Chief Adviser Prof Muhammad Yunus Sunday directed opening free-trade agreement (FTA) negotiations with the European Union forthwith to safeguard Bangladesh's trade preferences in its largest export market as the current duty-free access is set to expire.

The head of interim government stressed the urgency during a courtesy call by Nuria Lopez, Chairperson of the European Chamber of Commerce in Bangladesh (EuroCham), at the state guesthouse Jamuna in Dhaka.

Michael Miller, European Union's Ambassador in Bangladesh, took part in the meeting and discussion.

They discussed the need to accelerate European investment in Bangladesh, how to ensure smooth trade relations between Bangladesh and the EU, and the need for further reforms to improve the country's business climate.

They also discussed the upcoming elections and the deployment of international observers to monitor the polls.

Professor Yunus mentions that the Interim Government has recently concluded an Economic Partnership Agreement (EPA) with Japan, paving the way for duty-free access for more than 7,300 Bangladeshi products to the world's fourth-largest economy.

Bangladesh is preparing to hold similar negotiations with other countries, including the European Union, to ensure continued duty-free access for its products -- particularly readymade garments -- to the EU market for the foreseeable future, he told the EU side.

"The EPA with Japan has opened doors for us. It gives renewed hope for our exports. We definitely hope to sign an FTA with the EU to expand our market," the Chief Adviser said.

The EuroCham chairperson, Nuria Lopez, said Bangladesh needs to begin FTA negotiations urgently, as the country may lose its existing trade preferences in the EU -- its largest export destination -- after graduating from least-developed country (LDC) status.

She notes that an FTA would attract more European investment to Bangladesh, create jobs, and boost exports to advanced Western markets.

Lopez points out that India is signing an FTA with the EU, while Vietnam already has such an agreement, allowing both middle-income countries preferential access to the European market.

"We are advocating for an FTA. I will go to Europe to encourage private companies to invest in Bangladesh," she told the meet.

EU Ambassador Michael Miller said that the commercial relationship with Bangladesh would evolve after graduation but not before 2029.

He underlines EU's strong interest in bringing European investment and technology to Bangladesh -- an important market with a population of nearly 200 million. He also expresses EU readiness to organise an EU-Bangladesh Business Forum in 2026.

"We are looking for early political signals that EU companies will be encouraged to come and will enjoy a level playing field," he said during the

trade discussion.

The Chief Adviser also emphasised the relocation of factories to Bangladesh, noting that European firms can take advantage of the country's large pool of skilled labour at competitive costs.

"We are building a free-trade zone. Our aim is to turn Bangladesh into a manufacturing hub for global businesses. We want more European investment in Bangladesh," he told the EU side.

Professor Yunus expressed satisfaction over the EU decision to deploy a large contingent of election observers to Bangladesh for the upcoming general election and referendum.

"It is important that EU election observers are here. It is a huge vote of confidence in revitalising our democracy," he said, adding that the overall picture of the election campaign is "very positive."

Lamiya Morshed, SDG Coordinator and Senior Secretary of the government, was also present at the meeting.

Merchandise exports earned Bangladesh US$48.28 billion in the last fiscal year (2024-25) and the EU accounted for 44.29 per cent or $19.71 billion.

Bangladesh's exports are destined to face up to 12-percent duty after LDC graduation and its transition period till 2029.

Despite political and economic uncertainty, most listed pharmaceutical companies reported strong revenue and profit growth in the October–December quarter and the first half of the fiscal year.

Analysts said higher sales, lower costs, easing finance expenses, efficient working capital management, stable demand, steady exchange rates, and operational efficiency drove the improved performance.

Renata PLC, one of the country's leading drug manufacturers, reported 25% year-on-year profit growth in the first half of the fiscal year. Consolidated profit rose to Tk156.26 crore in July–December from Tk125.08 crore a year earlier, while EPS increased to Tk13.58 from Tk10.83. Consolidated revenue grew 6.56% to Tk2,223.84 crore.

Pharmaceutical product revenue, accounting for 80.7% of total revenue, rose 10% year-on-year, driven entirely by higher sales volumes, while the animal health segment remained flat. Export revenue, including subsidiary income, declined 10.1%, and contract manufacturing revenue fell 28.4%.

Export income rose 8.2% in the first quarter of FY26 but dropped 23.4% in the second quarter after export-bound inventory was damaged in a fire at Dhaka airport on October 19, 2025, leading to deferred orders. Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) increased 20.6% due to operational efficiency, while financing costs fell 7.3% following capital restructuring.

Square Pharmaceuticals, the country's largest drug maker, also posted strong growth. In the first half of the fiscal year, consolidated revenue rose 15% year-on-year to Tk4,338 crore, while net profit increased 16% to Tk1,467 crore, with EPS reaching Tk16.56. In the October–December quarter alone, revenue grew 9% to Tk2,179 crore and net profit rose 10% to Tk727 crore, reflecting sustained domestic demand despite rising sector-wide costs.

The results include contributions from foreign subsidiary Square Pharmaceuticals Kenya EPZ Ltd, local subsidiary Square Lifesciences Ltd, and associate companies Square Textiles, Square Fashions, and Square Hospitals, underscoring the group's diversified operations.

Advanced Chemical Industries (ACI) reported an 18% year-on-year increase in consolidated revenue to Tk7,794 crore in the first half of the fiscal year, up from Tk6,619 crore a year earlier. The company posted a consolidated net profit of Tk30 crore, reversing a net loss of Tk64 crore in the same period last year.

ACI said gross profit growth outpaced operating expenses due to strong performance across key segments, though borrowing costs rose amid higher interest rates and increased funding needs for working capital and strategic investments.

Navana Pharmaceuticals recorded a sharp turnaround in the October-December quarter, driven by higher sales, improved margins, lower finance costs, and stronger operating cash flows. Diluted EPS rose 65% year-on-year to Tk1.65 from Tk1.

The ACME Laboratories posted 15.75% year-on-year revenue growth in the October–December quarter, with EPS rising to Tk3.10 from Tk2.86. For the July-December period, EPS increased to Tk6.11 from Tk5.47.

Beacon Pharmaceuticals reported a 29.32% increase in earnings in the October–December quarter, while six-month EPS rose to Tk4.73 from Tk3.47 a year earlier.

The International Monetary Fund (IMF) has cautioned Bangladesh against providing unsecured liquidity injections to weak banks, stressing the need for a tight monetary policy stance and credible banking sector reforms to restore financial stability.

The caution came as the IMF Executive Board concluded its 2025 Article IV Consultation with Bangladesh on Monday (26 January), with the authorities consenting to the publication of the staff report, according to a statement released yesterday (30 January).

The IMF noted that Bangladesh's economic growth has slowed in recent years while inflation has remained elevated.

GDP growth fell to 3.7% in FY25 from 4.2% in FY24 and 5.8% in FY23, reflecting production disruptions during the 2024 uprising, a tighter policy mix and weak investment.

Inflation eased from double-digit levels earlier in FY25 but remained high at 8.2% year-on-year in October.

IMF observed that Bangladesh's tax revenue-to-GDP ratio declined sharply in FY25, although the fiscal deficit was contained due to under-execution of capital and social spending.

Foreign exchange reserves have started to recover, supported by improvements in the current account balance.

Looking ahead, the IMF projected a gradual economic recovery, provided reforms are implemented.

Growth is expected to rebound to 4.7% in FY26 and rise to around 6% over the medium term, supported by higher revenue mobilisation and measures to address financial sector weaknesses.

Inflation, however, is projected to remain elevated at 8.9% in FY26 before easing to about 6% in FY27.

Executive directors acknowledged the interim authorities' efforts to stabilise the economy following the 2024 uprising and ahead of national elections.

However, they warned that Bangladesh continues to face mounting macroeconomic and financial challenges, including weak revenue mobilisation, banking sector vulnerabilities, incomplete implementation of the new exchange rate framework and persistently high inflation.

Directors noted uneven programme performance and said decisive and sustained policy actions would be required to restore macroeconomic and financial stability.

