In Bangladesh today, the greatest struggle for ordinary citizens is no longer political uncertainty; it is economic survival. For millions of families, the daily challenge is not debating national issues but simply affording basic necessities. A visit to any local market reveals the reality: middle-income families are cutting back on groceries, while low-income households are struggling to afford even the most essential items.

At such a critical moment, the proposal by the National Board of Revenue (NBR) to increase the source tax on essential commodities from 0.5 percent to 1 percent raises serious concerns. The proposed tax hike would affect key everyday goods such as rice, pulses, edible oil, and fruits. While the increase may appear marginal on paper, its consequences in Bangladesh’s fragile market structure could be far-reaching.

In theory, a 0.5 percent increase may seem insignificant. In practice, however, additional taxation rarely remains confined to importers or wholesalers. Importers pass the extra cost on to wholesalers, wholesalers shift the burden to retailers, and retailers ultimately transfer it to consumers. In economic terms, this is known as cost pass-through, and in Bangladesh, the final burden almost always falls on ordinary citizens — basically, the final consumers.

At a time when inflation continues to erode purchasing power, such a move risks deepening public hardship. Inflation in Bangladesh is no longer an abstract economic indicator; it is a harsh daily reality. Families that once managed their monthly budgets comfortably are now forced to cut spending before the month ends. Many households have reduced their consumption of fish, meat, and fruits, while others are struggling to maintain basic nutrition.

The most troubling aspect of this proposed tax increase is that it targets essential goods — items people cannot simply stop buying. Rice, pulses, and cooking oil are not luxury products; they are necessities. Economists describe these products as having “inelastic demand,” meaning consumers must continue purchasing them even when prices rise. As a result, higher taxes on these items disproportionately hurt lower- and middle-income families.

Such decisions not only create economic pressure but also carry political repercussions because ordinary people determine a large part of their satisfaction or dissatisfaction with the government based on their everyday experiences. When people see that their incomes are not increasing but their daily expenses are rising, questions about the government’s economic management naturally emerge.

History has repeatedly shown that prolonged increases in living costs create widespread social stress and public dissatisfaction. It has been observed in various countries that a prolonged rise in commodity prices creates stress in the daily lives of ordinary people and increases expectations from the government.

In Bangladesh too, people naturally want the government to play an effective role in controlling the market situation and keeping the prices of essential commodities at a tolerable level. Therefore, it is important to consider the purchasing power of the general public and the overall market reality when making such decisions in the current situation. Timely and people-friendly measures can strengthen public trust in the government.

This expectation becomes even more significant considering the government’s repeated commitments to building a just, humane, and prosperous Bangladesh — often referred to as “Bangladesh First” — by reducing poverty, strengthening social protection, and improving living standards. Election promises emphasized lowering the cost of living and creating a more efficient market system. Yet imposing additional taxes on basic necessities appears inconsistent with those commitments.

Certainly, taxation remains essential for any government. Revenue is needed to fund infrastructure, education, healthcare, and social welfare programmes. However, an important question must be asked: should revenue generation come at the expense of ordinary people’s kitchens?

Bangladesh has long faced allegations of large-scale tax evasion, loan defaults, illicit financial outflows, and administrative inefficiencies involving billions of taka. If the government chooses to increase taxes on basic goods without taking stronger action against major tax evaders and financial irregularities, it risks reinforcing public perceptions of inequality and unfairness.

Consumer confidence remains a critical driver of economic growth. When households have less disposable income, demand declines, small businesses suffer, and economic activity slows. While taxing essential goods may generate short-term revenue, it could create long-term economic and political costs.

The responsibility of a government extends far beyond revenue collection; it must also safeguard the welfare and dignity of its citizens. At a time when many families are already struggling with rising living costs, imposing additional financial burdens through higher taxes on essential commodities is both economically questionable and socially insensitive.

Instead, policymakers should prioritize broadening the tax base, curbing wasteful public expenditures, addressing tax evasion, and strengthening market regulation to ensure greater efficiency and fairness in revenue generation.

The success of a government should not be assessed solely through large-scale infrastructure projects or ambitious development agendas. It must also be measured by its ability to reduce the everyday hardships faced by ordinary citizens. The proposed increase in source tax on essential goods is not merely a fiscal measure; it carries significant implications for household affordability, market stability, and public confidence in government policies.

Given Bangladesh’s current economic challenges, the need of the hour is to identify alternative revenue streams and implement meaningful reforms in market governance without placing further pressure on low- and middle-income households. Development, in its truest sense, should improve the quality of life for citizens, not make it more difficult.

The EU hopes Tuesday to strike a deal towards implementing its nearly year-old trade pact with the United States -- with an increasingly impatient Donald Trump threatening steep new tariffs unless it is done by July 4.

The 27-nation bloc struck an accord with Washington last July setting levies on most European goods at 15 percent, but to the US president's frustration a final version of the text still needs nailing down on the EU side.
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"A deal is a deal," the US mission to the EU posted on X Monday, saying the bloc "must live up" to the agreement sealed in Turnberry, Scotland, between Trump and EU chief Ursula von der Leyen.

Negotiators from the EU's parliament and capitals will meet Tuesday night in Strasbourg to push for a compromise that would allow the bloc to meet Trump's deadline and hopefully turn the page on more than a year of transatlantic trade battles.

Short of that, Trump has warned the EU should expect "much higher" tariffs -- and has already vowed to raise duties on European cars and trucks from 15 to 25 percent.

The tariff blitz unleashed by Trump before the Turnberry accord, including hefty levies on steel, aluminium and car parts, jolted the bloc into cultivating trade ties around the world.

But the EU cannot afford to neglect the 1.6-trillion-euro ($1.9-trillion) relationship with the United States, its largest trade partner.

Cyprus, which holds the rotating presidency of the EU, said its goal "remains, the swift implementation of the EU-US joint statement".

To reach a compromise with member states, parliament is under pressure to renege on several amendments it added to the text in March which the Americans consider unacceptable.

The head of parliament's trade committee, Bernd Lange, struck an optimistic note, saying the sides had "already made a lot of progress".

"I hope we can reach a compromise, including new propositions," Lange said.

But first, he needs to hammer out a common stance between the parliament's different factions, which looked set to keep haggling until the last moment.

The EU parliament's conditional green light came after months of delay caused by Trump's designs on Greenland and a US Supreme Court ruling striking down many of the president's levies.

The assembly's largest force, the conservative European People's Party to which von der Leyen belongs, is now pushing hard to implement an accord it says is vital to ending a period of damaging uncertainty for EU businesses.

EPP lawmaker Zeljana Zovko told AFP she was "confident that we will get it done".

The EPP has firm support from the hard-right ECR party, whose shadow rapporteur on the file, Kris Van Dijck, also said he was "cautiously optimistic".

But several political groups had yet to make their position public as of Monday night, and it remained unclear how far the majority would compromise to get a deal.

Lawmaker Kathleen Van Brempt of the Socialists and Democrats, parliament's second-biggest group, said they would "engage constructively" but fight for safeguards "to guarantee stability, predictability and protection for European businesses and workers".

