Bangladesh relies on indirect taxes far more heavily than its regional peers, raising fresh questions about the fairness of the country’s tax structure and its impact on ordinary citizens, according to a study presented yesterday.

The data, which measures indirect tax dependence as a percentage of total revenue, places Bangladesh at the top of the regional ranking. When VAT, customs duties and supplementary duties are combined, Bangladesh’s indirect tax share reaches 78.2 percent -- a staggering 28 percentage points above the regional average.

Even when calculated using VAT and customs alone, Bangladesh still stands at 65.8 percent, nearly 17 percentage points higher than India’s 48 percent.

Snehasish Barua, managing director of SMAC Advisory Services Limited, presented the comparative study at a roundtable discussion held yesterday in Dhaka on the over-reliance on indirect taxes and their multidimensional impacts on the economy. The event was organised by Voice for Reform, a citizens’ platform in Bangladesh.

By contrast, the Asia-Pacific average sits at just 40.2 percent, according to OECD 2025 data. Vietnam records 60 percent, Pakistan 58.6 percent, and Sri Lanka 64.8 percent -- all below Bangladesh’s figure.

India, often seen as a comparable developing economy, trails Bangladesh significantly, with direct taxes accounting for a far larger share of its revenue base. India’s direct tax share stands at 45 percent, while Bangladesh manages only 21 to 35 percent.

M Masrur Reaz, chairman of Policy Exchange of Bangladesh, said the country’s revenue system is overly dependent on indirect taxation, making it a major structural weakness.

He said indirect taxes are easier to collect but discourage efforts to expand the direct tax base. “As long as this dependence continues, the system will remain regressive, and inequality will persist,” he said.

Reaz added that low tax compliance is driven not only by cultural factors but also by fear of harassment and administrative burdens.

He warned that reliance on customs duties is unsustainable as Bangladesh graduates from least developed country status, noting tariffs still account for 27 to 28 percent of revenue.

“If we had gradually shifted toward direct taxation, we could have used fiscal policy more effectively to address inflationary pressures and rising inequality,” he said.

He said that in the current challenging context, spending Tk 35,000 crore on a new government pay scale would be the wrong decision.

Imran Hassan, secretary general of the Bangladesh Restaurant Owners Association, said current tax assessment methods are ineffective and require full system integration. “All businesses must be brought under the VAT net,” he said, proposing that tax collection be integrated with VAT payments.

He alleged resistance from authorities, arguing that meaningful system reform would reduce opportunities for informal pressure on businesses.

Md Farid Uddin, former member of the National Board of Revenue, said the VAT rate should under no circumstances exceed 10 percent.

The tax reform task force formed during the interim government had also proposed a maximum VAT rate of 10 percent, though several of its other recommendations have since gone unaddressed, he noted.

Rushad Faridi, assistant professor of the Department of Economics at the University of Dhaka, warned that excessive reliance on indirect taxation creates instability in budget execution, as revenues become highly dependent on consumption and overall economic conditions.

“If the economy slows down, fiscal pressure builds up immediately, forcing cuts in essential spending or increased borrowing,” he said, adding that direct taxation provides a more stable fiscal framework.

He also said indirect taxes create a “fiscal illusion,” where people do not fully realise their tax burden, reducing public pressure for government accountability.

Prof M Abu Eusuf, executive director of RAPID, said Bangladesh’s main challenge is not a lack of reform ideas but weak enforcement.

“We all know the problems and solutions. Reform strategies already exist, but without enforcement and a strong commitment, nothing will change,” he said.

Faisal Mahmud, managing editor of The Daily Waadaa, said India’s experience with Goods and Services Tax (GST) and the Unified Payments Interface (UPI) shows how a digitalised economy can strengthen tax administration and expand formalisation.

He urged policymakers to study India’s GST system more closely, saying it offers important lessons for improving Bangladesh’s tax and revenue framework.

AKM Fahim Mashroor, Co-coordinator of Voice for Reform, who moderated the event, proposed setting the standard VAT rate at 7.5 percent while introducing a rate exceeding 25 percent on luxury goods.

Among others, Saeed Ahmed Khan, former head of tax at Unilever Bangladesh, Abdur Rauf, founding president of the VAT Forum, and Doulot Akter Mala, president of the Economic Reporters Forum, also spoke at the event.

The upcoming FY27 budget will be a “litmus test” for the newly elected government, experts warned yesterday, as it faces mounting pressure to balance reforms, debt obligations and political promises within the tightest fiscal space in recent memory.

There is little room to manoeuvre for policymakers as they face weak revenue mobilisation, an underperforming ADP, rising debt costs and unaddressed corruption, they said at a pre-budget dialogue organised by Citizen’s Platform for SDGs at the Lakeshore Hotel in Dhaka.

Google News LinkFor all latest news, follow The Daily Star's Google News channel.
Towfiqul Islam Khan, additional director (research) of the Centre for Policy Dialogue (CPD), said while presenting the keynote paper that the budget would be shaped by a series of difficult trade-offs.

“The first budget of the newly elected government faces dual pressures of balancing economic stability and reforms while meeting political demands to deliver quickly and prove legitimacy, all within the tightest fiscal space in recent memory,” he said.

Public financial management faces challenges on multiple fronts, he said, including streamlining tax expenditures, protecting investment, advancing reforms, managing subsidies for the marginalised, and addressing the ADP (annual development programme) backlog.

Khan noted that the National Board of Revenue’s tax-to-GDP ratio fell to the lowest in years at 6.6 percent in FY25. The country “forgoes roughly as much as it collects” through exemptions and tax expenditures.

The government’s planned Tk 6.95 lakh crore revenue target for the upcoming fiscal year would require at least a 42 percent jump in collection compared to the current fiscal year, according to Khan. The FY26 shortfall alone is expected to reach Tk 1 lakh crore.