They stressed that full ownership of the reform programme by the next administration would be critical, alongside early engagement with IMF staff and efforts to secure stakeholder support.

On the banking sector, the IMF highlighted the urgent need for a credible reform strategy aligned with international standards.

Directors said such a strategy should include clear estimates of undercapitalisation, define the scope of fiscal support and outline legally robust restructuring and resolution plans.

They encouraged the authorities to conduct asset quality reviews for all systemic and state-owned banks, strengthen risk-based supervision and improve governance and balance sheet transparency.

In this context, the IMF cautioned against unsecured liquidity injections into weak banks, warning that such measures could undermine financial stability.

The IMF also stressed that maintaining a tight policy mix remains necessary to continue rebuilding foreign exchange reserves and reducing inflation.

Directors stressed the importance of full and consistent implementation of exchange rate reforms, along with greater exchange rate flexibility.

Monetary policy, they said, should remain appropriately tight until inflation is firmly on a downward trajectory, while efforts to modernise the monetary policy framework should continue.

On fiscal policy, directors urged ambitious reforms to boost revenue. They encouraged bold tax policy measures, simplification of the tax system and stronger tax administration and compliance.

The IMF also underscored the need to rationalise subsidies, prioritise growth-enhancing investment and improve public financial and investment management, while strengthening social safety nets to support inclusive growth.

The institution further noted that improving the financial viability of energy sector state-owned enterprises would be important for reducing fiscal risks.

Beyond macroeconomic management, the IMF stressed the importance of comprehensive structural reforms as Bangladesh prepares to graduate from least developed country status.

Directors highlighted the need to enhance governance and transparency, strengthen anti-corruption and AML/CFT frameworks and safeguard central bank autonomy.

They also supported policies aimed at job creation, particularly for young people, export diversification and continued improvements in macroeconomic statistics.

The IMF said continued implementation of reforms under the Resilience and Sustainability Facility arrangement could help Bangladesh build climate resilience and mobilise climate finance.

Bangladesh's recent shift from a manual to an online value-added tax refund system, promoted by the National Board of Revenue as a move towards transparency and efficiency, has instead created new complications for businesses, leaving around Tk1,500 crore in refunds effectively stuck.

When the NBR introduced the online VAT refund module, it said businesses would be able to apply digitally and receive reimbursements directly into their bank accounts with ease, drawing praise for the initiative from various quarters.

However, business owners now say the reality is different, with the new system proving more restrictive in many cases than the old manual process.

Under the previous system, companies could apply for full refunds of excess VAT and related duties, although the process often took time. But under the new online system, businesses can apply only for partial refunds, while additional conditions such as audits have complicated the process further.

As a result, refunds worth tens or even hundreds of crores of taka are effectively stuck, according to business representatives. They also complain that while newly created refunds can be claimed through the system, older outstanding amounts are not being reimbursed.

Officials at field-level NBR offices have acknowledged the problem, saying there is no immediate solution. This has increased concern among businesses and weakened their confidence in the online system, they added.

Concerns have also been raised about the automation of customs bond management.

Although businesses are required to comply with the automated process, the NBR has not yet developed adequate service capacity, traders say. This has led to delays in obtaining utility permissions and, in some cases, increased harassment.

On 7 January, the NBR announced that VAT refunds would be credited directly to companies' bank accounts once applications were submitted online. It also claimed the new module would ensure faster processing through a fully transparent system.

But businesses say they began to encounter serious problems soon after the system went live.

Partial refunds, blocked claims

Confidence Group, one of the country's leading conglomerates, has around Tk140 crore in VAT refunds recorded – money it says was over-collected by the government and already claimed by the company for reimbursement.

Company officials said under the new system, they can claim only the 2% advance tax deducted at the import stage, but not the 15% VAT or supplementary duty (SD).

Salman Karim, a director of Confidence Group, told The Business Standard, "Under the manual system, after calculation, refunds for VAT, advance tax or SD could be claimed and eventually paid, though it took time."

"In the new online VAT refund module, there is no option to claim anything other than the 2% advance tax. This makes recovery of the much larger amounts of VAT and SD uncertain," he said.

He added that even when the government holds money owed to a company, it cannot be adjusted against the company's VAT liabilities under the new system.

"If I am entitled to Tk40 as a refund, the new system is giving me only Tk2," he said, describing the change as an increased financial burden rather than a simplification.

This situation is not limited to the Confidence Group, as a similar picture is seen in the case of other companies as well.

A senior official from Meghna Group, another major conglomerate, told TBS on condition of anonymity that the group previously claimed Tk74 crore in VAT and advance tax refunds under the manual system.

"However, after the online system was introduced, we were told to abandon previous claims and apply afresh under the new system," the official said. "But now, apart from advance tax, no VAT refund can be claimed."

"Instead of simplifying the process, it has been made more difficult," he added, noting that audits, which were not mandatory under existing VAT law, are now required, along with other strict conditions that make refunds nearly impossible.

Large sums outstanding

According to NBR sources, businesses are owed around Tk1,500 crore in VAT refunds nationwide. Data from the Dhaka South VAT Commissionerate alone shows refund claims of about Tk211 crore from at least 25 companies.

These companies will now have to submit new applications online, but will be able to claim only a small portion of their dues, according to officials.

Commissioners at two Dhaka VAT commissionerates confirmed that only partial VAT claims are being allowed under the new system. One commissioner, speaking anonymously, said, "The NBR can better explain why this has been done."

Asked about the issue at a press conference on 25 November, NBR Chairman Abdur Rahman Khan said the process would gradually become easier.

However, officials within the relevant departments said there is no plan to refund VAT and supplementary duty under the new system.

Syed Mushfequr Rahman, a member (VAT audit) at NBR, told The Business Standard, "Under the new system, advance tax can be claimed. If, after calculation, someone is entitled to VAT, they can apply for a rebate as per the law."

A senior NBR official, speaking on condition of anonymity, said commissionerates in the past approved refunds without proper scrutiny, leading to suspected irregularities. "This system has been introduced to prevent such irregularities," he said, adding that VAT refunds would no longer be given, though rebates could be claimed where applicable.

'Cutting off the head for a headache'

Business leaders say that until 2023, refunds could be claimed for VAT, supplementary duty and advance tax collected, and were eventually paid, sometimes after two or three years. In 2023, claims for supplementary duty were stopped. With the launch of the online system, they say, VAT refunds have also effectively been blocked.

A senior executive at a large local business said, "When the government is owed money, it collects it immediately. But when it owes us, it creates excuses. The new system is a clear example of that."

Businesses also say officials have been instructed to verify refund applications against a 24-point checklist, making refunds virtually impossible for many firms.

Tax experts have also criticised the NBR's approach.

A leading chartered accountant and tax expert, speaking on condition of anonymity, told TBS, "The NBR is legally obliged to provide VAT refunds.

"If some companies obtained refunds through irregular means in the past, the NBR should strengthen its capacity to detect and prevent such abuse. Cutting off refunds altogether is not a solution. You do not cure a headache by cutting off the head," the expert said.

Of the 110,774 green buildings recognised worldwide, HAMS Garments Ltd has secured a top position, scoring 108 out of 110 points under the latest certification.

The factory owners said they had to spend less than Tk2 crore additionally to obtain recognition as a top green factory.

Although the factory does not receive higher prices from foreign buyers for green production, Shafiqur Rahman, managing director of HAMS, told The Business Standard that the recognition helps keep the company "in buyers' good books." "It is a prestigious achievement," he said.

Ananta Ahmed, managing director of 360 TSL, which works on green buildings in Bangladesh and provided technical support to HAMS for the certification, told TBS that globally, about 30 buildings have scored more than 100 points, of which nine are in Bangladesh. Notably, all of the top five such facilities are located in Bangladesh.

Explaining why HAMS scored higher than others, Ananta said the factory successfully met the criteria it had targeted within the stipulated timeframe, which helped it secure the score.

He added that the factory missed two points mainly because it could not meet the outside water-saving criteria. "There was not enough space outside the factory area to fulfil that requirement," he said.