One bone of contention is a suspension clause toughened by parliament that would scrap favourable tariff conditions for US exporters, should the United States later breach the terms of the deal.

Another concerns so-called "sunrise" and "sunset" clauses under which the EU side of the accord would kick in once the United States makes fully good on its pledges, and would expire unless renewed in 2028.

Green lawmaker Anna Cavazzini said "the odds are good" but warned member states would need to "budge" on parliament's main priorities.

"These past weeks have shown time and again that Trump is not to be trusted, so the EU needs stronger tools at hand," she said.

The Bangladesh Bank is set to introduce stricter rules for transferring money from bank cards to mobile financial services (MFS) accounts, commonly known as "add money", amid growing concerns over cyber fraud and unauthorised transactions.

Under the new rules, which will take effect from 1 August this year, customers will only be able to transfer money from a bank card to an MFS account if both are registered under the same name. Banks and MFS providers will be required to verify that the receiving MFS account belongs to the cardholder.

The central bank decided to impose the restriction following a major fraud incident involving a foreign bank operating in Bangladesh, where fraudsters transferred money from customers' cards to MFS wallets through unauthorised transactions.

Officials familiar with the matter said the Payment Systems Department of the Bangladesh Bank is expected to issue a circular on the new measures soon.

As an interim arrangement until August, customers will still be able to transfer money from one person's card to another person's MFS account. However, a token transaction of up to Tk500 must first be completed during the card-linking process.

Regular transactions will only be permitted 24 hours after the successful completion of the token transaction and linking process.

The Bangladesh Bank has also instructed MFS providers to classify card-to-MFS add money transactions as "fund transfers" rather than "merchant payments". The central bank further said the beneficiary wallet number must remain visible to the card-issuing bank during transactions.

Banks and MFS providers that fail to ensure this facility by 31 July will not be allowed to offer add money services through those cards from 1 August onwards.

According to sector insiders and central bank officials, a cybercrime group in the last week of August 2025 syphoned off nearly Tk27 lakh from at least 54 customers of Standard Chartered Bank (SCB) by bypassing one-time password protections on credit and debit cards issued by bank and transferring funds to mobile wallets such as bKash and Nagad.

Victims had reported that without their knowledge or any transaction, Tk50,000 was transferred from their cards to bKash and Nagad accounts in each instance. The money was then quickly withdrawn by the fraud group, and the MFS accounts were immediately closed.

An investigation by The Business Standard found that the fraudsters used SIM cards and MFS accounts registered under other people's names to move the stolen funds.

Following the incident, SCB suspended the add money feature from its cards to MFS platforms.

Bangladesh Bank (BB) will not intervene in the dollar exchange rate in the near term, with the currency instead expected to be determined by market supply and demand, the central bank governor told treasury heads of banks at a meeting today (19 May).

A senior Bangladesh Bank official, who attended the meeting, confirmed the development to The Business Standard, saying the governor sought a clearer understanding of foreign exchange market operations and listened to bankers' concerns over current dynamics.

According to the official, the governor informed bankers that the central bank would no longer dictate the foreign exchange market and that exchange rates would be allowed to adjust based on supply and demand conditions.
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He also said the regulator is working towards a more market-based foreign exchange regime. At the same time, the governor cautioned banks against any attempts to manipulate the dollar market.

However, a deputy managing director (DMD) of a private commercial bank told TBS that Bangladesh Bank had intervened in the foreign exchange market between March and April this year.

He alleged that during that period, central bank officials contacted banks and informally indicated a ceiling for dollar exchange rates.

The country's private sector credit growth fell to a historic low of 4.72% in March this year, reflecting weak business confidence, slowing investment and mounting uncertainty in the economy.

Economists and bankers said political uncertainty eased somewhat after the February election, but the deeper problems discouraging investment and new business activity remain unresolved.

In addition, the fuel crisis emerged as another contributing factor in March, leading to a sharp slowdown in bank lending growth compared with previous levels, they said.

Private sector credit growth had been declining steadily in recent months, falling from 6.58% in November 2025 to 6.20% in December, and then to 6.03% in both January and February 2026, before dropping sharply in March, central bank sources confirmed.

Outstanding loans to the private sector stood at Tk23.35 lakh crore in March 2026, according to Bangladesh Bank data.

Speaking to The Business Standard, Mustafizur Rahman, distinguished fellow at Centre for Policy Dialogue, said, "The major trend indicates that it is not increasing. Both necessary and sufficient factors are at work here."

"The necessary factor is political stability, which has improved somewhat after the election. But the sufficient factors – such as the cost of doing business, inflation, logistics policies and several other issues – have not seen any major changes."

He said the energy crisis added further pressure in March. "These problems already existed, and energy became an additional challenge. Inflation, the cost of doing business and other factors have created uncertainty," he added.

The Bangladesh Bank has been publishing private sector credit growth data since 2003. A review of the data shows March recorded the lowest growth in the past 24 years.

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

He said several factories owned by large business groups, including Nassa Group, Beximco Group and Gazi Group, had closed, reducing demand for bank borrowing. "When factories were operational, they imported capital machinery. But even the firms still running have reduced production by 60-70%," he said.

Bankers question BB's policy direction

Several managing directors of private banks told TBS they remain unclear about the central bank's policy direction in dealing with the current economic challenges.

Bankers said lending decisions depend heavily on broader policy clarity, including interest rates, exchange rates and inflation trends. They explained that when businesses seek loans for new investments or ventures, banks assess the overall policy environment, borrowing costs and the likely movement of the US dollar before approving financing.

One private bank managing director said the governor had spoken about lowering lending rates, but questioned how feasible that would be at a time of high inflation.

He also criticised Bangladesh Bank for holding the dollar exchange rate at Tk122.75 despite pressure on the local currency. Another MD said the central bank's decision to cap trade finance interest rates at 3% during a crisis period had created concerns.

He noted that the cost of foreign borrowing currently stands at SOFR plus 2.5%, while the additional cap on UPAS financing – a foreign currency-based import financing system – would further limit financing opportunities.

"If financing through UPAS becomes difficult, banks will have to lend in local currency at interest rates of 12-13%. The central bank believes this will increase credit growth, which is why rates on trade finance have been lowered. But this decision is not correct – it is a mistake," he said.

Another bank MD said businesses and banks remained uncertain about the central bank's main priority – whether it was controlling inflation, lowering interest rates or boosting GDP growth.

"There were expectations that many new projects would emerge after the election, but that has not happened," he said.

He added that the government's heavy borrowing from banks because of a revenue shortfall could further increase interest rates and crowd out private sector borrowers. "There is also uncertainty over where the exchange rate will stand in the next six months," he said.

Another bank MD said many large corporate firms had sought policy support from the central bank, signalling financial distress. "When companies need policy support, banks become less willing to finance them. It also becomes very difficult for those firms to make new investments or expand business operations," he said.

Banks shift towards government securities

With demand for private sector loans weakening, banks have increasingly turned to treasury bills and bonds for income.

A senior official at a private bank said lenders were moving towards safer government securities amid weak private investment.

At the same time, the government has been borrowing heavily from banks through treasury bills and bonds, including an additional Tk10,000 crore outside the regular borrowing calendar during the October-December quarter.