“A Plan B will be required if revenue mobilisation does not keep pace,” he said, raising the question of where the government would cut if the gap proved too wide.

Mustafizur Rahman, CPD distinguished fellow, said a major component of the “litmus test” is whether the government can ensure redistribution of resources through the budget.

According to him, the core issue was not revenue volume but reducing the gap between what taxpayers pay and what the government actually receives.

“That gap is corruption,” he said. “If we can bring this to zero, many of our other tasks will become much easier.”

The CPD fellow also warned of a deepening debt risk. Bangladesh’s borrowing is becoming increasingly non-concessional, yet the entire development programme still depends on loans.

“Interest and principal repayments are increasing gradually. This is creating a huge risk,” he said.

Debapriya Bhattacharya, noted economist and a distinguished fellow at CPD, criticised the government for not producing “a documented assessment of the economy” it inherited.

He said, “This government is focusing more on the outward aspects of political commitments such as Family Card, Farmers Card, canal excavation, and so on.

“But the core issue of the economy is maintaining macroeconomic stability, the biggest expression of which is controlling inflation, reducing interest rates and at the same time keeping the exchange rate stable.”

These issues, which are directly linked to people’s livelihoods, are not receiving sufficient attention, he said.

Debapriya said they suggested the government adopt a policy of “tough love” by preparing a budget that is consistent with reality.

Instead, he warned, the government is repeating the pattern of its predecessors and is risking passing a conventional budget similar to that of the interim government.

“You are increasing the ADP by another 20 percent even though 40 to 50 percent of the previous ADP could not be implemented. At the same time, you did not clean up the mess within those 1,500 projects,” he said. “You are simply reproducing the old situation in a new form.”

AK Enamul Haque, director general of Bangladesh Institute of Development Studies, said a portion of every budget usually remains unimplemented, and therefore, the efficiency level must be improved. He also stressed reducing land dependency in development projects.

“One reason many government projects are delayed is the huge amount of land demanded for project implementation. In a land-scarce country like ours, the land dependency of projects must be reduced,” he said.

Sharmind Neelormi, a professor of economics at Jahangirnagar University, suggested introducing a programme to ease tax-related fears among the nearly 82 percent of TIN holders who currently do not pay taxes.

She proposed engaging students from public and private universities in awareness programmes in exchange for an honorarium so that they could help TIN holders.

She also suggested allowing people with incomes below a certain threshold to submit “zero returns” for three years in order to build the habit of filing tax returns.

Mahmuda Habiba, a lawmaker from the Bangladesh Nationalist Party for a reserved women’s seat in the 13th National Parliament, said this year’s budget is “more of a crisis-management and stabilisation budget.”

Zahid Hossain, minister for women and children affairs and social welfare, said the government is focusing on making the country humanitarian and inclusive.

“But it may not happen overnight,” he said, urging all to work together.

The new BNP-led government has decided to spend Tk 3.09 lakh crore on development programmes in FY2026-27, the largest single-year increase in eight years, signalling a sharp break from the austerity-driven approach of the interim administration.

The allocation for the Annual Development Programme (ADP) is up 30 percent from the current year, which Finance and Planning Minister Amir Khosru Mahmud Chowdhury said reflects a five-year strategic framework for reform and development.

The minister acknowledged the massive expansion, but said the government is betting that political legitimacy and stronger institutional capacity will improve delivery.

“We have assumed that the elected government will have greater capability and implementation efficiency,” he said after the National Economic Council approved the plan yesterday, chaired by Prime Minister Tarique Rahman.

Bangladesh spent only 36.16 percent of its ADP in the July–March period of FY26, the lowest five-year rate both in percentage and absolute terms, even after the outgoing interim government slashed the plan by 14 percent, the steepest cut in recent memory, to contain inflation and shore up weak revenues.

According to the planning ministry, of the total allocation for FY27, government financing would be Tk 1.99 lakh crore, while the rest is expected to come from project loans and grants.

TRANSPORT, EDUCATION, HEALTH LEAD

The new government is eyeing the most development in the transport and communication sectors, which has been given 16.7 percent of the total ADP fund.

Education has also been given high priority. The sector will get 15.86 percent of the total development fund, while the health sector’s allocation stands at 11.84 percent.

Allocation and implementation of the ADP in the two major sectors remained almost stagnant at low levels in recent years. The new development spending plan for the education and health sectors is nearly double the original budget allocation for FY26.

The allocation falls in line with the government’s pledges. It has set a goal of gradually raising public healthcare spending to five percent of the gross domestic product (GDP) – the total value of all final goods and services produced within a country. It also announced plans to implement massive reforms in the education sector.

The Planning Commission said preferential allocations have been provided to the education, health and agriculture sectors to support discrimination-free socio-economic development.

“Special importance has been given to expanding quality and technology-based education, building skilled human resources, ensuring modern healthcare, empowering women, expanding social security, and promoting agricultural and environment-friendly development,” said the commission in a summary presented at the meeting.

“Simultaneously, initiatives have been undertaken to tackle the Fourth Industrial Revolution, advance technology-based industrialisation and ensure sustainable development,” it added.

The energy and power sector got the fourth-highest allocation of 10.9 percent of the total ADP. Bangladesh is facing growing pressure of energy bills, recently further compounded by additional costs during fuel supply disruptions caused by the US-Israeli war on Iran. The government also announced plans to push towards renewables.

Another major allocation goes to social development assistance, under which the government has started providing Family Cards, Farmers Cards and allowances for mosque imams and other religious leaders.

In line with that plan, the government expects to spend Tk 17,000 crore on social development assistance, with Family Cards alone accounting for Tk 14,500 crore. That programme was a central election pledge.

STRATEGIC FRAMING

The BNP-led government, which has come to power after 19 years, has taken up 1,277 new projects recommended by various ministries and departments. An additional 80 projects have been proposed under public-private partnership (PPP) arrangements and 148 under the Bangladesh Climate Change Trust Fund.