Ananta said the main criteria for green certification include comparisons with set benchmarks on water consumption and how much energy use is reduced through energy-efficient technologies.

He said the indoor environment of the factory or building is also assessed, along with the percentage of open space outside the factory building maintained as green areas.

He added that scoring also considers, if crops are grown in green spaces, how irrigation is managed and what types of fertilisers or pesticides are used there.

He further said that the amount of carbon emissions generated by workers' commuting to and from the factory is also taken into consideration.

"Bangladesh enjoys a comparative advantage in this regard," Ananta said, noting that many workers commute on foot, which keeps carbon emissions lower and helps raise scores.

He added that areas such as location and transportation planning, site selection and management, policies and procedures, audits, training and human development, preventive maintenance systems, procurement strategy, product and material selection, and operational discipline and documentation do not require extra costs, yet together account for around half of the total score.

The factory owner said the facility, which employs about 7,000 workers, had to spend nearly Tk2 crore additionally to achieve the highest score.

Shafiqur Rahman told TBS, "The use of environmentally friendly technologies has reduced water consumption by 30% and energy use by 20% at the factory."

For the achievement, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) accorded a special reception to HAMS Garments Ltd yesterday.

Speaking at the event, BGMEA Senior Vice President Inamul Haque Khan said HAMS Garments Ltd set a new world record by scoring 108 out of 110 under the US Green Building Council (USGBC) LEED Platinum certification.

"The achievement is not just about numbers but represents the highest score among green factories worldwide," he said.

"The success has taken the prestige and capability of the 'Made in Bangladesh' brand to a new height globally and has created a global benchmark for Bangladesh's garment sector," he added.

The Dhaka International Trade Fair (DITF), the country's flagship trade showcase, closed after a month today (31 January) with sales of nearly Tk400 crore, underscoring steady domestic demand despite pressure from inflation and a slowing economy, according to the Export Promotion Bureau.

At the closing ceremony held at the Bangladesh–China Friendship Exhibition Centre in Purbachal, Narayanganj, the EPB said domestic transactions at this year's fair amounted to Tk393 crore – up 3.42% compared to 2025.

Based on data received from 329 participating local and foreign companies, the EPB reported that potential export orders secured during the fair stood at $17.98 million, equivalent to Tk224.26 crore.

Sectors attracting export orders included diversified jute products, electrical and electronics goods, home appliances, cosmetics, hygiene products, processed food, handloom, household items, home textiles, nakshi kantha and fabrics. Export orders were received from Afghanistan, Singapore, Hong Kong, Indonesia, India, Pakistan, Malaysia and Turkey.

A total of 329 enterprises participated in the fair, including 11 companies from six countries—India, Turkey, Singapore, Indonesia, Hong Kong and Malaysia—besides Bangladesh.

Products and services on display and sale covered cottage, micro, small, medium and large industries, including garments, leather goods, jute and jute products, agricultural and agro-processed goods, furniture, electrical and electronic items, cosmetics, home décor, toys, stationery, crockery, handicrafts, plastic and melamine products, herbal and toiletry items, imitation jewellery, real estate products and services, fast food and various other services.

At the closing ceremony, awards were presented to the best pavilions, stalls and enterprises across different categories.

A total of 40 institutions were recognised based on criteria such as construction and architectural design, interior decoration, product display, customer service and satisfaction, compliance with allotment conditions, cleanliness and health standards, digital contents, contribution as exporters and manufacturers, and innovation.

To promote export diversification and enhance exporters' capacity, eight seminars were organised as sideline events under a seminar series led by the EPB, in collaboration with the Ministry of Commerce, government trade promotion bodies (BSCIC, SME Foundation and JDPC), product-based trade associations (BPGMEA, BGAPMEA, BFPIA and BanglaCraft), and development partners including the World Bank, GIZ, FCDO and BSI.

The EPB said an Export Enclave was set up at the fair to showcase the capabilities of seven leading export sectors, keeping foreign buyers and local visitors in focus.

Facilities such as a Senior Citizen Corner, mother and child care centre, and a children's park were arranged to make the fair more comfortable and enjoyable for visitors of all ages.

Several voluntary organisations conducted health awareness campaigns during the fair. To ensure security, CCTV surveillance, deployment of law enforcement agencies and fire service units were in place.

The Directorate of National Consumers' Rights Protection carried out regular drives throughout the month to ensure food quality and prevent consumer harassment, the EPB added.

Commerce Adviser Sk Bashir Uddin formally declared the fair closed, with Commerce Secretary Mahbubur Rahman presiding over the closing ceremony.

Bangladesh is set to seek a binding 12-year transition period to safeguard its export-oriented economy from post-LDC-graduation trade challenges in a high-stakes strategy to be placed at the upcoming WTO ministerial meet.

Officials say the government has finalized a comprehensive Position Paper for placing at the 14th World Trade Organisation (WTO) Ministerial Conference (MC14) will be held in Cameroon on March 26-29.

The Position Paper outlines a strategy that balances the prestige of "Developing Nation" status with the pragmatic needs to shield its around U$50billion export economy from the "graduation shock."

"The four-day global trade summit…in Yaoundé will mark Bangladesh's final Ministerial appearance as a Least-Developed Country (LDC) ahead of its scheduled graduation on November 24, 2026," says one trade official.

The Bangladesh delegation, led by the Ministry of Commerce and supported by the ERD or Economic Relations Division, is expected to fly to Cameroon with a clear mandate: 'No agreement is better than a bad agreement that compromises the livelihood of millions of garment workers and small-scale farmers'.

According to the finalised position paper, Dhaka will lead the LDC group in demanding a structured graduation "Support Package".Online newspaper reader

The centerpiece of this strategy is the extension of LDC-specific Special and Differential Treatment (S&DT) for 12 years to ensure a sustainable transition into the developing-country club.

While MC13 (Abu Dhabi) secured a 3-year grace period for certain LDC supports, Bangladesh is pushing for a more robust 12-year horizon for Duty-Free Quota-Free (DFQF) market access.

"Graduation should be a reward for development, not a penalty for success," a senior official at the commerce ministry involved in drafting the paper told The Financial Express.

"Without a decade-long transition, our RMG sector-contributing over 80 per cent to national exports-could face an immediate tariff hike of 12 per cent in major markets, eroding competitiveness against regional peers," he notes.

"If a star performer like Bangladesh faces a trade crisis after graduation, it sends the wrong signal to every other LDC. Our success is, ultimately, the WTO's success."

Graduation implies a jump in tariffs from 0 per cent to nearly 9.0-12 per cent in the EU and 16-18 per cent in Canada, according a source.

Bangladesh's position is to negotiate Rules of Origin (RoO) that allow for more flexibility, moving away from "double transformation" requirements to maintain competitiveness.

The strategy involves leveraging the G-90 coalition to ensure that developed partners (EU, UK, China, Japan) honor their 3-year post-graduation grace periods (2026-2029) and push for these to be made permanent under GSP+ or similar schemes.Banking services comparison

Dhaka is seeking an extension of the TRIPS (Trade-Related Aspects of Intellectual Property Rights) waiver until 2034. The TRIPS is a non-negotiable priority. Under current LDC rules, Bangladesh can produce patented medicines without licences.

Losing TRIPS waiver in 2026 would force the U$3.0-billion domestic generic drug industry to enforce expensive patent regimes, potentially hiking local medicine prices and halting export to other LDCs.

Current WTO drafts suggest members with a global marine catch share of over 0.8 per cent (which includes Bangladesh) must face stricter subsidy disciplines.

The position paper argues for permanent S&DT for graduating LDCs to protect the livelihoods of artisanal/small-scale fishers who rely on government social-safety nets.

Currently, there are around 20 million artisanal fishers across the country.

Bangladesh will insist that subsidies for "overfished stocks" must be protected for at least 7-10 years for graduated LDCs.