Limited opportunities for private investment have allowed banks to earn nearly 11% interest on what are effectively risk-free government securities. For many conventional banks, a growing share of income now comes from this segment.

Despite concerns at the start of 2025 over rising deposit rates, high inflation, political uncertainty and weak loan demand, stronger private banks have posted higher profits largely through earnings from government securities rather than loan expansion.

Bangladesh Bank data showed the government collected Tk33,000 crore through treasury bills in March this year. In April, the amount rose 39% month-on-month to Tk46,000 crore.

Of that amount, Tk32,800 crore was used to repay liabilities from previously issued treasury bills, leaving the government's net borrowing through treasury bills at Tk13,200 crore in April.

Rather than strengthening the capital market, the government is playing its habitual game of relying on banks for business financing.

This is evident in the central bank's latest decision to expand the single borrower exposure limit from 15 per cent to 25 per cent of a bank's capital.

The suspension of the effectiveness of the previous 15 per cent limit until June 2028 is feared to discourage new listings of companies from large conglomerates.

"The expansion of the exposure limit is a repetition of the same mistake that led to a systematic damage to the financial ecosystem," said Md. Ashequr Rahman, managing director of Midway Securities.

Long-term financing through banks has continued over the years against short-term deposits, which has proved to be disastrous for the banking sector after a substantial amount of loans turned sour.

Before the last national election, key representatives of the BNP said they, if voted to power, would prioritise the capital market instead of the money market in financing.

In November last year, BNP leader Amir Khosru Mahmud Chowdhury, the incumbent finance minister, said at the Bangladesh Economic Summit that the party would put emphasis on energizing the capital market to lessen pressure on banks.Bangladesh travel guide

"We don't want to go to banks that are overused. We want to make the capital market vibrant and we're very serious about it," said Mr Chowdhury at the time.

The ruling party's election manifesto also included plans for the development of the capital market.

"All political parties spoke about a free economy, but eventually they preferred a managed economy after assuming office," said Mr Rahman while speaking with The FE over the phone on the latest policy of the Bangladesh Bank.

The change has been brought apparently to ease financial stress of the borrowers amid economic volatility.

With the high non-performing loan (NPL) ratio, however, the banks will face mounting pressure.

The overall banking sector's NPL ratio stood at over 30 per cent in December last year and deposits grew at a rate of 11.28 per cent year-on-year in February this year.

The deposit growth has not created enough room for fresh lending.

A lender having a 30 per cent NPL ratio means it has to serve purposes worth Tk 100 by Tk 70.

On receipt of fresh deposits worth Tk 11.28, the bank will be able to do the same job with Tk 81.28. Still, there is a shortfall of Tk 18.72. Besides, fresh deposits come with fresh interest liability.Global economy overview

The bank would have been in a better situation in terms of liquidity and for fresh lending had the deposit growth been at least equivalent to the NPL ratio.

In a situation like this, the expansion of the single borrower's exposure limit is not conducive to creating a healthy financial ecosystem.

Mr Rahman, of Midway Securities, said the BB decision is aimed at easing financial stress of business groups but they will borrow money from banks to execute long-term plans. "Will the central bank be able to restore the previous 15 per cent limit after two years?"

In the pre-budget meeting held between the National Board of Revenue (NBR) and stakeholders of the capital market, it was discussed that the companies that would exhaust a certain limit of credit must go to the capital market to raise more capital and that money could be raised through both equity and debt instruments.

After the promise of prioritising the capital market by the government and subsequent discussions in this regard with the revenue board, the central bank expanded the single borrower exposure limit.

Stakeholders of the capital market said both the securities regulator and the central bank are regulatory bodies. But the central bank enjoys the authority to take decisions without consulting other regulators.

On the other hand, since its inception in 1993, the Bangladesh Securities and Exchange Commission (BSEC) has failed to establish its importance before the government and other regulatory bodies.

Alongside the failure of the BSEC, stock exchanges and professional bodies of the capital market have also been unable to play any role in bringing good companies, which heavily rely on bank financing, to the secondary market.

The government is considering the introduction of a refund mechanism for excess minimum tax paid by companies if the amount cannot be adjusted against future profits within a specified period – a move aimed at improving tax fairness and easing a major concern among domestic and foreign investors.

Officials at the National Board of Revenue told The Business Standard that the proposal, likely to be included in the upcoming national budget, would allow business entities to claim refunds of excess minimum tax after three years if they fail to offset the amount against future taxable income.

A senior NBR official, speaking on condition of anonymity, said, "We have long felt that a non-refundable minimum tax system conflicts with international standards and the principles of tax justice. The upcoming budget will contain a positive development in this regard."

Another official said companies would become eligible for such refunds after a set timeframe, which is currently being considered at three years.

"The refund process will be handled through an automated faceless system. Representatives of companies will not need to visit tax offices. Refunds will be automatically credited to their bank accounts," the official added.

Officials also said the NBR plans to strengthen compliance systems and data integration before implementing the refund mechanism to prevent abuse by non-compliant taxpayers.

Welcoming the move, business leaders and tax experts said the proposed reform could significantly improve Bangladesh's investment climate by reducing capital erosion caused by turnover-based taxation.

Under the existing system, companies are required to pay minimum tax based on turnover or gross receipts, regardless of whether they make a profit or incur losses. Businesses have long argued that the inability to recover excess minimum tax has sharply increased their effective tax burden, despite reductions in statutory corporate tax rates in recent years.

Bangladesh currently has around 3 crore registered business entities, although only about 30,000 submit tax returns, according to NBR officials. Minimum tax rates on company turnover range from 1% to 3.5%, while more than 30 other categories of taxpayers are also subject to minimum tax on gross receipts, with rates reaching as high as 20%.

Last year's budget allowed companies to carry forward excess minimum tax for adjustment against future tax liabilities. However, businesses argued that the provision offered little practical relief for firms facing prolonged losses or persistently low profit margins.

Concerns over effective tax burden

Corporate tax rates in Bangladesh have been reduced by nearly 10 percentage points over the past several years. Non-listed companies currently pay 27.5% corporate tax, while listed firms pay between 22.5% and 25%.

Despite these cuts, business groups have argued that high minimum taxes and the absence of refunds have pushed effective tax rates to nearly 50% in some cases.

Minimum tax was first introduced in Bangladesh in the fiscal 2012-13 to address widespread tax evasion among companies that repeatedly declared losses. NBR officials said about 60% of the income tax currently collected is collected as minimum tax.

Former NBR member for income tax policy Syed Md Aminul Karim said the system was originally introduced because the tax authority lacked the capacity to detect profit concealment effectively.

"Many companies used to show losses year after year to evade taxes. Since it was difficult for the NBR to uncover such evasion, the minimum tax system was introduced. However, compliant companies ended up suffering," he said.

Why businesses oppose minimum tax

Under the current regime, businesses must pay tax based on turnover even if their actual taxable income is lower.

For example, if a company pays Tk1 crore in minimum tax at a 2% turnover tax rate, but its final profit-based tax liability is only Tk70 lakh, the excess Tk30 lakh is not refunded under the existing system. As a result, the company's effective tax burden rises above the statutory corporate tax rate.