The plan has been made in line with the ruling party’s election manifesto and its five pillars: social development, economic restructuring, and balanced regional development among them.

“The context is very clear — a journey towards prosperity from a fragile economy. We are moving forward with strategies for recovery, transition and reconstruction,” Khosru said.

He said it reflects a “new perspective” in Bangladesh’s development planning.

“It is not only about infrastructural development; rather, it is an integrated outline for state reform, building a discrimination-free society, a sustainable economy and establishing regional balance,” said the minister.

THE IMPLEMENTATION QUESTION

The government’s ambitions, however, face a credibility problem as the gap between announced and actual spending has become a structural feature of Bangladesh’s development planning, not an aberration.

Debapriya Bhattacharya, convenor of Citizen’s Platform for SDGs, Bangladesh, raised that concern directly at a dialogue ahead of the NEC meeting.

Khosru acknowledged the record but framed ambition as a precondition for recovery.

“Without investment, growth, employment or development is not possible,” he said. “We want every project to ensure value for money. There must be returns on investment, and employment must be generated. We do not want jobless growth. Climate issues must also be taken into consideration.”

He also said in the past there were various questions, corruption allegations and concerns over inefficiency regarding the appointment of project directors. “From now on, there will be specific criteria for appointing PDs. Those who meet the criteria will be appointed.”

Bangladesh Bank has purchased nearly $6 billion from the foreign exchange market so far in the fiscal year 2025-26, reflecting continued efforts to manage liquidity and stabilise the exchange rate.

The central bank bought $100 million from six commercial banks yesterday at a cut-off rate of Tk 122.75 per dollar. Total purchases in the current fiscal year (July to May 18) stood at $5.98 billion, according to the latest data from the central bank.

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

War puts forex market under strain: BB

War puts forex market under strain: BB
Between FY21 and FY25, the BB sold more than $25 billion from its foreign exchange reserves to meet import payments for fuel, fertiliser and food.

However, it resumed purchasing dollars at the beginning of the current fiscal year as supply increased on the back of higher export earnings and remittance inflows.

Building foreign exchange reserves is another reason behind the central bank’s continued dollar-buying spree.

According to Bangladesh Bank calculations, gross foreign exchange reserves stood at $34.31 billion as of May 14 this year, up from $25.47 billion during the same period last year.

However, reserves reached $29.65 billion as per the IMF’s BPM6 methodology, up from $20.09 billion last year.

The interbank exchange rate was Tk 122.75 per US dollar today.

Economic experts criticised the central bank's move to buy dollars amid high inflation in Bangladesh, arguing that allowing the dollar rate to fall further could help contain inflation.

Bangladesh Bank has purchased nearly $6 billion from the foreign exchange market so far in the fiscal year 2025-26, reflecting continued efforts to manage liquidity and stabilise the exchange rate.

The central bank bought $100 million from six commercial banks yesterday at a cut-off rate of Tk 122.75 per dollar. Total purchases in the current fiscal year (July to May 18) stood at $5.98 billion, according to the latest data from the central bank.

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

Between FY21 and FY25, the BB sold more than $25 billion from its foreign exchange reserves to meet import payments for fuel, fertiliser and food.

However, it resumed purchasing dollars at the beginning of the current fiscal year as supply increased on the back of higher export earnings and remittance inflows.

Building foreign exchange reserves is another reason behind the central bank’s continued dollar-buying spree.

According to Bangladesh Bank calculations, gross foreign exchange reserves stood at $34.31 billion as of May 14 this year, up from $25.47 billion during the same period last year.

However, reserves reached $29.65 billion as per the IMF’s BPM6 methodology, up from $20.09 billion last year.

The interbank exchange rate was Tk 122.75 per US dollar yesterday.

Economic experts criticised the central bank’s move to buy dollars amid high inflation in Bangladesh, arguing that allowing the dollar rate to fall further could help contain inflation.

Bangladesh Bank today (18 May) purchased $100 million from six commercial banks through auctions.

The dollars were purchased at Tk122.75 per dollar, Bangladesh Bank Executive Director and Spokesperson Arief Hossain Khan confirmed.

With this latest purchase, the central bank has bought a total of $5.98 billion in the current fiscal year.

"In this month alone, the central bank purchased $310 million. It began dollar purchases through auctions in July of the current fiscal year," Arief added.

Following the settlement of import liabilities under the Asian Clearing Union (ACU), the country's foreign exchange reserves fell below $30 billion this month, prompting the central bank to purchase dollars both before and after ACU payments.

ACU payments are settled every two months to clear import bills among member countries.

In addition to Bangladesh, the regional mechanism includes India, Bhutan, Iran, Maldives, Myanmar, Nepal, Pakistan, and Sri Lanka. Central banks of these countries conduct transactions through this multilateral system.

According to BB officials, the central bank primarily boosts foreign exchange reserves through dollar purchases, with its latest data released on 14 May showing reserves at $29.65 billion.

Bangladesh Bank has been purchasing dollars amid strong remittance inflows into the banking system. In April, remittances reached $3.12 billion, up 13.5% year-on-year, with inflows expected to remain strong ahead of Eid-ul-Adha this month.

Bangladesh Bank (BB) has purchased $100 million from six commercial banks, marking the highest single-day greenback purchase by the central bank in May.

The dollars were bought at a rate of Tk 122.75 each on Monday, according to data released by the regulatory body.

Earlier, the highest single-day dollar purchase this calendar year was recorded on Jan 6, when the central bank bought $223.5 million at a rate of Tk 122.30 per dollar.

Within the current 2025-26 fiscal year, the highest single-day purchase took place on Sept 15 last year, when the central bank snapped up $353 million from the market at Tk 121.75 per dollar.