As a Net Food Importing Developing Country (NFIDC), Bangladesh's position focuses on securing a "Permanent Solution" that allows the government to buy food at administered prices for stockholding without violating WTO subsidy caps and advocating for exemptions that prevent other nations from banning food exports to LDCs/NFIDCs during global crises.Newspaper subscription

The global moratorium on customs duties for electronic transmissions is set to expire at MC14.

Bangladesh is currently in a "wait and see" mode. While it benefits from the moratorium for its ICT/freelancing sector, the paper highlights the need to balance the growth of the about U$2.0-billion IT sector against potential fiscal revenue losses.

Bangladesh is likely to support a temporary extension of the moratorium but will demand Technical Assistance and a "Work Programme" that helps developing nations in building internal VAT/GST systems to capture digital trade value.

Beyond issue-specific demands, Bangladesh is expected to use MC14 to push for broader institutional reform at the WTO-most notably the restoration of the Dispute Settlement System and Appellate Body.

Here, the official position rests on some primary pillars. These pillars are support for the immediate restoration of a functional two-tier dispute-settlement system, which has been hampered by a lack of appointments to its appellate body, full alignment with G-90 proposals aimed at making development provisions more "precise, effective, and operational" rather than merely aspirational and rejecting any mandate that forces differentiation among developing member-states.Online newspaper reader

The position paper argues that without a functioning appellate mechanism, smaller economies are increasingly exposed to unilateral trade measures, arbitrary tariffs and protectionist policies by major powers.

For Bangladesh, a rules-based system with enforceable outcomes is essential as it transitions from preference-dependent status to full competition under WTO disciplines.

Domestically, the government has already operationalised its Smooth Transition Strategy (STS), consisting of five foundational pillars and 157 concrete actions.

The strategy aims to improve logistics through the National Logistics Policy 2025 and implement the Customs Single- Window system to lower the cost of doing business, which is currently seen as a bottleneck for post-LDC competitiveness.

Experts suggest the Yaoundé conference will be a "defining moment" for Bangladesh to leverage its influence as a leader of the LDC group to secure international legal guarantees.

There are 166 members under the WTO of which 75 per cent are developing countries and LDCs.

After takeover by the current interim government, local business community has called for a three-to-six-year deferral of the country's planned graduation from LDC status in November 2026, citing mounting economic headwinds and weak industrial preparedness.

Trade bodies warn that the loss of duty-free, quota-free market access, expiry of the TRIPS waiver for pharmaceuticals and the withdrawal of export subsidies could significantly erode export competitiveness.

With inflation, energy constraints and high interest rates already straining businesses, stakeholders argue the current timeline risks compounding shocks to the private sector.

While economists stress the need for long-term efficiency-driven reforms, businesses maintain that a temporary extension is critical to protecting exports and ensuring a smoother transition.

Bangladesh Bank is about to announce its Monetary Policy Statement for the rest of FY26. Once again, a familiar question has surfaced: should it cut the policy rate and begin easing monetary conditions?

The pressure is understandable. Headline inflation has come down from its peak, the real policy rate is positive, and private investment remains weak. Business groups are lobbying hard for cheaper credit. On the surface, a rate cut looks like the obvious—and politically attractive—next step.

But a closer look—based on monthly data from July 2019 to October 2025—at how inflation actually behaves in Bangladesh, how it rises, how it spreads across sectors, and how it eventually cools, suggests that cutting rates now would risk reigniting inflation through the exchange rate, slowing disinflation rather than supporting durable growth.

What makes inflation persistent

Headline CPI inflation in Bangladesh is persistent, but not explosive. When inflation rises, it tends to remain elevated for many months, continuing to erode household purchasing power long after the initial shock. At the same time, inflation does not spiral indefinitely. Over time, it drifts toward a level shaped by underlying price dynamics rather than short-term demand fluctuations.

Those dynamics are dominated by food prices. Food inflation sits upstream in Bangladesh's inflation process and is the primary source of persistence in headline inflation. This is why inflation often remains stubborn even as macroeconomic conditions tighten.

Food inflation is highly inertial. Roughly 85 percent of a food price shock carries over from one month to the next, imparting substantial stickiness to headline inflation. Prices also adjust asymmetrically: food prices rise quickly when shocks hit—whether from supply disruptions, policy frictions, or global price movements—but fall back only slowly when conditions improve.

Crucially, food inflation appears largely insulated from standard macroeconomic levers. It does not respond systematically to domestic credit growth, broad money growth, or even exchange-rate movements. Instead, it is best explained by its own past. Once food inflation rises, it unwinds only slowly—on average, only about 15 percent of the initial shock fades each month, leaving much of it in place for a long time.

This pattern points to structural features of food markets rather than macroeconomic overheating. Dominant intermediaries, markup-setting behavior, and informal extraction weaken competitive discipline. In more contestable markets, exchange rates and liquidity conditions would matter more. In Bangladesh's food markets, they largely do not.

BB's own value-chain evidence reinforces this conclusion: food inflation in Bangladesh reflects structural frictions and weak contestability across key supply chains, not excess demand—explaining both its persistence and its limited sensitivity to monetary tightening.

How shocks spread

If food inflation anchors persistence, non-food inflation is how shocks spread across the economy. Non-food inflation is less persistent than food inflation, but more responsive to macroeconomic conditions—especially movements in the exchange rate.

Persistent food inflation spills into non-food prices through cost-of-living pressures and expectations. When food prices rise, higher rents, service charges, and markups become easier to justify. Roughly half of a sustained increase in food inflation eventually feeds into non-food prices, while the reverse does not occur: non-food inflation does not feed back into food prices.

Non-food inflation is sensitive to exchange-rate movements. A 1 percent depreciation of the taka raises non-food inflation by about 0.15 percentage points within a few months—a meaningful and relatively quick pass-through that builds over time, with roughly one-third of the initial depreciation eventually showing up in prices. This response is strongly asymmetric: depreciation pushes prices up far more forcefully than appreciation pulls them down.

Together, these dynamics explain why inflation in Bangladesh rises quickly and broadly, but falls slowly and unevenly. Even after exchange-rate pressures stabilise and non-food inflation begins to ease, headline inflation remains elevated until food prices finally turn.

Implications for monetary policy

These dynamics imply a different role for monetary policy in Bangladesh than the one embedded in standard demand-based frameworks.

In conventional models, core inflation—typically defined as CPI excluding food and energy—is treated as a proxy for excess demand. Rising core inflation signals overheating; falling core inflation suggests that tighter policy is cooling demand. That interpretation does not fit the Bangladeshi data. Demand-mediated monetary transmission—where tighter policy lowers inflation by cooling domestic spending—appears weak or absent.

This does not make monetary policy irrelevant; it changes the channel through which it matters. In Bangladesh, monetary conditions influence inflation primarily through the external sector. Easier credit and lower interest rates raise demand for imports, increasing pressure on the taka. Exchange-rate depreciation then feeds directly—and asymmetrically—into non-food inflation.

Within this framework, non-food inflation plays a role analogous to "core" inflation, but with a different meaning. It does not reflect excess demand. Instead, it reflects how upstream food and exchange-rate pressures are spreading through the economy, as movements in the taka are rapidly passed through into the prices of imported goods, energy, transport, and other non-food items. Core-like measures are therefore informative as indicators of transmission, but not as signals that demand is overheating or that policy space has opened.

The absence of demand-driven inflation in domestic prices does not imply unconstrained monetary space. While credit expansion may not raise inflation through excess demand, it can still do so indirectly by worsening the external balance, weakening the exchange rate, and triggering cost pass-through into non-food prices. In this system, inflation is not demand-led but exchange-rate–mediated. Because food inflation adjusts downward only slowly, such shocks keep headline inflation elevated even after exchange-rate pressures ease.

Credit expansion can, in principle, raise output through depreciation and higher net exports. In Bangladesh, however, this channel is weak and unstable. Export supply responds slowly, imports are highly input-intensive, and depreciation feeds quickly into domestic costs, eroding real competitiveness. Growth benefits are therefore uncertain and temporary, while the inflation costs are more predictable, asymmetric, and persistent.