The problem becomes more severe for companies incurring losses as they are still required to pay minimum tax despite having no taxable income.

Mobile phone operator Robi Axiata said it has paid around Tk1,000 crore more in minimum tax than its actual tax liability over the years. Although the company has recently returned to stronger profitability, allowing it to offset excess taxes, Banglalink, another mobile phone operator, continues to face losses while remaining subject to minimum tax obligations.

The issue has been repeatedly raised by business organisations, including the Foreign Investors' Chamber of Commerce and Industry and the Metropolitan Chamber of Commerce and Industry.

Shahed Alam, chief corporate and regulatory officer of Robi Axiata, said turnover tax remains a major obstacle to business growth.

He added that the turnover tax imposes tax on gross revenue without considering whether a company is profitable or loss-making, making the system inconsistent with the principles of fair taxation.

Taimur Rahman, chief corporate and regulatory affairs officer of Banglalink, said, "Banglalink has been subject to minimum tax since FY2015 and, up to FY2024, the company has paid approximately Tk938.90 crore under the minimum tax regime. Since these taxes were paid despite the absence of taxable profits, the minimum tax mechanism has had a significant impact on the company's cash flow and investment capacity."

Wide coverage of minimum tax regime

Under the current Income Tax Act, mobile phone operators are subject to a 1.5% minimum tax on annual turnover. Manufacturers of carbonated beverages, sugary products and tobacco products face a 3% rate, while most other companies pay 1%.

Individuals with annual gross receipts exceeding Tk3 crore are also subject to a 1% minimum tax.

Exporters are required to pay 1% tax on export proceeds, while at least 32 withholding tax provisions are also treated as minimum tax, meaning taxpayers cannot reclaim excess deductions even if their final tax liability is lower.

Experts welcome proposed reform

SK Zami Chowdhury, managing partner of chartered accountancy firm Chowdhury Emdad and Company, said the proposed refund mechanism would help establish greater tax fairness.

"However, the authorities must first ensure that loopholes for tax evasion are properly addressed before implementing the refund system," he said.

Syed Md Aminul Karim said taxing businesses without income contradicts the fundamental philosophy of taxation.

"Introducing a refund system would be a positive and necessary step," he added.

Welcoming the reform initiative, Banglalink's Taimur Rahman said, "The proposed refund mechanism for unadjusted minimum tax is a positive and constructive step, which would help reduce long-term financial pressure on businesses operating in challenging market conditions."

Bangladesh Bank has introduced new rules for cashing out money from card-based mobile financial service (MFS) accounts, aiming to strengthen verification and transaction security.
Under the new rules, customers must first complete a successful transaction of up to Tk 500 using the card before linking it with an MFS account. The account can only be connected 24 hours after the transaction is completed.
The circular also said that from August 1 this year, MFS cash withdrawals through cards will be allowed only if the MFS account and the card are verified under the same ownership. Transactions involving mismatched ownership information will not be permitted.

The central bank said the changes will apply to all MFS providers and scheduled banks operating in the country.
In a circular issued by the Payment Systems Department yesterday, the central bank outlined several conditions for card-to-MFS cash withdrawal services. The instructions were sent to managing directors and chief executives of all concerned institutions.

Bangladesh Bank has also instructed service providers to introduce systems that clearly identify transactions as card-based rather than merchant payments.

At the same time, beneficiary account numbers must not remain blank during card-linked transactions.

The central bank warned that institutions failing to make the required changes by July 31 this year would not be allowed to continue offering card-to-MFS cash withdrawal services from August 1.

The circular further said that earlier instructions issued on March 27 last year regarding other transactions through MFS accounts would remain in force. All new directives will take immediate effect.

The government will include provisions or support for every community in the budget for the fiscal year 2026-27 as part of its pledge to democratise the economy.

“Many groups appeared to have been excluded from past budgets. There were no programmes for them-- no support. We will address every group in this budget,” said Finance Minister Amir Khosru Mahmud Chowdhury

He made the remarks in an interview with The Daily Star on the sidelines of the Asian Development Bank’s annual general meeting in the first week of May in Samarkand, Uzbekistan.

Khosru, who previously served as commerce minister during the BNP’s last tenure in power more than two decades ago, is now overseeing both the finance and planning ministries.

The current government’s slogan is the democratisation of the economy. If the economy is to be democratised, every group must be included, and the benefits of the economy must reach their homes, he said.

“We are planning the budget with this in mind.”

Khosru said the government had little time to formulate the upcoming budget, which is “a difficult task”.

“All indicators of the economy that we received from the previous governments were on the decline. On top of that, there is the war in the Middle East -- we have to face this crisis day after day,” said the minister.

“You can certainly understand how hard it can be. But still, we are optimistic,” he added, noting that when the BNP had previously come to power, it restored macroeconomic stability and discipline in the financial sector.

Bangladesh Bank (BB) has instructed treasury heads of commercial banks to play a responsible role and refrain from manipulating the US dollar exchange rate in order to keep the foreign exchange market stable.

BB Governor Md Mostaqur Rahman gave the instruction at a meeting between the central bank and treasury heads of commercial banks, held at the BB headquarters in Dhaka today.

Treasury heads of three private commercial banks, seeking anonymity, told The Daily Star that the BB governor asked them for suggestions on how to stabilise the forex market and exchange rate.

Recently, several banks increased their forward booking of US dollars, which affected the market, prompting the authorities to call the meeting.

According to them, the governor said the banking regulator does not want to intervene directly in the market and therefore asked banks to behave responsibly.

One of the treasury heads said officials of the central bank raised questions about forward selling and asked banks to rationalise the practice, saying it contributes to volatility in the forex market.

The official also said it would be difficult to stop forward selling as it works like insurance.

Forward selling in the forex market involves entering into an over-the-counter (OTC) contract to sell a specific amount of one currency for another at a predetermined exchange rate on a fixed future date.

It allows businesses and investors to lock in exchange rates and eliminate currency risk.

The treasury heads also said they informed the central bank during the meeting that there is little scope for banks to manipulate the market.

According to them, exchange houses and exporters are more likely to be responsible for market volatility.

The treasury heads also informed the governor that central bank officials had verbally instructed lenders not to increase the US dollar rate, which they described as a form of intervention.

A senior official of the central bank told the newspaper that the banking regulator warned lenders not to get involved in market manipulation.

The interbank exchange rate has been hovering at Tk 122.75 per US dollar for the past one and a half months.

On Tuesday, banks were buying US dollars at Tk 122.75 per dollar and selling them at Tk 123.50 per dollar.

To keep the forex market stable, the banking regulator has also continued buying US dollars from the market. Yesterday, it purchased $85 million from six commercial banks at a cut-off rate of Tk 122.75.

As a result, total purchases in the current fiscal year have surpassed $6 billion, according to BB data.

Bangladesh Bank has been buying US dollars since the beginning of the current fiscal year amid improved inflows and easing pressure on the foreign exchange market.

The treasury heads argued that the forex market has not yet become fully market-based.

“Bangladesh Bank still intervenes at times in determining the exchange rate. Even during dollar purchases through auctions, the central bank provides instructions.”