BB Executive Director Arief Hossain Khan told bdnews24.com: "With Monday’s transaction, the central bank has purchased a total of $310 million from commercial banks so far in May."

Before Monday's large-scale intervention, the regulatory body had last purchased $40 million from the market on Thursday.

According to BB data, the regulator has injected significant local currency into the banking system by purchasing a cumulative total of $5.98 billion from the market so far in the current fiscal year.

The Dhaka Stock Exchange has announced an updated schedule for its office and trading operations in line with the government-declared Eid-ul-Adha holiday period.

According to the announcement, the DSE will continue its regular office and trading activities on Saturday, 23 May and Sunday, 24 May following normal trading hours.

The exchange will then remain closed from 25 to 31 May due to the official Eid-ul-Adha holidays.

Normal trading and office operations will resume on 1 June.

Most Asian shares were lower in morning trade today (18 May), extending slides in global markets, as the impasse in the Middle East drove oil prices more than 2% higher.

Washington and Tehran agreed to a truce in April, but negotiations on ending the conflict have stalled and sporadic attacks in the region have continued.

US President Donald Trump issued a fresh warning to Iran yesterday, saying it had to move quickly towards a peace deal or "there won't be anything left of them".

The war has led to an effective blockade of the Strait of Hormuz, through which around 20% of global oil exports pass in peacetime.

The strait "remains meaningfully closed -- now approaching eleven weeks -- after the Trump-Xi summit in Beijing concluded without a breakthrough on reopening the waterway", MUFG's Michael Wan said today.

Tokyo shares lost 1% and Hong Kong was down 1.4%, while Shanghai was flat.

Sydney, Bangkok, Taipei, Singapore and Wellington also fell, with Jakarta tumbling 2.7%.

Seoul, which has renewed record highs in recent days thanks to the artificial intelligence stock boom, was trading up 1.2%.

"Global government yields rose sharply heading into the start of this week, as three forces collided: surging oil prices, fading hopes for a Strait of Hormuz resolution, and mounting fiscal concerns especially in the UK and US," Wan said.

However, last week's talks on trade between China and the United States have offered "a degree of relief for Asian markets", he added.

'Wave' of AI demand

Data showed today that China's consumer spending in April grew at the slowest pace in more than three years -- a stark sign of the challenges Beijing faces to reignite domestic activity.

In Tokyo, shares in memory chip maker Kioxia were not yet trading after a reported rush of buy orders following stellar quarterly results on Friday.

Kioxia, the world's third-largest producer of NAND flash memory chips -- used as storage in AI data centres -- has seen its stock soar nearly 300% over the past year.

The firm has forecast an eye-watering 1.3 trillion yen ($8.2 billion) in operating profit for April-June, saying it is "riding the large wave of AI demand, which has led to record high revenue and profits".

In South Korea, Samsung Electronics -- which has also profited massively from the AI memory chip boom -- resumed union talks in a bid to avoid a strike over bonus payments, due to start Thursday.

Later Monday, traders will have their eye on a meeting of G7 finance ministers and central bank chiefs that kicks off in Paris, with bond selloffs in the spotlight, analysts said.

Then all eyes will be on quarterly results from US chip titan Nvidia, set for Wednesday, which will be scrutinised as tech investors question whether huge spending on AI data centres is justified by potential returns.

The Dhaka Stock Exchange (DSE) and BRAC EPL Investments today (18 May) signed an agreement to facilitate subscription of the Sajida Orange Zero-Coupon Bond to mobilise capital specifically for women-focused economic empowerment and gender-inclusive development through the bourse's Electronic Subscription System (ESS).

The subscription process began on 18 May and will continue until 23 May, allowing eligible investors to participate through the DSE platform.

The bond, issued by development organisation Sajida Foundation, received approval from the Bangladesh Securities and Exchange Commission in March this year to raise Tk158.5 crore through private placement.

Designed as a social impact financing instrument, the zero-coupon bond aims to fund women-focused economic empowerment initiatives and expand access to inclusive financing.

According to the DSE, Tk75.73 crore of the total bond value has been allocated for eligible investors through the subscription process.

Speaking at the signing ceremony held at the DSE headquarters, Managing Director Nuzhat Anwar said innovative and inclusive financing structures are essential for leveraging Bangladesh's demographic dividend.

She said thematic instruments such as orange bonds are opening new avenues for alternative financing in the capital market.

BRAC EPL Investments Chief Executive Officer Syed Rashed Hossain said the Sajida Orange Bond is laying the groundwork for an internationally aligned thematic bond market in Bangladesh.

He said the initiative would help create a strong impact investment platform capable of attracting both local and foreign investors by combining financial returns with measurable social impact.

He also expressed hope that the successful launch of the bond through the DSE platform would encourage more thematic bond issuances in the future.

Deputy CEO of Sajida Foundation Md Fazlul Hoque, described the Orange Zero-Coupon Bond as a significant initiative for women's empowerment.

He said Sajida Foundation has been working for over 30 years to support women through employment generation, income enhancement and financial inclusion programmes.

Under the allocation plan, around 32% of the raised funds will be used for SME financing and employment generation, 20% for housing-related initiatives, and nearly 40% for agriculture and food security projects.

The remaining funds will support microfinance operations, programme implementation and technology-driven financial inclusion initiatives.

Senior officials from DSE, Sajida Foundation and BRAC EPL Investments were present at the signing ceremony.

The Bangladesh Energy Regulatory Commission (BERC) has increased the consumer-level price of furnace oil by Tk18.85 per litre, setting the new rate at Tk113.54 per litre.

The revised price will come into effect from tonight (18 May) and remain effective until further notice, according to a notification issued by the regulator.

The new rate will apply to furnace oil supplied by the Bangladesh Petroleum Corporation (BPC) to the Bangladesh Power Development Board (BPDB), public and private power plants, industrial units, and other consumers.