The decision at hand

The upcoming Monetary Policy Statement will be judged on whether BB chooses to ease or hold steady. The evidence suggests that cutting rates now would be premature. Easing risks weakening the exchange rate, reigniting inflation, and prolonging the disinflation process.

Monetary policy alone cannot fix food inflation. But BB can still influence food price dynamics by improving contestability in food markets—most directly by reducing non-price frictions in foreign-exchange and trade finance, including clearer, more predictable rules for authorised banks to open import LCs for essential food items and lower discretionary barriers that allow supply to be restricted.

A natural concern is whether easing trade-finance frictions for food imports could weaken the exchange rate and reignite downstream inflation. But improving predictability in foreign-exchange access is not equivalent to monetary easing or import subsidisation. Food import demand responds primarily to supply gaps, while rules-based access reduces hoarding and rent extraction rather than inflating volumes. By easing persistent food price pressures, such measures can support inflation expectations and exchange-rate stability over time.

Staying the course—while supporting currency stability and improving food market contestability—offers a more credible path to sustained disinflation than premature easing in the current inflation regime.

Zahid Hussain is a former lead economist of The World Bank, Dhaka Office

Advanced Chemical Industries (ACI) PLC posted strong growth in revenue in the first half of the current fiscal year, reflecting steady domestic demand and continued expansion of its operations.

According to the company's financial disclosure, consolidated revenue rose by 18% year-on-year to Tk7,794 crore in the July–December period, compared to Tk6,619 crore in the same period a year earlier.

It posted a consolidated net profit of Tk30 crore during the half-year, which was a net loss of Tk64 crore in the same time a year ago.

ACI PLC is one of the country's leading conglomerates, with a presence in pharmaceuticals, consumer brands, logistics and retail.

The domestic market price of one bhori of gold, equivalent to 11.664 grammes, rose by Tk 32,892 over the course of a month, reflecting a notable increase compared with previous months.

According to the Bangladesh Jewellers Association (Bajus) data, the price of gold per bhori was Tk 2.22 lakh on January 1, 2026, which increased to Tk 2.55 lakh on January 31.

An analysis of Bajus data shows that throughout the month, gold prices in the domestic market changed 18 times, whereas prices rose on 15 occasions.

Businesspeople said the local market in Bangladesh has remained unstable over the past few months, driven by fluctuating global prices, steadily rising costs of pure gold, and broader economic uncertainty.

Dewan Aminul Islam Shahin, chairman of Bajus’ Standing Committee on Pricing and Price Monitoring, recently said the retail gold market has been highly volatile lately, largely due to swings in global prices and rising costs of pure gold.

“International issues such as geopolitical tensions and conflicts have a direct impact on our local market,” he mentioned

GOLD FALLS AGAIN

Gold prices in the local market fell sharply within 24 hours, dropping by Tk 15,746 per bhori to Tk 2.55 lakh. The Bangladesh Jewellers Association announced the price cut yesterday, citing a decline in the prices of pure gold in the local market.

On January 29, gold prices hit an all-time high of Tk 2.86 lakh per bhori in the country. Since then, prices have fallen by roughly Tk 31,000.

In the international market, spot gold lost 4.7 percent to $5,143.40 an ounce on January 30, as jittery investors moved to lock in profits, with hopes for aggressive US interest rate cuts fading and the dollar steadying, according to Reuters.

In Bangladesh, domestic prices remain closely aligned with global trends. Under the Gold Policy 2018, annual domestic demand is estimated at between 20 and 40 tonnes.

Gold first crossed Tk 50,000 per bhori in January 2018. Five years later, in July 2023, it reached Tk 100,000. Prices climbed further to Tk 150,000 in February 2025, before surging past Tk 200,000 per bhori later in the year.

With around two weeks left in office, the interim government has yet to pass two important banking reform laws that the central bank says are crucial for strengthening its oversight of the financial sector.

The laws are related to the autonomy of the Bangladesh Bank (BB) and the ownership and governance of banks.

Those laws topped the reform agenda that the interim government had pledged following the July uprising in 2024. Besides, the International Monetary Fund (IMF) has long advocated greater autonomy for the BB. Under its $5.5 billion loan programme, the Fund provided technical support in drafting the amendments.

Now both of the drafts are pending with the finance ministry, though the BB submitted them months ago and repeatedly urged their passage before the national election on February 12.

So far, the interim government has enacted only two banking-related laws. Those are the Bank Resolution Ordinance and the Deposit Insurance Ordinance.

Central bank officials say the remaining drafts, including amendments to the Bangladesh Bank Order 1972 and the Bank Company Act, have not progressed.

In a press release yesterday following its Article IV consultations, the IMF said the government reiterated its commitment to legal, institutional and operational reforms but noted that key policy decisions would be taken by the next government.

The IMF said that delays in banking and fiscal reforms would weaken growth, raise inflation, and increase macro-financial risks.

At a public programme last week, BB Governor Ahsan H Mansur expressed concern over the delays, saying passing the laws after the election would be difficult.

Finance Adviser Salehuddin Ahmed attended the event. Mansur reminded the government that the central bank considers the reforms unfinished business.

“We will try,” said Ahmed in response. “However, the time is short, so we are not sure how much can be accomplished,” he said.

Central bank officials said the revised draft amendment to the Bangladesh Bank Order has been with the finance ministry for around four months. The amendment is prepared to increase the autonomy of the banking regulator.

The original draft proposed removing bureaucrats from the BB board, where three government officials currently sit. Following objections from the finance ministry, the proposal was revised to allow one bureaucrat instead of three.

It also seeks to grant the BB governor the rank of a minister and require the governor to take the oath before the chief justice. Despite these revisions, the amendment has not been approved.

The second pending reform is the proposed amendment to the Bank Company Act. The BB board approved the draft in October last year and submitted it to the finance ministry.

It has 45 proposed changes, including reducing the maximum number of directors on bank boards from 20 to 15 and increasing the number of independent directors to at least half of the board, up from the current three.

The draft also recommends that independent directors be appointed from a vetted pool of candidates shortlisted by an expert panel.

Another proposal would limit ownership concentration by preventing any individual, family or institution from holding more than 5 percent stakes in multiple banks.

BB says the amendments aim to improve governance standards and strengthen oversight of both private and state-owned banks.

However, private bank owners have expressed opposition to the proposals. The Bangladesh Association of Banks (BAB) formally communicated its objections to the finance ministry, especially regarding the proposed ownership limits.

Zahid Hussain, former lead economist at the World Bank’s Dhaka office, said the delay is difficult to explain given how the drafts were prepared.

“This is not a new file,” he said.

According to Hussain, the drafts were developed after extensive discussions, including coordination committee meetings involving the finance ministry, BB and other stakeholders. The reforms were outlined in IMF mission reports and incorporated into the government’s Letter of Economic and Financial Policies, signed by both the finance minister and the BB governor.

“After that process, the role of the finance ministry is straightforward,” he said. “It should review the draft, clear it, or clearly explain why it cannot be cleared.”

Leaving the file idle for months, he said, raises questions.

Hussain said the delay shows resistance linked to authority rather than technical disagreements. “One key element of the reform is reducing the representation of the finance ministry on the Bangladesh Bank board. From that perspective, the issue is control,” he said.

He added that the central bank’s independence should not be defined narrowly. “It is not only about fiscal dominance. It also involves bureaucratic dominance and influence from business lobbies.”

According to the economist, passing the reform laws now would clarify where institutions and political actors stand, rather than deferring responsibility to the next government.

For comments, The Daily Star approached Finance Adviser Salehuddin Ahmed, BB Governor Ahsan H Mansur and Financial Institutions Division Secretary Nazma Mobarek. Despite phone calls and text messages, they did not respond.

As part of the interim government's efforts to reduce project expenses, the construction of Eastern Refinery Limited's second unit (ERL-2) has been cut by Tk4,465 crore, even before work has begun.

A revised proposal, a copy obtained by The Business Standard, puts the project's new cost at Tk31,000 crore, down from Tk35,465 crore, and has been submitted to the Planning Commission.

