies have unnerved Washington and its partners, which nonetheless have struggled for years to implement policies to stand up durable domestic mining and processing alternatives for lithium, nickel, rare earths and other critical minerals.

China's leverage was on full display in October when Trump agreed to trim tariffs on the country in exchange for Beijing's pledge to hold off on stricter restrictions on rare earths exports.

The talks underscore a broader US push to work with partners to counter China's dominance over critical minerals by coordinating policy tools at a time when Trump has angered allies with his sweeping "America First" tariff policies.

Washington and its partners are weighing measures that include aligning trade and investment incentives, encouraging new mining and processing capacity outside China, and exploring market interventions such as price floors, strategic stockpiles and export restrictions to reduce Beijing's leverage over supply chains vital to advanced manufacturing and national security.

"I think this is a recognition by the United States that it must act in concert with others to reduce its vulnerability in areas where China has supply dominance," said Scott Kennedy, who leads the Chinese business and economics program at the Center for Strategic and International Studies in Washington.

Incentives

US Secretary of the Interior Doug Burgum said on Tuesday that 11 more countries would be named to a critical minerals trade club this week, joining the US, Australia, Japan, South Korea, Saudi Arabia and Thailand. He said 20 more countries showed "strong interest" in joining the coalition.

US Secretary of State Marco Rubio and Vice President JD Vance will deliver remarks at the meeting of ministers from across Europe, Asia, Africa and Latin America, which according to the State Department, aims to "advance collective efforts to strengthen and diversify critical minerals supply chains."

"China has long played an important and constructive role in keeping the global industrial and supply chains of critical minerals safe and stable and is willing to continue to make active efforts in this regard," China's embassy in Washington told Reuters when asked about the meeting.

Industry experts say countries must find the right balance of incentives to boost investment in critical minerals production.

Those could include deploying newly created Section 232 tariffs in coordination with allies to establish industry-wide price floors for specific materials.

The Trump administration last year struck a price-floor agreement with rare earths producer MP Materials, but Reuters has reported the administration may now be moving away from company-specific deals in favour of a broader, international approach.

Washington's Group of Seven partners and the European Union have considered price floors to promote rare earth production, as well as taxes on some Chinese exports to incentivize investment.

Australia, which has been positioning itself as a critical minerals alternative to China, has also said it would establish a strategic reserve of minerals, expected to be ready by the second half of 2026.

Canberra is also considering setting a price floor to support local critical minerals projects.

"The reality is that none of us have tested these tools in this context. So, we're looking to see which will be most effective. Most likely it will be a bit of a menu of tools ... I don't think there's going to be a one silver bullet," one meeting participant told Reuters on condition of anonymity.

The interim government’s net borrowing from the banking system rose almost fivefold in the first seven months of the current fiscal year 2025-26, as spending raced ahead of sluggish revenue collection.

The government borrowed Tk 48,819 crore from banks as of January 25, compared with Tk 10,558 crore by January 23 last year, according to Bangladesh Bank (BB) provisional data.

The amount already accounts for nearly half of the full year’s borrowing target of Tk 104,000 crore.

The sharp rise reflects a widening gap between expenditure and income. Government spending has climbed steadily, while revenue collection has failed to keep pace.

The National Board of Revenue posted a 14 percent year-on-year growth in collection in the first six months of FY26, mobilising Tk 185,229 crore. Even so, receipts fell short of the target by about Tk 46,000 crore.

In the same period last year, revenue slipped by 1 percent amid unrest following the political changeover in August 2024.

“This is not a sustainable situation,” said Fahmida Khatun, executive director of private think-tank the Centre for Policy Dialogue (CPD).

She said weak domestic resource mobilisation pushes debt levels higher and leaves little room to manage day-to-day spending. “The revenue collection remains so low that it is difficult to manage regular expenditure.”

According to the economist, the country’s persistently low tax-to-GDP ratio has made the government increasingly reliant on bank borrowing, driving up debt and interest payments.

In FY25, interest payments reached a record Tk 132,460 crore, almost one-fifth of total budget spending, according to the finance ministry’s debt bulletin.

For the current year, interest costs stand at Tk 122,000 crore, accounting for 13 percent of the budget.

As debt servicing takes up a larger share of public funds, allocations for education, health and infrastructure are squeezed, undermining long-term growth prospects.

Fahmida said that unless tax collection grows fast, heavier government borrowing from banks will also tighten credit for the private sector.

Ashikur Rahman, principal economist at the Policy Research Institute (PRI), warned that a risky cycle is beginning to take hold.

Higher borrowing, he said, feeds directly into a growing interest burden within the fiscal framework.

“As debt servicing absorbs a larger share of public expenditure, fiscal space for productivity-enhancing investments, particularly in human capital, health, education, and critical infrastructure, shrinks,” he explained.

Over time, this trade-off weakens the state’s ability to address structural development constraints and undermines the quality of growth itself, said Rahman.

Rising government demand for credit also crowds out private firms, pushing up borrowing costs and discouraging investment.

“This is particularly concerning at a time when economic recovery and employment generation depend critically on a revival of private sector confidence and investment momentum,” he added.