In the notification, the BERC said the latest adjustment was made under Sections 22(kha) and 34 of the Bangladesh Energy Regulatory Commission Act, 2003.

The regulator stated that the revised price was determined based on the average Platts rate of refined furnace oil published during May and the free-on-board (FOB) price of imported crude oil.

The BERC, in its notification, also said the upward price adjustment was made following provisions of its February directive that allows furnace oil prices to be revised every three months or whenever necessary in line with international market movements.

The latest hike comes just over a month after the commission sharply increased furnace oil prices in April by Tk24.59 per litre, raising the rate from Tk70.10 to Tk94.69 per litre.

At that time, the BERC cited soaring international oil prices amid tensions in the Middle East and supply disruptions in the global market.

Furnace oil is widely used in Bangladesh's power plants as well as in industrial boilers and captive power generation units.

Any increase in fuel prices is expected to raise power generation costs and put additional pressure on industrial production expenses too.

Despite achieving healthy economic growth over the past decade, Bangladesh’s economy is now showing signs of strain due to persistent inflation and slowing private investment, exposing underlying weaknesses, experts said at an event yesterday.

“Bangladesh faced the Middle East crisis with several existing vulnerabilities, including persistent inflation, weak investment growth and financial sector stress,” said Dhruv Sharma, senior economist at the World Bank.

He made the remark while presenting a keynote speech at the seminar on “Bangladesh Development Update: Special Focus - A Business Environment that Delivers Jobs” jointly organised by Policy Research Institute of Bangladesh (PRI) and the World Bank at the PRI auditorium.

Although Bangladesh Bank has succeeded in bringing inflation down from around 12.5 percent to nearly 9 percent, tighter monetary policy alone cannot fully address the inflationary pressures, which are being fuelled less by excess demand and more by inefficiencies in supply chains, distribution systems and market management, according to Sharma.

World Bank’s Bangladesh-Poverty and Equity Assessment 2025 showed that another 1.4 million people slipped below the poverty line, raising the national poverty rate to 21.4 percent. Sluggish job creation and external shocks, particularly the Middle East conflict, have added to the pressure on households.

He cautioned that prolonged tight monetary conditions are weighing on investment and employment as businesses continue to struggle with high borrowing costs.

Unless wider reforms are made to improve market governance, logistics and the investment climate, hiking interest rates risks further slowing economic growth while failing to substantially ease inflationary pressure, he said.

Bangladesh’s growth model, long driven by cheap labour and protected domestic industries, is no longer delivering sustainable results, said Fahmida Khatun, executive director of the Centre for Policy Dialogue.

She said the country had achieved impressive economic growth over the years, alongside gains in health, education and poverty reduction. But the momentum has weakened since fiscal year 2021-22 as macroeconomic indicators deteriorated under both external shocks and internal vulnerabilities.

She pointed to persistent weaknesses in the banking sector, saying financial institutions were no longer able to adequately support productive private-sector investment with affordable financing.

According to her, many businesses are now focused more on survival than expansion amid regulatory uncertainty, policy unpredictability and bureaucratic delays.

Piecemeal measures would not be enough to restore stability, Fahmida stressed, calling instead for broad institutional reforms in governance, banking, trade policy and labour markets to ensure sustainable and employment-oriented growth.

Foreign investors are increasingly worried about Bangladesh’s unpredictable fiscal and taxation policies, which are hurting long-term investment confidence, said TIM Nurul Kabir, executive director at the Foreign Investors’ Chamber of Commerce and Industry (FICCI).

He said businesses planning investments over 10 years need policy consistency, but sudden changes in taxes and duties are creating uncertainty.

Restoring investor confidence would be a major challenge for the interim government ahead of the budget, he added.

Zaidi Sattar, chairman of the PRI, stressed the need for job-intensive growth, saying employment generation remains central to Bangladesh’s economic and social progress.

Rising youth unemployment posed a serious challenge for policymakers, he said, noting that Bangladesh’s experience over the past three decades showed that growth, employment and poverty reduction moved together.

Ashikur Rahman, principal economist at PRI, warned that Bangladesh’s growth trajectory has weakened since 2019, with slower growth and rising volatility becoming a growing concern.

“The economy’s buffers are now very weak,” he said, stressing that reforms in the financial and revenue sectors were no longer optional.

Rahman cautioned that Bangladesh could face a middle-income trap without urgent reforms and stronger macroeconomic discipline.

Asian share markets were on the skids on Monday as fresh drone attacks in the Gulf shoved oil prices and bond yields higher, while the AI euphoria underpinning the tech bull run will be tested by earnings from Nvidia this week.

A drone strike caused a fire at a nuclear power plant in the United Arab Emirates, while Saudi Arabia reported intercepting three drones, as US President Donald Trump warned that Iran must act "fast" to reach a deal.

Meanwhile, the vital Strait of Hormuz remains closed to all but a trickle of shipping as Tehran tries to formalise its control of the waterway that during normal times carries 20% of the world's oil trade.

"The closure is draining global oil inventories fast," warned analysts at Capital Economics. "Inventories could reach critical levels by end-June, setting the stage for Brent at $130-140pb, if not higher."

"If the strait is closed through year-end and oil stays around $150pb into 2027, that would push inflation to near 10% in the UK and euro zone, send rates back to their recent peaks and lead to global recession."

Brent was trading up 1.9% at $111.34 a barrel, while US crude climbed 2.2% to $107.72 a barrel. Crucially, futures for September climbed above $100 and December hit a contract high as markets braced for protracted shortages.

G7 finance ministers are scheduled to gather in Paris on Monday to discuss the Strait of Hormuz and critical raw material supplies, even as geopolitical differences threaten to test the group's cohesion.

Global bond markets were hammered on Friday on concerns that energy costs would stay high and thus continue to drive inflation.