On 23 December, the Executive Committee of the National Economic Council (Ecnec) approved the project conditionally, asking for a review of various components, senior planning commission officials said.

They said Ecnec had asked to revise detailed engineering, design, construction supervision, commissioning, and associated buildings and infrastructure – to ensure costs were reasonable.

Following the directives, a cost review committee was formed under Amin Ul Ahsan, chairman of Bangladesh Petroleum Corporation (BPC), with officials from ERL and the energy division.

The committee reviewed capital expenditures and subcomponents, including engineering design, pre-commissioning and commissioning, internal roads, plant-related buildings, and other equipment.

After thorough review, the committee recommended a revised total cost of Tk31,000 crore, officials said.

12.59% cost reduction

BPC officials said the reviewed committee made significant reductions in several areas. Construction of plant-related buildings was cut by Tk768.83 crore, reducing the proposed cost to Tk250 crore.

Expenditure on engineering and other equipment fell by Tk1,726 crore from the original Tk8,203.89 crore.

Costs for other infrastructure dropped by Tk1,626 crore to Tk9,506 crore. Other capital expenditures were trimmed by Tk1,364 crore to Tk3,815 crore, and internal road costs fell from Tk288 crore to Tk138 crore.

Planning officials said the revision represents a 12.59% reduction from the Ecnec-approved project cost. Under the June 2022 Government Project Formulation, Processing and Approval Guidelines, any project cost reduction of 10% or more requires presentation to the Project Evaluation Committee (PEC).

The revised project proposal will be presented at a PEC meeting on 1 February.

IsDB offers $1b

Although Ecnec approved the project for self-financing, it also instructed the ministry to explore the possibility of securing concessional foreign loans.

Sources at the Economic Relations Division (ERD) said the Islamic Development Bank (IsDB) has expressed interest in providing $1 billion or more for ERL-2. On 22 December, the IsDB sent an initial proposal for financing, with final approval expected after a mission visits Bangladesh.

Project revival

Eastern Refinery, established in 1968 under French contractor Technip, first planned a second unit in 2010. The government approved Tk13,000 crore in 2013, but no progress was made. In 2022, BPC attempted to proceed with its own funds, raising the estimate to Tk23,000 crore, but work still did not start.

In 2024, S Alam Group offered to construct ERL-2 for Tk25,000 crore, approved on 9 July. The project was suspended in August after the mass uprising that toppled Sheikh Hasina's government.

The interim government revived the plan, which by then was estimated at Tk36,410 crore. Unable to secure foreign loans, it was revised to rely on state funds and BPC resources; the original estimate had been Tk42,974 crore.

4.5m tonnes of crude oil annually

Officials said Eastern Refinery currently meets only 20% of Bangladesh's petroleum demand, the rest imported. ERL-2 will produce Euro-5 gasoline and diesel and upgrade the existing refinery's diesel, motor spirit, and octane to Euro-5 standards.

BPC has completed a new "Installation of Single Point Mooring (SPM) with Double Pipeline" project, enabling transport of up to 4.5 million tonnes of crude oil annually.

Officials project ERL-2 could produce 400,000 tonnes of furnace oil, 60,000 tonnes of LPG, 600,000 tonnes of Euro-5 gasoline, 1.1 million tonnes of Euro-5 diesel, 200,000 tonnes of lube base oil, and 500,000 tonnes of jet fuel yearly.

At least five financial institutions risk losing assets following the recent bank merger, as shares held as collateral for loans they disbursed have been valued at zero.Personal finance advice

IFIC Bank, Dutch-Bangla Bank, Shahjalal Islami Bank, Southeast Bank and National Housing Finance together face losses exceeding Tk 6.46 billion, according to the Central Depository Bangladesh Limited (CDBL).

Among the borrowers, former EXIM Bank chairman Nazrul Islam Mazumder alone took out loans equivalent to Tk 1.46 billion, pledging shares of his own bank as collateral. His action was replicated by 31 other EXIM Bank shareholders. The aggregate value of EXIM Bank shares held as lien by the above mentioned financial institutions amounts to Tk 6.20 billion.

Four shareholders of Social Islami Bank Ltd (SIBL) also took out loans worth Tk 264 million, putting their holdings in SIBL as collateral. The shareholders of EXIM Bank and SIBL may have borrowed from one or more lending institutions. Smaller loans were also disbursed against shares of the merged banks.

The central bank announced the nullification of shares of five troubled banks-First Security Islami Bank, Social Islami Bank, Union Bank, Global Islami Bank and EXIM Bank-which were merged as their liabilities had far exceeded their assets.

"Such a situation is completely new to us. No one would have thought that the value of shares of the merged banks would turn negative," said IFIC Bank Chairman Md Mehmood Husain.

The lenders are now exploring ways to recover their claims.

"We will seek legal opinions to identify possible remedies," Mr Mehmood said.

The matter remained undisclosed for a long time amid debates over the pros and cons of the merger and concerns surrounding the interests of shareholders and depositors of the merged banks.

The lenders holding nullified shares as collateral neither drew attention to the issue nor approached any regulatory authority for a solution.

Talking to the FE, senior executives of several financial institutions said they were "confounded" by the situation.

"There is no provision to recover such loans under the regulations set by the central bank for the merged banks," said Abidur Rahman, additional managing director of Southeast Bank.

Bangladesh Bank has prioritised repayment to depositors of the merged entities. "We also disbursed loans using depositors' money. We will inform our board about the impact of the collaterals becoming worthless," Mr Abidur said.

He added that Southeast Bank would take legal action against the borrowers while making provisions for the expected loan losses.

IFIC Bank Chairman Mr Mehmood said the bank would write to the Dhaka Stock Exchange (DSE) and the Bangladesh Bank seeking guidance on the issue.

"We will also communicate the matter to the Association of Bankers, Bangladesh (ABB)," he added.

Ashequr Rahman, managing director of Midway Securities, however, questioned the delay by lenders in responding to the situation.

Shareholders of the merged banks must have taken loans before the fall of the previous government, long before reform measures-including the merger-were initiated in the banking sector. Meanwhile, the stocks of those banks had already suffered significant value erosion amid a prolonged bearish trend in the secondary market.

The DSEX, the benchmark index of the Dhaka bourse, shed more than 15 per cent, or 996 points, between January 2023 and August 2024, severely squeezing the market value of shares held as collateral.

"Why did the lenders not issue margin calls following the erosion in collateral value?" Mr Rahman asked.

"They could have approached the central bank and the securities regulator to seek permission to liquidate the borrowers' shares to protect depositors' interests," he said.

According to CDBL sources, the securities pledged as collateral remain blocked by the relevant brokerage houses under lien arrangements with the depository.

The depository authority usually does not know the identities of lenders or borrowers, and its intervention is sought only when shares need to be confiscated due to loan defaults.

Meanwhile, the central bank had restructured the board of EXIM Bank following the ouster of the previous government in August 2024. Mr Mazumder, also chairman of NASA Group, was removed from the board and arrested in October that year.

Before his arrest, he had chaired EXIM Bank since 2007 and served as president of the Bangladesh Association of Banks (BAB) for around one and a half decades.

On loan recovery, Southeast Bank Managing Director Md Khalid Mahmood Khan said banks are generally aggressive in recovering loans from small and medium clients but remain timid when dealing with influential borrowers.

"They often wait for a change in the political regime, as influential clients are usually aligned with those in power," he said.

Asked why lenders had not raised the issue earlier, Mr Khan said the matter had been placed before the bank's board, but no solution was reached at the time.

Industry insiders said shareholders of the banks merged into Sammilito Islami Bank should receive shares of the new entity.

While general shareholders were left empty-handed following the nullification of their shares, influential shareholders and sponsor-directors-including Mr Mazumder-had already borrowed against their holdings.

"In a capitalistic society, privileged groups benefit even during financial disasters, leaving ordinary people behind," Mr Rahman said.