BB Deputy Governor Md Habibur Rahman, Executive Director Sarwar Hossain, Director of the Foreign Exchange Policy Department Md Bayezid Sarker, and other officials of the department were present at the meeting.

Bangladesh’s steel manufacturers yesterday urged the government not to raise electricity tariffs further, saying higher energy costs could deepen the sector’s crisis by triggering production cuts, financial losses and possible factory closures.

At a press briefing organised by the Bangladesh Steel Manufacturers Association (BSMA) at the Economic Reporters’ Forum in Dhaka, industry leaders said the sector was already under pressure from rising utility prices, weak demand, high borrowing costs and low utilisation of installed capacity.

“If electricity prices are increased again, production costs will rise sharply, and many factories may be forced to reduce output. Some could even face partial or complete shutdown,” said Mohammad Jahangir Alam, president of BSMA.

The association said industrial electricity tariffs have risen around 30 percent in recent years, while gas prices for some industries climbed nearly 300 percent, hurting the competitiveness of one of the country’s largest manufacturing sectors.

As part of the ongoing electricity tariff review, the Bangladesh Power Development Board submitted a proposal to the Bangladesh Energy Regulatory Commission seeking higher bulk electricity purchase rates.

BSMA said the proposed tariff hike comes at a time when steel makers are still dealing with the fallout from the Covid-19 pandemic, global supply chain disruptions, the Russia-Ukraine war, exchange rate volatility and geopolitical uncertainty in the Middle East.

The association also criticised demand charges, additional VAT and power factor penalties imposed on industrial consumers, saying those charges effectively act as indirect tariff increases.

According to BSMA, most large steel mills receive electricity through high-voltage connections ranging from 33kV to 230kV, where transmission and distribution losses remain low. Despite this, industries continue to bear additional charges.

It also questioned the power sector’s capacity payment system, claiming that more than Tk 50,000 crore is paid annually in capacity charges even as industries struggle with rising energy bills and inadequate gas supply.

BSMA urged the government to keep electricity prices unchanged for the steel sector, reduce demand charges and VAT, review power factor surcharges and introduce special tariff facilities for high-voltage industrial consumers.

Responding to reporters, BSMA President Jahangir Alam said many mills were operating at a loss amid sluggish construction demand, rising financing costs and increasing production expenses.

He said an additional Tk 2,000 in production costs per tonne would be difficult for the construction sector to absorb and could further slow real estate and infrastructure activities.

“Many factories were built with significantly higher production expectations, but now they are operating at only around 40 percent capacity,” he said.

BSMA Secretary General Suman Chowdhury said electricity accounts for nearly 30 percent of steel production costs, making the industry highly vulnerable to tariff hikes.

According to BSMA, annual steel demand in Bangladesh has fallen to around 40-50 lakh tonnes against the installed production capacity of nearly 1.2 crore tonnes.

Among others, Salam Group Chairman Md Rezaul Karim and BSMA Vice-President Sk Masadul Alam Masud, who is also managing director of Shahriar Steel Mills Ltd, addressed the briefing.

Bangladesh's private bank owners have urged the government to toughen laws to help recover huge default loans and heal the ills facing banks following "massive looting" during the past political regime
They placed the demand Tuesday at a meeting with Finance Minister Amir Khosru Mahmud Chowdhury at his secretariat office in the capital, ahead of a crucial budget coming soon.

Chairman of Bangladesh Association of Banks (BAB) Abdul Hai Sarker led the delegation of bank owners at the meeting, where a detailed discussion took place on banking situation.

"If the government toughens the laws, at least 60 per cent of bad loans can be recovered very easily," Mr Sarker told The Financial Express after the meeting, referring to their talks with the minister.

He says they demanded preparing a law on mandatory physical presence of the loan defaulters at the court dock instead of allowing them to be represented by a lawyer only.

"Many loan defaulters who fled abroad are avoiding repayment of loans, and at the same time, ensuring presence at court by a representative which leads to inordinate delay in loan recovery."

Also, the BAB demanded bringing an amendment regarding how many people of a family can be director of a bank company.

Mr Sarker says they requested the finance minister to take measures so that people's confidence in banking sector can be restored. He says the finance minister has assured the bank owners that the government will follow international best practices in the case of banking sector.

"Necessary measures will be taken to eliminate the irregularities," Mr Sarker quoted the minister as saying.

Earlier, a delegation of the Foreign Investors' Chamber of Commerce and Industry (FICCI), led by its president Rupali Haque Chowdhury, met the finance minister at his office discussing the upcoming national budget for FY 2026-27 and broader economic priorities under the new government.

During the meeting, the two sides exchanged views on the country's investment climate, current economic challenges, and measures needed to attract greater foreign direct investment (FDI).

The FICCI representatives emphasised the importance of a predictable and business-friendly policy environment, highlighting the need for a long-term budgetary roadmap that would enable investors to better anticipate tax structures and make informed investment decisions.

The chamber also stressed the importance of competitive tax policies, policy consistency, and transparency to strengthen investor confidence and enhance Bangladesh's competitiveness among peer economies.

Ms Chowdhury told The Financial Express that during the meeting, they also discussed the corporate tax rate as nominal corporate rates may seem low but the effective tax rate remains excessively high due to various non-deductible expenses and administrative hurdles.

She underscores the need for broadening the tax base rather than increasing pressure on existing taxpayers, a principle the minister reportedly acknowledged as a necessary direction for future budgetary policy.

Senior vice-president of the FICCI Deepal Abeywickrema and vice-president Mohammad Iqbal Chowdhury also attended the meeting, among other directors.

Government's highest economic-policy body Monday endorsed an ambitious Tk3.0-trillion annual development programme (ADP) for the upcoming fiscal year with nearly one-third of the money earmarked as block allocations.

Economists forewarn that such huge block allocations could create room for misuse of the public funds and undertaking "politically motivated" projects, but the finance minister says ADP structured on well-defined strategic parameter.

The ADP outlay for fiscal 2026-27 is 30.43-percent higher than the Tk 2.30-trillion original ADP outlay and 50-percent higher than the Tk 2.0 trillion revised one of the outgoing FY2026.

Of the new development-budget outlay, the government has kept aside Tk 973.04 billion as block allocations.

The National Economic Council (NEC) approved the massive ADP for the upcoming FY2026-27 taking implementation challenge after a massive blow in the current fiscal.

Till March this fiscal, the government agencies had executed only 35.57 per cent of the Tk 2.0- trillion RADP.

The NEC in a meeting held at the Planning Commission in Dhaka with NEC Chairperson and Prime Minister Tarique Rahman in the chair gave the seal of approval.City & Local Guides

Briefing reporters following the meeting, Finance and Planning Minister Amir Khosru Mahmud Chowdhury said out of the total Tk 3.0 trillion worth of ADP outlay, the government will finance Tk 1.90 trillion from its domestic resources, while the remaining Tk 1.10 trillion will be sourced through foreign loans and project grants.

"This ambitious development roadmap marks an approximate 50-percent increase from the revised ADP of the current fiscal year, signaling government's intent to ramp up public investment and enhance macroeconomic implementation capacity," he adds.