Yields on US 10-year notes hit a 15-month top of 4.631%, having already surged 23 basis points last week. Yields on 30-year bonds reached 5.159% after jumping 18 basis points on the week.

Japanese yields hit peaks not seen since 1996 as the government proposed issuing fresh debt to fund a planned extra budget to cushion the economic blow from the US-Israeli war on Iran.

Investors in turn feared central banks globally would have to tighten to head off an inflationary spiral and a hike from the Federal Reserve is now seen as a 50-50 chance this year.

Minutes of the Fed's last meeting are out on Wednesday and should show how much pressure there was on the committee for a shift to a neutral stance and away from an easing bias.

New Fed Chair Kevin Warsh will have a chance to air his views at the G7 meeting and analysts are keen to hear whether he still favours the rate cuts that Trump so desires.

Japan's Nikkei eased 0.9%, having fallen 2% last week from record highs. South Korean stocks dipped 0.3%, though Samsung Electronics gained after a court issued a partial injunction against a union strike.

MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.8%. Chinese blue chips lost 0.6%, as economic data disappointed. China's April retail sales edged up 0.2% when analysts had looked for growth of 2.0%, while industrial output rose a sluggish 4.1%.

AI, retail earnings to test the bull run

S&P 500 futures fell 0.6% and Nasdaq futures lost 0.7%. For Europe, EUROSTOXX 50 futures and DAX futures both fell 1.0%, while FTSE futures were flat.

While Wall Street has been supported by upbeat earnings, analysts at Citigroup noted that half of the boost to earnings came from one-time items like tariff add-backs and asset mark-ups. Both the gains in profits and the overall indexes were also tightly based.

"We identify 20 stocks that contributed the majority of index earnings upside," analyst Scott Chronert wrote in a note. "Forward guidance increases also show a similar narrow focus."

"Broadening is a necessary condition for meaningful index upside from here," he added. "This will require a better line of sight to the Iran conflict wind-down."

Rising yields also push up borrowing costs for the US government and home buyers, a negative for the budget deficit and housing markets. They also mean a higher discount for future company earnings, challenging stock valuations.

The all-important AI trade will be tested by earnings from Nvidia that are due on Wednesday, where expectations are sky-high for the world's most valuable company.

Nvidia shares are up 36% since a March low, while the Philadelphia SE semiconductor index has surged more than 60%, amid voracious demand for chips as tech companies spend massively to build AI-related infrastructure.

Also due this week are results from a host of retailers led by Walmart, which will provide an insight into how consumers are faring with high energy prices.

In forex markets, risk aversion has tended to benefit the greenback as the world's most liquid currency. The US is also a net energy exporter, giving it a relative advantage over Europe and much of Asia.

The euro sat at $1.1618 after losing 1.4% last week. The pound wallowed at $1.3311, having dived 2.3% last week as political instability added to already intense pressure on the gilt market.

The dollar held firm against the yen at 158.91, with only the threat of Japanese intervention preventing another speculative assault on the 160.00 chart barrier.

In commodity markets, gold idled at $4,544 an ounce, having drawn little support so far as a safe haven or as a hedge against inflation risks.

Dhaka division received nearly half of Bangladesh's total remittance inflows in March 2026, ahead of Chattogram and Sylhet divisions, according to a Bangladesh Bank (BB) report.

The division accounted for $1.85 billion, or 49.55 percent of the $3.75 billion that flowed in during the month — up $456.58 million, or 13.85 percent, from March 2025.

Chattogram division ranked second with $1.16 billion (31.03 percent), followed by Sylhet at $301.10 million (8.02 percent), according to BB’s Monthly Report on Workers' Remittance Inflows.

BB noted that inflows typically rise during religious festivals, at the end of the fiscal year in June, and at the close of the calendar year in December.

At the district level, Dhaka topped the list with $1.35 billion, ahead of Chattogram ($413.04 million), Cumilla ($243.40 million), and Sylhet ($161.13 million).

Bangladesh’s ambition to become a $1 trillion economy by 2034 is bold, inspiring and politically powerful. It reflects confidence in the country’s development journey and its desire to emerge as a major economic force despite evolving challenges. For a nation transformed through decades of resilience, the goal naturally captures the public imagination. Yet while the slogan is compelling, the economics behind it are more complex.

The economy is currently valued at about $470 billion. To reach $1 trillion within a decade, Bangladesh needs close to 10 percent annual GDP growth in dollar terms. That is where the difficulty lies. GDP measured in US dollars depends not only on domestic production growth, but also on inflation and exchange rate stability.

The distinction matters. If Bangladesh achieves 5 percent real growth and 7 percent inflation, the economy could expand by roughly 12 percent in nominal taka terms. But if the taka loses 3 percent of its value against the dollar each year, dollar-based GDP growth falls to about 9 percent, below what is required. In simple terms, Bangladesh may grow strongly at home yet still struggle to hit the trillion-dollar target if currency depreciation continues.

This makes the exchange rate policy central to the debate.

The Bangladesh Bank (BB) is already navigating a delicate balancing act. It must rebuild foreign exchange reserves after they fell sharply from $48 billion in 2022, while preserving export competitiveness. A weaker taka helps exporters, particularly the ready-made garments sector, remain competitive. But the same weaker currency reduces the economy’s size in dollar terms.

This creates a policy trilemma. Bangladesh cannot fully maximise three objectives at once: a strong currency, export competitiveness and reserve accumulation. A stronger taka may lift GDP in dollar calculations, but would hurt exports. A weaker taka supports exports and reserve rebuilding but delays the trillion-dollar milestone. At any given time, policymakers can effectively prioritise only two.

Global conditions further complicate matters. Rising geopolitical tensions and volatile oil prices increase import costs, strain reserves and fuel inflation. As an energy-importing economy, Bangladesh remains exposed to external shocks that can weaken the taka and disrupt growth projections.