Square Pharmaceuticals PLC, the country's leading drug maker, posted strong growth in both revenue and profit in the first half of the current fiscal year, reflecting steady domestic demand and continued expansion of its overseas operations.

According to the company's financial disclosure, consolidated revenue rose by 15% year-on-year to Tk4,338 crore in the July-December period, compared to Tk3,771 crore in the same period a year earlier. Consolidated net profit increased by 16% to Tk1,467 crore during the half-year, while earnings per share stood at Tk16.56.

In the second quarter alone, covering October to December, Square Pharma reported a 9% increase in consolidated revenue to Tk2,179 crore. Net profit for the quarter surged by 10% to Tk727 crore, indicating sustained momentum despite rising costs faced by the broader pharmaceutical sector.

The consolidated results include contributions from Square Pharmaceuticals Kenya EPZ Ltd, its foreign subsidiary, local subsidiary Square Lifesciences Ltd, and three associate companies – Square Textiles, Square Fashions and Square Hospitals – highlighting the diversified nature of the group's operations.

Square Pharma has also continued its strong shareholder return policy. Earlier, the company declared a 120% cash dividend for FY25, equivalent to Tk12 per share, marking the highest payout in its corporate history. In the previous fiscal year, it had distributed a 110% cash dividend, reinforcing its track record of consistent and rising payouts.

The company, listed on the stock exchanges since 1995, saw its shares close at Tk218.90 on Thursday. With a market capitalisation of around Tk19,400 crore, Square Pharma currently ranks as the second-largest listed company on the Dhaka Stock Exchange.

Founded in 1958 by the late Samson H Chowdhury, Square Pharmaceuticals began operations at a time when Bangladesh's pharmaceutical market was largely dominated by multinational companies. Over the decades, it has grown into a market leader, producing around 1,000 varieties of medicines. Its flagship gastric relief brand Seclo remains one of the top-selling products in the country.

Square Pharma was also the first Bangladeshi pharmaceutical company to export medicines overseas in 1987. At present, it exports pharmaceutical products to 42 countries across Asia, Africa and Latin America, strengthening its position as a regional healthcare player.

Foreign debt servicing by the government and its guaranteed loans rose 17 percent to $7.09 billion at the end of June in the last fiscal year.

The amount ate up around 76 percent of the total grants and loans of $9.3 billion that Bangladesh received in the fiscal year (FY) 2024-25.

Of the total repayment, $5 billion was principal, including $2.6 billion in state-guaranteed loans taken by public agencies. For example, Bangladesh paid $1.41 billion to settle crude oil import bills. The remaining $2.08 billion went to interest payments, according to data from the Economic Relations Division (ERD).

This marks another year of rising debt servicing costs for Bangladesh, which have more than doubled over the last five years. The government repaid $6.08 billion in principal and service charges to foreign lenders in FY24, double the $3.3 billion paid in FY21. Debt servicing crossed the $1 billion mark for the first time in FY13.

At the end of FY25, Bangladesh’s foreign debt stock stood at $87.3 billion. Of this, $77.28 billion was government debt, while the rest was government-guaranteed debt taken by public sector agencies.

The debt stock rose around 12 percent from the previous year. External debt accounted for 18.99 percent of the country’s Gross Domestic Product, well below the 40 percent threshold.

Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development (InM), said the rise in debt repayment reflects the end of the grace period for some foreign loans, many of which are in their final stages.

He added that many loans are not soft loans but hard loans with high interest rates and short grace periods, which will increase repayment pressure in the near future.

Mujeri, a former director general of the Bangladesh Institute of Development Studies, said the previous government borrowed heavily to fund large projects, and borrowing continued under the current government. With many projects now at their final stages, principal repayments have begun, pushing up debt servicing costs.

He added that significant budgetary support in recent years, provided to help the country recover from the coronavirus pandemic, has also increased loan repayments.

Global interest rate increases are another factor, although the ERD said interest rate risk is limited because most external loans are obtained at concessionary fixed rates.

Citing the World Bank’s classification, the ERD said that all indicators remain below threshold levels, categorising Bangladesh as a “less indebted” country.

However, Mujeri stressed that the government needs to strengthen its loan repayment capacity.

The Investment Corporation of Bangladesh (ICB) has incurred a loss of Tk311 crore in the first half (July-December) of the current fiscal year (2025-26).

According to its price sensitive information (PSI) disclosed today (29 January), the company's per share loss stood at Tk3.59.

ICB said it incurred the loss due to decrease in Interest Income and Capital Gain from sale of securities and increase in the payment of Interest against Term Deposit.

The government has reduced fuel prices by Tk2 per litre across the country. The move will take effect at the consumer level from February 1.

The Power, Energy and Mineral Resources Ministry announced the decision in a press release issued today.

Under the revised rates, diesel will be sold at Tk100 per litre, down from Tk102. Octane prices have been reduced to Tk120 from Tk122 per litre, while petrol will now cost Tk116 per litre instead of Tk 118. Kerosene prices have also been lowered to Tk112 per litre from the previous Tk114.

According to the ministry, fuel prices in the country are adjusted automatically at the consumer level in line with fluctuations in the global market.

MJL Bangladesh Limited, a leading lubricant and energy company, has reported a year-on-year decline in its consolidated revenue and profit for the first six months of the current fiscal year, as customers faced ongoing economic challenges and increasingly shifted toward lower-cost products.

In the July to December period, the company's consolidated profit decreased to Tk100.88 crore, which is 53.61% lower from Tk217.44 crore in the period of the previous year, according to its financial statements.

The company said changes in consumer purchasing behaviour – driven by cost pressures and cautious spending – negatively affected sales volumes and profit margins during the period. As customers prioritised affordability, demand for premium and higher-margin products weakened.

Since MJL primarily manufactures and markets high-quality products, the growing preference for low-cost alternatives had a direct impact on the company's revenue performance. The shift in consumer demand limited sales growth and exerted pressure on overall profitability during the reporting period.

The share price of the company closed at Tk92.40 on the Dhaka stock exchange on Thursday (29 January).

Revenue down 17.52%

In the July to December period, the company made revenue of Tk2017.53 crore, which is 17.52% lower from Tk2446.12 crore compared to the same period of the previous year, said the financial statement.

In the first six months, its earnings per share stood at Tk3.86, which was Tk6.66 a year ago.

In the October to December quarter, its consolidated profit reduced to Tk4.74 crore, which is down from Tk104.27 crore in the period of the previous year.

In this quarter, the company made revenue of Tk1027.88 crore, which is lower from Tk1200.65 crore compared to the same period of the previous year.

In the October to December quarter, its earnings per share stood at Tk0.80, which was Tk3.23 a year ago.

'No compromise on product quality'

A senior company official, speaking on condition of anonymity, said they never compromise on product quality, which makes its products slightly more expensive than competitors in the market.

"Due to inflationary pressures and challenging economic conditions, customers are increasingly shifting toward lower-cost alternatives, which has affected the sales of high-value, quality products," he added.

Meanwhile, imports of liquefied petroleum gas (LPG) from Iran have become more difficult due to existing sanctions. The company usually imports these raw materials through Singapore. Since these products cannot be imported secretly, the restrictions have directly impacted the company's business operations.

Its net asset value per share stood at Tk52.72 at the end of December 2025.

The company owns a state-of-the-art lube oil blending plant and offers high-performance and authentic lubricants, grease products and other innovative energy solutions to the local market and exports some of its products to the international market as well, according to its financial statement.

In FY25, MJL recommended a 52% cash dividend of their shareholders. As on December 2025, the sponsors and directors jointly hold 71.52%, institutions 22.15%, general investors 6.33% of the company.

Seven state-owned listed companies have bucked the prevailing market trend, delivering a collective profit of Tk1,544 crore in the first half of the current fiscal year despite a broader downturn that has left 56% of all listed firms in the red.

This combined profit represents a significant 47.57% increase over the Tk1,046.65 crore recorded by the same firms during the July-December period of the previous fiscal year.