To a question, the Finance and Planning Minister said, "If we want to reap benefit of our continuous 'population dividend', we have no way but to enhance investment in the education and health sectors for human-capital development.

"Besides, we need more private investment from home and abroad which would be attracted through improving our infrastructure."

The minister explains that the ADP is structured around five key pillars derived from the country's proposed Five-Year Strategic Framework for Reform and Development

The framework transitions Bangladesh from an infrastructure-only model toward a balanced, inclusive framework, he adds.s

The five key pillars include state system reforms focusing on digitisation and the efficiency of law enforcement, inclusive socioeconomic development giving maximum precedence to education, healthcare, and social security.

Besides, Khosru says, economic restructuring, securing energy grids and investing in renewable energy, regional balanced development by improving logistics hubs and coastal infrastructure and socio-cultural cohesion with enhanced social harmony and cultural welfare have also been given focus in the newly formed ADP.

In a departure from traditional infrastructure-heavy development blueprints, the newly approved ADP prioritizes social protection, agricultural assistance, and human-resource development.

"This shift aligns closely with the government's electoral promises to insulate low-income households from inflationary pressures."

To facilitate new social protection schemes and welfare initiatives, the government allocated a record Tk 170 billion for the social safety-net programmes, including "Family Card", "Farmer Card", and "honorarium" to the religious leaders within the development framework.

In the new ADP, the government allocated Tk 1.789 trillion for investment and study projects, Tk 27.96 billion for technical-assistance projects, Tk 39.85 billion for "development fund", Tk 592.76 billion block allocations for different ministries and divisions, Tk 380.274 billion block allocations for Programming Division of the Planning Commission and Tk 170 billion for the social safety-net programmes.

The total number of projects in the upcoming ADP is 1,150 wherein 983 are investment projects, 23 for feasibility study, 109 TA and 45 self-funding.

Former World Bank Lead Economist in Dhaka office Dr Zahid Hussain says since the ministries could apply discretionary powers for getting the funds from the massive block allocations, it could create a room for misuse of the public funds and taking "politically motivated" projects.

"In another way, since the funds are not specified yet for any specific projects, the government could be able to cut the ADP size at the end of the fiscal if agencies fail to implement those fully or if the revenue generation becomes low like in the previous years," he told the FE.

The NEC also approved a Tk 89.248 billion worth of development budget for the autonomous and semi-autonomous government bodies.
Planning Commission officials say those funds will ensure flexible financing for flagship initiatives, such as the expanded "Family Card" and "Farmer Card" programmes, alongside targeted social-development assistance.

While social-safety initiatives heavily influence the budgetary philosophy, the transport and communications sector retains the highest traditional sectoral funding at Tk 500.92 billion or 16.7 per cent of the total ADP.

The education sector follows closely with Tk 475.91 billion, while healthcare is set to receive Tk 355.35 billion and the power and energy sector has been allocated Tk 326.91 billion.

Among ministries and divisions, Local Government Division has been accorded the largest individual share, totalling Tk 337.35 billion.

Addressing longstanding implementation challenges, the NEC has directed all ministries and divisions to strictly prioritize projects that are scheduled to be completed by June 2027.

The Planning Ministry emphasizes that stricter oversight mechanisms and new criteria for appointing project directors will be deployed to optimize fiscal discipline and curb discretionary spending during the upcoming fiscal year.

The Indian rupee fell to an all-time low on Monday, as stubbornly high energy prices due to the Iran war sent global bond yields soaring, denting risk appetite and deepening economic headwinds confronting the world's third-largest crude importer.

The rupee fell nearly 0.3% to 96.2275 per dollar, eclipsing its previous all-time low of 96.1350. Asia's worst-performing currency of 2026 has fallen to record lows for five straight sessions.

Traders said the losses would have been steeper if not for likely dollar-selling intervention by the Reserve Bank of India.

In addition to market interventions, Indian policymakers have deployed rare regulatory curbs to support the rupee including, most recently, restrictions on most silver imports.

The currency has declined 5.5% since the Iran war began.

"With chances of oil staying higher for longer, we revise our forecast for further INR weakness to 96/USD by mid-2026 and 98/USD by end-2026," analysts at BofA Global Research said in a note.

"Growth risks dampen prospects for any reversal in equity inflows while low carry, high hedging costs, concerns around wider fiscal deficit and rate-hikes would reduce scope for debt flows."

Overseas investors have net sold over $23.5 billion of local stocks and bonds since March.

Regional stocks slumped and bonds from Tokyo to New York extended losses as rising energy prices from the ongoing Middle East war fanned inflation fears.

Efforts to end the Iran war appeared to have stalled following a drone strike at a nuclear power plant in the United Arab Emirates.

The pressure reflected on Indian assets as well, with the 10-year bond yield up 6 basis points to 7.12% while the benchmark equity index Nifty 50 slumped over 1%.

India has been buying Russian ​oil irrespective of US ‌sanctions waivers, Sujata Sharma, a joint secretary in the petroleum ​ministry, said on ​Monday.

“Regarding (the) American waiver on Russia, I would like to ​emphasise that we have ​been purchasing from Russia earlier ... I mean before waiver also, during ​waiver also, and ​now also,” she told a media ‌briefing.

“It is basically the commercial sense which should be there for us to purchase ... ​There ​is no shortage of crude. Enough crude has ​been tied up ​repeatedly ... and this, whatever waiver or no waiver, it will not ​affect,” she ​said.

Policy uncertainty remains one of the key barriers hindering both local and foreign direct investment, which are essential for economic growth and job creation in Bangladesh.

“The number one reason over the past few years has been policy uncertainty,” said Dhruv Sharma while delivering the keynote presentation titled ‘Bangladesh Development Update: Special Focus – A Business Environment that Delivers Jobs’.

“One cannot make a long-term decision about what to do with his or her firm without knowing the direction of policy,” he said, adding that the national election held last February had removed political uncertainty, which he described as another major barrier to attracting investment.

He noted that the high cost of capital, distorted tax incentives, lack of transparency, and supply chain and infrastructure challenges — including access to power, electricity and water — were among the other major obstacles.

Sharma said the government would release its five-year strategic framework soon, while the national budget is expected within the next couple of weeks.Bangladesh economic report

“So hopefully there will be some level of specificity regarding the direction in which the government wants to proceed,” he added while presenting the report at a dissemination event organised by the Policy Research Institute and the World Bank at PRI’s conference room in the capital.

The event was chaired by PRI Chairman Zaidi Sattar. Among others, Fahmida Khatun, Executive Director of the Centre for Policy Dialogue (CPD), TIM Nurul Kabir, Executive Director of the Foreign Investors' Chamber of Commerce and Industry (FICCI), and PRI Principal Economist Ashikur Rahman also spoke.

Describing fiscal and taxation policies as “unpredictable”, Mr Kabir said foreign investors wanted to see predictable long-term policies extending at least 10 years ahead to plan their business operations.

“When investors see a new policy being changed within two years, they lose confidence,” he said, explaining one of the key reasons behind the country’s low level of foreign direct investment.