The persistence of high borrowing also points to deeper weaknesses on the revenue side. Despite some gains, collections remain far below what is needed to finance public spending in a sustainable way.

“This points to longstanding deficiencies in tax policy design, tax administration, and compliance. Without a durable improvement in domestic resource mobilisation, borrowing risks becoming a default adjustment mechanism rather than a temporary counter-cyclical tool,” he said.

Breaking the cycle, Rahman said, will require prudent debt management alongside credible revenue reforms and a clear medium-term fiscal strategy that shifts spending towards growth-enhancing priorities rather than debt servicing.

More pressure is expected in the months ahead. The rollout of a new pay scale for government employees will require an additional Tk 106,000 crore, around one-fifth of total operating expenditure for the year.

CPD’s Fahmida suggested the increases should be phased in.

Otherwise, she said, maintaining fiscal balance will become one of the toughest challenges for the next government.

Bangladesh is stepping into a new phase of trade diplomacy as it signs its first Economic Partnership Agreement (EPA) with Japan tomorrow, a deal meant to preserve duty-free market access after the country’s graduation from the least developed country club later this year.

A Bangladesh delegation led by Commerce Adviser Sk Bashir Uddin will leave Dhaka for Tokyo today to sign the agreement, Commerce Secretary Mahbubur Rahman told The Daily Star yesterday.

The EPA, approved by the Advisory Council on January 22, will give Bangladeshi exporters immediate duty-free access to 97 percent of their export basket, including ready-made garments (RMG) and nearly 7,379 other products.

In return, Japan will receive duty-free access to 1,039 products in the Bangladeshi market.

Automobiles from Japan, home to global brands such as Toyota, Honda and Subaru, will not enjoy duty-free entry under the deal, according to the commerce secretary.

Rahman said the move is deliberate to encourage Japanese entrepreneurs to invest directly in Bangladesh’s vehicle segment.

Officials believe this could prompt “handsome” investment in local vehicle manufacturing, possibly reshaping the country’s automotive industry.

Japan is already Bangladesh’s largest export destination in Asia, with annual shipments hovering around $2 billion, mostly garments.

Imports from Japan, however, have remained relatively steady at around $1.8 billion to $2.7 billion in recent years, according to data from the Bangladesh Bank and the Export Promotion Bureau (EPB).

Officials say the EPA could help narrow this trade deficit by boosting exports while drawing Japanese capital into industrial zones across the country.

Apart from tariffs, the agreement covers trade in services, investment, customs procedures and intellectual property rights, according to the commerce ministry.

“We are expecting a major shift of Japanese investment in Bangladesh under this EPA, as Japan is looking for a favourable investment destination and is choosing Bangladesh,” Commerce Secretary Rahman said.

At present, Japanese investment in Bangladesh stands at about $500 million, a small slice of Japan’s global investment. Still, several Japanese firms have already set up operations at the dedicated Japanese economic zone at Araihazar in Narayanganj district.

Under the deal, Bangladesh will open 97 service sub-sectors to Japan, while Japan will open 120 to Bangladesh. Officials expect this to speed up technology transfer and encourage long-term investment.

According to commerce ministry documents, garments will receive immediate duty-free access under Single Stage Transformation rules, a major win for the local RMG sector as the country prepares for the post-LDC competition.

For years, Bangladesh has been looking for trade agreements with major partners and blocs, including India, Turkey, Malaysia, China, the UAE, Indonesia, Nepal, Asean and the Regional Comprehensive Economic Partnership (RCEP), to widen its footprint in Asian, African and Latin American markets.

Until now, the country has only signed a Preferential Trade Agreement (PTA) with Bhutan in 2020. This EPA with Japan marks its first full-fledged trade deal.

Dhaka and Tokyo had been progressing towards this deal since 2022, when then prime minister Sheikh Hasina said Bangladesh was open to negotiating free trade agreements, including with Japan.

Subsequently, a joint study group was formed. Talks gathered pace in July 2023, with both sides signalling their intention to sign the EPA by late 2025 or early 2026, ahead of Bangladesh’s LDC graduation.

Momentum picked up after the Advisory Council gave its nod on January 22 this year, following Japan’s approval of the draft in December.

Last month, Japan also reaffirmed at the World Trade Organisation (WTO) that it would continue duty-free market access for Bangladesh for three more years, up to 2029.

Regarding the EPA with Japan, analysts say this sends a message about the country’s readiness to engage with major economies and trading blocs.

Abdur Razzaque, chairman of local think tank Research and Policy Integration for Development (RAPID), called the deal a positive signal but stressed that its success would depend on execution.

“It is a positive signal for Bangladesh to the foreign investors as it is a testimony that Bangladesh is capable of signing the deal even with Japan,” he said, adding that the country should actively attract Japanese investment, especially in export-oriented sectors such as man-made fibre industries.

Similarly, M Masrur Reaz, chairman of Policy Exchange Bangladesh, called the agreement an excellent development.

“This EPA will enable Bangladesh to be a partner of a country which is a member of the G-7. It will brighten our image,” he said.

If used well, the deal could also open new doors for foreign direct investment, Reaz added.