None of this makes the trillion-dollar goal unrealistic. It does mean the path must rest on structural reform rather than political arithmetic.

The real route to a trillion-dollar economy lies in productivity growth. Bangladesh must diversify beyond garments into sectors such as pharmaceuticals, IT services, electronics, light engineering and higher-value services. Greater industrial depth, stronger foreign direct investment and technological upgrading are essential. Without this transformation, growth may continue, but not at the scale or quality required.

Human capital is equally important. Skills development, better education and higher labour productivity must become national priorities. A larger economy is not built by numbers alone; it is built by a more capable workforce.

Macroeconomic discipline will also matter. Inflation control, stable fiscal management and a predictable exchange rate policy are crucial. Gradual and manageable depreciation may prove wiser than abrupt adjustments or artificial currency support.

Ultimately, the trillion-dollar question is not simply whether Bangladesh can reach a number by 2034. It is whether the country can build an economy strong enough to make that number inevitable.

If Bangladesh sustains solid growth, preserves stability and implements meaningful reforms, it could approach $900 billion by 2034 and cross $1 trillion soon after. Reaching the milestone in 2035 instead of 2034 would not be a failure; it would be economic realism.

The true success of Bangladesh’s strategy will not be measured by a political deadline alone, but by whether it builds productive strength, resilience and institutional capacity, alongside a governance model capable of sustaining prosperity long after the trillion-dollar headline is achieved.

The writer is an economic analyst and chairman at Financial Excellence Limited

G7 finance ministers gathering in Paris on Monday will try to find common ground on tackling global economic tensions and coordinating critical raw material supplies, even as geopolitical differences threaten to test the group's cohesion.

The two-day meeting follows a summit between US President Donald Trump and Chinese President Xi Jinping in Beijing that yielded few concrete economic breakthroughs, as tensions over Taiwan and trade simmered beneath a display of diplomatic cordiality.

At the core of the Paris agenda will be what French Finance Minister Roland Lescure described as deep-seated global economic imbalances that are fuelling trade friction and risk a turbulent unwinding in financial markets.

"The way the global economy has been developing for the past 10 years or so is clearly unsustainable," he said, pointing to a pattern in which China under-consumes, the United States over-consumes and Europe under-invests.

Update from US-China summit

Lescure, who will host the talks, said the G7 offered an opportunity for frank dialogue among allies at a time of widening disagreements with Washington.

"These discussions are not easy. I'm not going to tell you that we agree on everything, including, of course, first and foremost with our American friends," he told journalists ahead of the meeting.

Finance ministers will be looking for an update on US-China relations following the Trump-Xi summit and the latest US efforts to re-open the Strait of Hormuz, as the Trump administration allowed a sanctions waiver on Russian seaborne oil to lapse on Saturday.

Merely agreeing each side bears some responsibility for the trade and capital flow imbalances would be a success, French officials involved in preparations said, though the US side is likely to be reluctant.

Fallout from Mideast conflict

"I'd be shocked if they're going to sign on to the idea this is the US's fault in some way," said Philip Luck, director of the economics programme at Washington's Center for Strategic and International Studies.

Ministers are also due to discuss the economic fallout from the Mideast conflict and volatility on global bond markets, which are of particular concern to Japan.

Britain's finance ministry said Rachel Reeves would "press for coordinated action to limit inflation and supply chain pressures, and restore freedom of navigation through the Strait of Hormuz" at the meeting, and also reassert the government's desire to reduce trade barriers between Britain and the European Union.

Divisions within the G7 complicate efforts to project unity as ministers prepare for a 15-17 June leaders summit in the spa town of Evian.

Critical mineral dependence

A second priority will be critical minerals and rare earths, where G7 governments are trying to coordinate efforts to reduce reliance on China, which dominates supply chains vital for technologies such as electric vehicles, renewable energy and defence systems.

Lescure said the G7 would push for stronger coordination to monitor markets, anticipate disruptions and develop alternative supplies, including through joint projects spanning allied economies. The aim is to ensure that "no country can ever again have a monopoly" over such materials, he said.

G7 countries are trying to agree on a common toolbox of measures to stabilise markets and encourage domestic investment, possibly through price floors for producers, pooled purchases and also tariffs.

Nonetheless, the initiative is a long-term project that would yield little at the finance ministers' meeting, said Luck, who worked on the issue in the Biden administration.

"We are in the very early innings of figuring this out," he said. "I don't think there's agreement on a strategy even within the US government, let alone being able to articulate that in a convincing way to our partners in order to get them to sign on."

Dhaka Stock Exchange and Swisscontact Bangladesh have signed a memorandum of understanding (MoU) to promote sustainable and inclusive economic development through Bangladesh’s capital market system, with a special focus on SMEs and sustainable financing instruments.

The agreement was signed on Saturday at the DSE premises by Managing Director Nuzhat Anwar and Swisscontact Bangladesh Country Director Helal Hossain in the presence of senior officials from both organisations.Geographic Reference

Under the partnership, the two organisations will jointly work to strengthen SME access to capital markets, improve corporate governance and compliance standards, and promote sustainable financing initiatives in Bangladesh.

The collaboration will focus on strategic sectors including ready-made garments (RMG), healthcare and agriculture, while also supporting initiatives related to environmental, social and governance (ESG) practices, sustainability reporting, financial inclusion, climate resilience, entrepreneurship development, trade facilitation and skill enhancement, says a press release.

Speaking at the signing ceremony, Ms Anwar said the initiative was implemented quickly through strong coordination and clear planning between the two institutions.

“This initiative has been materialised within a short period because of mutual coordination and a shared vision,” she said.Bangladesh trade analysis

She noted that small and medium enterprises require extensive support in capacity building, governance practices and regulatory compliance to enhance their participation in the capital market.