Citing an example of declining investor confidence, he said foreign investors at headquarters often question why they should invest if the country itself does not fully understand its own growth potential.
According to the World Bank findings, key constraints to creating a business environment that delivers jobs include a heavy regulatory burden, with senior managers spending around 13 per cent of their time complying with regulations.

The report suggested smart deregulation, creating a level playing field, enabling private capital, and enhancing productivity for SMEs and informal firms as the way forward.

Bangladesh Bank (BB) has directed all banks to keep their branches and sub-branches open on May 23 and 24 ahead of Eid-ul-Azha to facilitate financial transactions and salary payments for garment workers.

The central bank issued a circular in this regard, stating that all bank branches across the country will remain open during regular banking hours on the upcoming Saturday and Sunday.

Banks, however, will remain closed from May 25 to May 31 for the Eid holidays.

The directive follows a government notification regarding the upcoming Eid-ul-Azha holidays.

To ensure smooth payment of wages, bonuses, and other allowances for workers in the garment sector, BB instructed commercial bank branches in Dhaka, Ashulia, Tongi, Gazipur, Savar, Bhaluka, Narayanganj, and Chattogram to continue limited banking operations on May 25 and 26.

According to the circular, these branches will operate from 10am to 3pm, while customer transactions will be allowed from 10am to 1pm.

The central bank also said bank branches, sub-branches, and booths located in seaport, land port, and airport areas must continue limited operations during the Eid holidays, except on Eid day itself, to support import and export activities.

Officials and employees assigned duty during the holidays will receive allowances in accordance with existing rules, the circular added.

Meanwhile, the National Board of Revenue (NBR) has also instructed all customs houses and stations to keep import and export operations running on a limited scale during the Eid holidays.

According to a separate circular issued yesterday, the directive will remain in effect during public and weekly holidays from May 25 to May 31, excluding the day of Eid.

The revenue authority has urged relevant officials to take necessary measures to ensure uninterrupted external trade during the festive period.

Government's highest economic-policy body Monday endorsed an ambitious Tk3.0-trillion annual development programme (ADP) for the upcoming fiscal year with nearly one-third of the money earmarked as block allocations.

Economists forewarn that such huge block allocations could create room for misuse of the public funds and undertaking "politically motivated" projects, but the finance minister says ADP structured on well-defined strategic parameter.

The ADP outlay for fiscal 2026-27 is 30.43-percent higher than the Tk 2.30-trillion original ADP outlay and 50-percent higher than the Tk 2.0 trillion revised one of the outgoing FY2026.

Of the new development-budget outlay, the government has kept aside Tk 973.04 billion as block allocations.

The National Economic Council (NEC) approved the massive ADP for the upcoming FY2026-27 taking implementation challenge after a massive blow in the current fiscal.

Till March this fiscal, the government agencies had executed only 35.57 per cent of the Tk 2.0- trillion RADP.

The NEC in a meeting held at the Planning Commission in Dhaka with NEC Chairperson and Prime Minister Tarique Rahman in the chair gave the seal of approval.Maps

Briefing reporters following the meeting, Finance and Planning Minister Amir Khosru Mahmud Chowdhury said out of the total Tk 3.0 trillion worth of ADP outlay, the government will finance Tk 1.90 trillion from its domestic resources, while the remaining Tk 1.10 trillion will be sourced through foreign loans and project grants.

"This ambitious development roadmap marks an approximate 50-percent increase from the revised ADP of the current fiscal year, signaling government's intent to ramp up public investment and enhance macroeconomic implementation capacity," he adds.

To a question, the Finance and Planning Minister said, "If we want to reap benefit of our continuous 'population dividend', we have no way but to enhance investment in the education and health sectors for human-capital development.

"Besides, we need more private investment from home and abroad which would be attracted through improving our infrastructure."

The minister explains that the ADP is structured around five key pillars derived from the country's proposed Five-Year Strategic Framework for Reform and Development

The framework transitions Bangladesh from an infrastructure-only model toward a balanced, inclusive framework, he adds.

The five key pillars include state system reforms focusing on digitisation and the efficiency of law enforcement, inclusive socioeconomic development giving maximum precedence to education, healthcare, and social security.

Besides, Khosru says, economic restructuring, securing energy grids and investing in renewable energy, regional balanced development by improving logistics hubs and coastal infrastructure and socio-cultural cohesion with enhanced social harmony and cultural welfare have also been given focus in the newly formed ADP.

In a departure from traditional infrastructure-heavy development blueprints, the newly approved ADP prioritizes social protection, agricultural assistance, and human-resource development.Personal finance tools

"This shift aligns closely with the government's electoral promises to insulate low-income households from inflationary pressures."

To facilitate new social protection schemes and welfare initiatives, the government allocated a record Tk 170 billion for the social safety-net programmes, including "Family Card", "Farmer Card", and "honorarium" to the religious leaders within the development framework.

In the new ADP, the government allocated Tk 1.789 trillion for investment and study projects, Tk 27.96 billion for technical-assistance projects, Tk 39.85 billion for "development fund", Tk 592.76 billion block allocations for different ministries and divisions, Tk 380.274 billion block allocations for Programming Division of the Planning Commission and Tk 170 billion for the social safety-net programmes.

The total number of projects in the upcoming ADP is 1,150 wherein 983 are investment projects, 23 for feasibility study, 109 TA and 45 self-funding.

Former World Bank Lead Economist in Dhaka office Dr Zahid Hussain says since the ministries could apply discretionary powers for getting the funds from the massive block allocations, it could create a room for misuse of the public funds and taking "politically motivated" projects.

"In another way, since the funds are not specified yet for any specific projects, the government could be able to cut the ADP size at the end of the fiscal if agencies fail to implement those fully or if the revenue generation becomes low like in the previous years," he told the FE.

The NEC also approved a Tk 89.248 billion worth of development budget for the autonomous and semi-autonomous government bodies.

Planning Commission officials say those funds will ensure flexible financing for flagship initiatives, such as the expanded "Family Card" and "Farmer Card" programmes, alongside targeted social-development assistance.

While social-safety initiatives heavily influence the budgetary philosophy, the transport and communications sector retains the highest traditional sectoral funding at Tk 500.92 billion or 16.7 per cent of the total ADP.

The education sector follows closely with Tk 475.91 billion, while healthcare is set to receive Tk 355.35 billion and the power and energy sector has been allocated Tk 326.91 billion.Bangladesh trade analysis

Among ministries and divisions, Local Government Division has been accorded the largest individual share, totalling Tk 337.35 billion.

Addressing longstanding implementation challenges, the NEC has directed all ministries and divisions to strictly prioritize projects that are scheduled to be completed by June 2027.

The Planning Ministry emphasizes that stricter oversight mechanisms and new criteria for appointing project directors will be deployed to optimize fiscal discipline and curb discretionary spending during the upcoming fiscal year.

The US dollar-dominated global oil trading system is being tested by the Iran war and the closure of the Strait of Hormuz, as governments in major consuming nations turn to increasingly opaque deals with Tehran and Gulf producers to secure supplies.

Since the outbreak of the war on February 28, roughly a fifth of global oil supplies from the Gulf ​have been disrupted, dealing a tough blow to economies, particularly in Asia, which depends on the Middle East for about 60 percent of its imports.