While these seven leaders flourished, the government's overall portfolio remained mixed, as nine other state-linked firms posted a combined loss of Tk761 crore, though this was a slight improvement from the Tk867 crore loss recorded previously.

Power Grid top profit maker

Power Grid Bangladesh PLC, a state-owned power transmission firm, witnessed a staggering 236% growth in profit in the first half of 2025-26 fiscal year as its total income surged and decreased expenses.

According to its statements, in H1 of FY26, it made a profit of Tk476.63 crore, which was Tk141.68 crore in H1 of FY25.

Its profit in the second quarter during the October to December, however, declined 71.60% to Tk113.09 crore.

Its report showed that its revenue in H1 increased by 9.52% to Tk1,671 crore.

Due to foreign currency volatility for its foreign loans, Power Grid witnessed a significant blow in its profitability.

In the last three fiscal years, it had incurred a loss of Tk1,294 crore, and in the last two fiscals, it failed to declare any dividends for its shareholders.

Regarding its profit growth, Power Grid states its profit surged due to an increase in total income by Tk167.86 crore and a decline in total expenses by Tk167.07 crore.

Oil suppliers sees growth

Of the three listed fuel suppliers, Padma Oil and Meghna Petroleum posted growth in their profit, but Jamuna Oil saw declines in profit by 18% due to not accruing interest in the four merged banks into Sammilito Islami Bank.

Padma Oil's profit surged by 20% to Tk299 crore and Meghna Petroleum by 3% to Tk309.44 crore riding on their non-operating income mostly came from the income of fixed deposits receipts (FRDs).

Jamuna Oil posted a profit of Tk216.81 crore, which was Tk264.11 crore in the same time of the previous fiscal year.

Jamuna Oil said its profit decreased as interest on bank deposits with Sammilito Islami Bank for the period of second quarter of FY26 has not been accrued."

It also said interest accrued for the first quarter of FY26 earlier has been written back; because it is presumed that interest from bank deposits with Sammilito Islami Bank could not be realised.

According to the auditor, Jamuna Oil Company has a total investment of Tk1,541.08 crore in six banks.

Jamuna Oil has investments in FDRs of Tk326.11 crore and Tk393.84 crore in SND accounts at First Security Islami Bank, Tk432 crore in Global Islami Bank, Tk289.49 crore in Union Bank, and Tk18.64 crore in Social Islami Bank.

Besides, it has investments of Tk74 crore in Bangladesh Commerce Bank and Tk7 crore in National Bank, and some institutions that have also faced challenges.

Submarine Cable posts 59% growth

Bangladesh Submarine Cable Company posted a 59% year-on-year growth in its profit in the July to December of FY26.

Its net profit grew to Tk146.66 crore, which was Tk92.21 crore in H1 of FY25, its financial report showed. Its revenue also grew by 29% to Tk251.58 crore.

Regarding growth, Bangladesh Submarine Cable said revenue increased primarily due to a significant rise in IPLC rent, IP Transit service, and co-location service, as well as the substantial efforts of the company's management and supportive government policies.

The company added that the increase in EPS is the result of higher revenue and other income from ordinary business activities, leading to a positive impact on EPS. It also noted that there were no significant extraordinary transactions during this period.

Desco returns to profit

Dhaka Electric Supply Company (Desco) also returned to profit, reporting Tk90.49 crore in earnings compared with a Tk6.07 crore loss a year earlier. Its revenue rose 6% to Tk4,105 crore, as electricity sales increased both in volume and value, driven by growth in customer numbers and industrial and commercial consumption.

Titas's loss narrows

Titas Gas Transmission and Distribution PLC narrowed its loss to Tk390.32 crore in the first half, down from Tk711 crore in the same period last year. The company cited higher operational income and a reduced tax deduction rate as key factors behind the improvement.

ICB hits lower capital gain, interest burdens

The Investment Corporation of Bangladesh (ICB) remained under pressure, posting a Tk311 crore loss in H1, wider than the Tk117 crore loss recorded a year earlier. The institution had absorbed a Tk1,214 crore loss in the previous fiscal year.

Although it earned Tk74 crore in interest income, ICB paid Tk550 crore against deposits and borrowings. Dividend income fell 8% to Tk197 crore, capital gains plunged 81% to Tk33.62 crore, and fees and commission income dropped 29% to Tk59.46 crore. Officials attributed the weak performance to capital market volatility and limited share sales.

Sugar mills loss widens

Losses widened at two listed sugar mills. Zeal Bangla Sugar Mills posted a Tk29 crore loss, up from Tk22.17 crore a year earlier, while Shyampur Sugar Mills reported a Tk12.53 crore loss. Shyampur has remained closed for several years following a government decision amid sustained losses.

Other loss-making companies include Eastern Cables, Usmania Glass Sheet Factory, Atlas Bangladesh and Renwick Jajneswar. National Tubes and Eastern Cables, which were profitable in the same period last year, slipped into losses of Tk4.28 crore and Tk5.65 crore respectively in the first half of FY26.

Eurozone growth beat expectations to reach 1.5 percent last year, official data showed Friday, picking up pace for a second year running in spite of a bruising trade standoff with the United States.

Europe is working to close the gap with economic rivals China and the United States, and spiking tensions with President Donald Trump’s administration over trade have created added impetus to bolster its competitivity.

Last year’s uptick in the single-currency area’s economy builds on the modest 0.9 percent expansion recorded in 2024, after an anaemic 0.4 percent a year earlier.

Analysts at Bloomberg had forecast growth to be 1.4 percent, while the European Commission itself predicted 1.3 percent.

Quarter-on-quarter growth for the eurozone reached 0.3 percent in the last three months of 2025, according to statistics agency Eurostat.

“Accelerating growth in Germany, Spain and Italy, to a lesser extent, made up for slow growth in France,” said ING chief economist Bert Colijn.

The eurozone ended the year with “decent economic growth despite significant uncertainty and economic tension,” he wrote.

Data released Friday in Germany showed its economy grew faster than expected at the end of 2025, expanding 0.2 percent over the year, suggesting a recovery is gathering pace in Europe’s struggling industrial powerhouse.

But annual growth in the eurozone’s second-biggest economy France slowed to 0.9 percent, national data showed, impacted by a disappointing fourth quarter as the government wrestled with passing a new budget.

Spain’s economy meanwhile grew at more than twice the eurozone average last year, expanding 2.8 percent, fuelled by strong consumer demand, rising exports and robust tourism.

The eurozone’s fourth-largest economy has outshone its peers since 2021, supported by low energy costs, domestic consumption and a tourism boom since the end of the Covid pandemic.

Analysts at Capital Economics said they expected Spain to “continue to outperform for some time as high immigration boosts employment and domestic demand.”

Spain’s left-wing government credits immigration for much of the country’s dynamic economic growth of recent years, and has recently moved to regularise around 500,000 undocumented migrants.

ING’s Colijn said the eurozone-wide outlook for 2026 was “becoming more upbeat”, with industrial production expected to benefit from defence investments and German infrastructure spending in particular.

He predicted “accelerated growth over the coming quarters,” noting that even a “modest” pickup would be something to celebrate given the “significant turmoil” in international relations.

But he warned other factors were set to keep dragging on growth, from the uncertain global environment to a loss of competitiveness across the eurozone.

“These broader structural concerns are not being addressed quickly enough at the moment, which curbs longer-term prospects,” he said.

Across the broader 27-country European Union, the economy expanded by 1.6 percent last year, the data showed.

EU leaders will hold talks on competitiveness next month in Belgium as the bloc seeks to revive its economy and foster innovation.

The bloc’s competitiveness push has produced mixed outcomes so far, according to an annual assessment published Friday by the European Commission, which is pushing for stepped-up action.

Of a broad set of indicators examined in the report, six showed declines, six improved and 15 remained broadly unchanged.

Areas showing improvement ranged from the use of artificial intelligence by businesses to renewable energy production and the mutual recognition of diplomas and professional qualifications across member states.

By contrast, the share of intra‑EU trade in the bloc’s economy showed a decline, as did private investment levels and European students’ results in the PISA international education survey.