“SMEs are one of the key drivers of the economy, but many of them still lack the institutional preparedness required to access long-term financing from the capital market,” Ms Anwar said.

She added that the partnership would help create a stronger ecosystem for SMEs by offering training, advisory services and awareness programmes aimed at improving financial literacy and governance standards.

Mr Hossain of Swisscontact Bangladesh said SMEs remain a vital pillar of Bangladesh’s economy, although they continue to face challenges in financing, competitiveness and compliance.

“In the current economic context, creating opportunities for SMEs to raise alternative financing and equity-based capital is extremely important,” he said.Global economy forecast

He expressed optimism that the collaboration with DSE would help promising SMEs gain access to the capital market and reduce their dependence on traditional bank financing.

According to officials, the partnership will also facilitate joint capacity-building programmes, incubation support, workshops and advisory services to encourage wider participation in the capital market ecosystem.

The two organisations will additionally cooperate in developing sustainable financing products, including green bonds, sustainability-linked bonds, sukuk and blended-finance models to support environmentally and socially responsible investments.

Market analysts say the collaboration comes at a time when Bangladesh’s capital market is seeking to diversify financing sources and deepen participation from SMEs and sustainable enterprises.

They believe the initiative could help strengthen the country’s sustainable finance framework and support long-term economic resilience through broader access to capital market financing.

The UAE is to fast-track construction of a new oil pipeline bypassing the Strait of Hormuz, official media said on Friday, after the Middle East war crippled exports through the vital waterway.

The West-East Pipeline will double state oil giant ADNOC’s capacity through Fujairah port and is expected to become operational next year, the Abu Dhabi Media Office said.

Abu Dhabi Crown Prince Sheikh Khaled bin Mohamed bin Zayed Al Nahyan “directed ADNOC to accelerate delivery of the project”, the report said.

An existing, 360-kilometre (224 miles) pipeline from the Habshan oil fields to Fujairah has a capacity of 1.8 million barrels per day, according to the Port of Fujairah website.

The UAE, which made waves by quitting oil cartel OPEC at the start of this month, has plans to raise production capacity to five million barrels a day by next year.

Oil facilities in Fujairah have been repeatedly struck during the Middle East war. Three Indian nationals were wounded in the latest attack on May 4.

New Zealand will continue duty-free and preferential market access for Bangladeshi goods after the country graduates from the least developed country (LDC) category, David Pine, New Zealand’s non-resident high commissioner in Dhaka, said yesterday.

New Zealand has been giving special importance to ensuring market access for Bangladeshi goods after the graduation, he said at a meeting with Commerce Minister Khandakar Abdul Muktadir at the secretariat in Dhaka, according to a ministry press statement.

He said that given the current global scenario, export market diversification is important, but so is diversifying import sources, adding that both countries stand to benefit from expanded bilateral trade.

New Zealand goods, he added, are known for reliability, high standards, food safety, and being free of genetically modified organisms, and the country is interested in establishing a stable, long-term trade structure.

Bangladesh exported $99.73 million worth of goods to New Zealand in fiscal year 2024-25, around 90 percent of which were garment items, according to the Export Promotion Bureau. In the July–April period of the current fiscal year, the figure stood at $78.93 million.

Both sides also expressed interest in exploring a trade deal such as a free trade agreement, to boost investment and bilateral trade, states the ministry statement.

Meanwhile, minister Muktadir said employment generation, and rapid growth of investment are important for Bangladesh’s sustainable LDC graduation.

He also noted that it is important to maintain the competitiveness of garment exports and ensure preferential market access for the country’s major apparel items.

The minister also asked the high commissioner to encourage entrepreneurs from his country to choose Bangladesh as an investment destination, as the Bangladesh government has taken many measures to ease doing business.

Bangladesh is scheduled to graduate from the LDC category on November 24 this year, though it has applied to the UN for a three-year deferment to 2029.

Some countries such as the UK, Canada, and Australia have already assured that they will continue preferential market access for Bangladeshi goods even after LDC graduation.

At the same time, Bangladesh has also been lobbying some of its trading partners to sign trade deals to retain duty-free market access in the post-LDC period.

Bangladesh risks losing $17.5 billion worth of exports annually after LDC graduation, as nearly 75 percent of its exports are LDC-induced.

Bangladesh Bank (BB) has introduced a monthly performance review system to strengthen the implementation of the Bangladesh Bank Service Standard, aiming to improve efficiency, accountability, and service delivery across all operational units.

The decision was taken at the inaugural performance review meeting held on Sunday with Governor of Bangladesh Bank Md Mostaqur Rahman in the chair. Deputy governors and executive directors attended it.

The service standard framework sets mandatory timelines for processing and resolving cases across all departments and branch offices, serving as a key benchmark for operational efficiency and service quality.

During the review, 90 departments and branch offices were assessed based on compliance with service standard timelines. The findings showed that 41 units (45.56 percent) achieved 100 percent compliance, while 32 units (35.56 percent) maintained around 90 percent compliance.

In addition, 11 units recorded compliance between 80 and 89 percent, and 6 units fell within the 67 to 79 percent range.

Overall, more than 81 percent of the evaluated units were found to be performing at a high compliance level, although around one-fifth of the offices demonstrated notable efficiency gaps requiring targeted intervention.

The Governor directed that performance reviews be conducted on a monthly basis under his direct supervision to ensure continuous monitoring and timely corrective measures.

He instructed all departments and branch offices to strictly adhere to service standard guidelines and ensure that all cases are processed within the prescribed timeframe, emphasizing that 100 percent compliance should be the institutional benchmark.

At the same time, he assured full institutional support to units facing difficulties, particularly in addressing procedural and operational bottlenecks affecting service delivery.

BB said the combined approach of strict accountability and supportive intervention is expected to enhance overall institutional performance and improve public service delivery standards.