With the Hormuz blockade now in its 13th week, ‌there are growing signs that major Asian importers are adapting to the new reality by striking direct arrangements with Gulf producers, often with Tehran’s consent, to allow vital flows of crude, chemicals and fertilizer through the Strait.

In recent days, several oil tankers have crossed Hormuz, frequently sailing with their tracking systems switched off to avoid detection, following direct contacts between leaders in the purchasing countries and Iran.

Last week, a Panama-flagged tanker carrying 2 million barrels of Kuwaiti and Emirati crude passed through the Strait en route to Japan following discussions between ​Prime Minister Sanae Takaichi and Iranian President Masoud Pezeshkian. Iran has also struck arrangements with China, Iraq and Pakistan to move oil and liquefied natural gas out of the Gulf.

The precise structure of these bilateral and ​trilateral deals remains largely opaque. But it is highly likely that many are being settled outside the traditional oil trading system, either through currencies other than the US dollar or through informal barter arrangements.

Regardless of whether these trades include explicit transit fees to Tehran - something Tokyo has denied - the pattern reinforces Iran’s de facto control over traffic through the critical waterway.

Iran seeks to enshrine ​this influence in any future settlement with Washington, a demand President Donald Trump has firmly rejected.

However the standoff is ultimately resolved, the current disruption is likely to leave a lasting imprint on oil trade patterns.

PERMANENT RISK

Crossing Hormuz is now likely ​to carry a persistent geopolitical risk premium. That will embed higher costs into Middle East crude, forcing importers to rethink supply security.

In turn, that may encourage more direct, government-backed deals with regional producers to clinch supplies, create pricing mechanisms that insulate buyers from volatility and help secure transit through Hormuz.

Signs of that shift are already emerging. Indian Prime Minister Narendra Modi visited the United Arab Emirates on Friday to discuss long-term supply agreements and expand strategic storage. The timing of the trip – in the middle of a regional war – ​underscores the urgency of New Delhi’s situation and may signal a broader turn toward bilateral energy diplomacy across Asia.

“In the current circumstances, there is every reason to expect China, India, Japan, South Korea, and other import-dependent countries ​to extend the network of bilateral relationships they already have with Gulf states - including a post-war regime in Iran - and with other oil and gas exporters around the world,” consultancy Dragoman said in a note on Friday.

PETRODOLLAR UNDER THREAT

These evolving trade ‌patterns add to the slow erosion of the dollar’s dominance in global oil trade.

Modi’s talks in Abu Dhabi followed a 2023 agreement between India and the UAE to settle bilateral trade in rupees and dirhams rather than dollars, part of a broader push by emerging economies to diversify their payment systems.

Today’s oil trading architecture was designed in the 1970s and 1980s to avoid such fragmentation. The creation of crude futures markets in New York and London brought transparency and liquidity to a system previously dominated by producer-set prices.

Crucially, it also entrenched the US dollar as the system’s core currency.

The dominance of the “petrodollar” gave Washington unparalleled leverage over global finance, enabling it to impose sanctions that effectively exclude countries, companies and ​individuals from the international trading system.

Over recent decades, the US has dramatically ​expanded the use of sanctions, targeting countries such as Iran, Venezuela, Russia and China in pursuit of geopolitical and economic objectives. Those measures drove the development of a vast oil trading network that bypassed the dollar and Western shipping.

The risk of falling foul of US sanctions prompted major emerging economies to explore alternative trading mechanisms. So far, those efforts have had only limited success: even today, just 10 percent ​to 20 percent of global oil trade is estimated to occur in non-dollar currencies.

But the shock of the Iran war and the partial shutdown of one of ​the world’s most important energy arteries, which has forced buyers to rethink their energy security strategies, could accelerate that shift.

With Asia accounting for over a third of global oil consumption and more than half of global imports, any move toward bilateral, state-driven trading relationships in this region would push the market toward a much more fragmented global energy trading system.

To be sure, the Middle East supply disruption has also reinforced the US as the world’s premier oil and gas producer, and Washington is likely to remain dominant in the global economy for decades to come. No single currency ​is expected to take the dollar’s place.

But the fallout from the Iran war could nevertheless lead to the fragmentation of oil pricing, ​reducing transparency and weakening Washington’s grip over the financial architecture that has underpinned the global oil trade for decades.

The National Board of Revenue (NBR) has missed its revenue collection target by nearly Tk104,000 crore in the first 10 months of the 2025-26 fiscal year, amid sluggish growth in tax receipts and an ambitious government target.

The shortfall is the highest on record, according to NBR officials familiar with the matter.

Experts say that although revenue collection may pick up in the final two months of the fiscal year, the government is still likely to face an overall shortfall of at least Tk1 lakh crore.

An NBR official, speaking on condition of anonymity, told The Business Standard that revenue collection in April grew by only 6.71% compared with the same month last year, well below the average monthly growth rate of around 14% recorded in previous years.

Bangladesh's economic growth set to slow to 3.9% as inflation, banking risks, investment crisis deepen
Although revenue growth remained relatively strong in the early part of the fiscal year, collection momentum weakened later, affecting the overall performance during the July-April period.

According to preliminary NBR estimates, revenue collection in the first 10 months of the fiscal year rose by 10.60% year-on-year.

Towfiqul Islam Khan, additional research director at the Centre for Policy Dialogue, told The Business Standard, "During the previous government's tenure, revenue targets were set beyond the economy's actual capacity. Combined with the current economic slowdown, this has created a major gap in revenue collection."

He said a large share of government revenue is linked to implementation of the Annual Development Programme (ADP), and slower project execution during the current fiscal year had reduced VAT and other tax collections tied to development spending.

"That is one of the reasons behind the slowdown in revenue growth," he said.

Towfiqul added that higher fuel prices and a possible rise in revenue collection during the final two months of the fiscal year could help narrow the gap slightly.

"Even then, the revenue shortfall at the end of the fiscal year could still exceed Tk100,000 crore," he said.

VAT collection falls

NBR officials said that in April, import tax and income tax collection grew by 18% and 14.66% respectively compared with the same period last year. However, VAT collection declined by 3%.

According to officials, around 55% of VAT collected by the NBR comes from ADP-related activities and public sector institutions, including electricity and gas utilities.

Syed Mushfequr Rahman, a member of the VAT implementation wing at the NBR, told TBS, "ADP implementation has slowed, which is why VAT collection is also declining."

"The information we are receiving from the field level suggests that VAT receipts from public institutions are lower than expected. We will have a clearer picture once we get the full data on which other sectors are contributing less," he added.

Challenge next fiscal

The government is preparing to set a combined revenue collection target of Tk695,000 crore from NBR and non-NBR sources in the next fiscal year.

According to CPD estimates, based on projected revenue collection in the current fiscal year, the implied growth target for next year would be around 42%.

Towfiqul described the target as unrealistic. "The highest revenue growth in Bangladesh's history was 27% in fiscal year 2007-08. The likelihood of achieving the projected growth target next fiscal year is very low," he said.

"As a result, a large revenue shortfall is likely to persist in the next fiscal year as well."