The Supreme Court's recent ruling has altered the economic foundation of Bangladesh's trade arrangement with the United States. The reciprocal tariff mechanism that once justified a set of demanding obligations has been struck down. The administration has responded with a temporary 10% global tariff that applies to all countries alike. By statute, this tariff can remain in place for no more than 150 days unless Congress authorises an extension.

As a result, the tariff burden tied to the bilateral deal has fallen sharply. It is natural to ask why we should continue to carry obligations that were tied to a benefit that no longer exists in the same form. The instinct to demand renegotiation is understandable, and the desire for fairness is real. But the moment calls for clear judgment.

The case for patience
When circumstances shift abruptly, the impulse is to act quickly. Yet this is precisely when restraint becomes a strategic asset. The United States is navigating a politically sensitive moment: a legal setback, a hurried policy adjustment, and an uncertain path forward. Pressing for renegotiation now risks being seen as taking advantage of a partner at a vulnerable moment. That perception, even if unintended, can trigger reactions that are not strictly economic — regulatory scrutiny, administrative slowdowns, and other measures that fall outside the tariff framework. These tools remain fully available to Washington today.

Equally important is the uncertainty surrounding the status of the bilateral deal itself. The Supreme Court ruling removed the tariff instrument, but it did not automatically void the agreement. The obligations Bangladesh accepted do not rest on the same legal foundation as the reciprocal tariff. Assuming the deal has collapsed would be a serious misreading of the situation. Such an assumption could lead to missteps — provoking confrontation or relaxing compliance too soon. Until the United States clarifies its position, Bangladesh must proceed on the basis that the deal remains in force, even if its economic logic has weakened.

There is also a more structural risk that must be acknowledged. Bangladesh could find itself placed under the "unfair trade practices" category, a designation that allows the United States to impose tariffs under a different statute — tariffs that can reach levels far higher than the current 10%. Bangladesh is exposed on several fronts — labour standards, environmental compliance, and supply-chain transparency. None of these issues are new, but in a tense political climate they can be invoked to justify punitive measures. This is not a reason to retreat from seeking a fairer deal; it is a reason to choose the moment carefully.

Bangladesh can reduce its exposure with steady, practical steps. Strengthening labour-inspection systems, improving documentation of workplace conditions, and ensuring credible third-party verification of compliance would help close the gaps that often invite scrutiny. Environmental reporting can be made more transparent, especially in sectors where buyers already demand traceability. And coordination with industry to maintain consistent standards across factories would make it harder for isolated lapses to be framed as systemic failures. None of this guarantees immunity, but it places Bangladesh on firmer ground if allegations arise.

A better moment will come

The broader strategic logic still favours patience. When the environment is unsettled, the value of time increases. The United States will need to rebuild its trade architecture in the wake of the ruling. It will have to decide whether to craft new bilateral arrangements, adjust the temporary tariff, or seek congressional authority for a more durable framework. In that period, Bangladesh will not be approaching a wounded partner but engaging one ready to redesign. That is when our voice will carry more weight, and our demands will be seen as part of a forward-looking conversation rather than a reaction to a moment of weakness.

Bangladesh should prepare its position now — identify which clauses are unacceptable, articulate the imbalance created by the new tariff reality, and build a coherent case for a fairer arrangement. But preparation is not the same as provocation. The wiser course is to maintain a calm, neutral posture while the United States clarifies its next steps.

When Washington begins shaping its post-ruling trade strategy, Bangladesh can then make a principled, confident case for revisiting the terms. At that moment, renegotiation will not be an act of pressure but an act of alignment.

The public's desire for a fairer deal is legitimate. The government is right to prepare for one. But the country will gain more by choosing the right moment than the loudest one. The cost of moving too early is far greater than the cost of waiting. Bangladesh must choose timing over impulse — leverage over noise.

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

Newly appointed Finance Minister Amir Khosru Mahmud Chowdhury has instructed the authorities to ensure that the government's election pledges are reflected in the upcoming national budget, signalling the administration's intent to implement its commitments from the very first fiscal year.

He directed policymakers to move forward with budget preparations in a way that clearly demonstrates progress on campaign promises. The instructions were placed at a meeting held between the minister and officials from departments under the ministry at the Secretariat yesterday.

According to officials present at the meeting, Amir Khosru emphasised that the budget for FY2026-27, due to be unveiled in June, should visibly align with commitments made in the election manifesto of the BNP.

A senior finance ministry official, speaking to The Business Standard on condition of anonymity, said, "The finance minister has asked us to proceed with budget formulation so that the government's election pledges are reflected in the imminent budget."

Among the BNP's key economic promises were accelerating growth and investment, generating employment for youth, ensuring policy stability in trade and commerce, and reforming the revenue system.

The party also pledged to increase spending on health and education to above 5% of GDP — a move that would require significant additional fiscal resources.

One of the most discussed commitments at yesterday's meeting was the introduction of a nationwide "Family Card" programme. Implementing the scheme could require additional annual government spending ranging between Tk12, 000 crore and Tk24, 000 crore, according to officials familiar with preliminary estimates.

The BNP has also promised to waive agricultural loans of up to Tk10, 000, a measure that would carry substantial fiscal implications. Other commitments included keeping commodity prices stable, expanding support programmes for low- and middle-income groups, and ensuring stability in fuel and food supply chains.

Tarique Rahman-led government is set to present its first budget in June, leaving roughly three to three-and-a-half months for preparation. Officials said that not all promises would be implemented within a single fiscal year.

However, the finance minister wants the budget to clearly signal the government's policy direction and commitment to delivery.

Economy in 'difficult, stagnant' state; reforms, participatory budget top priorities: Khasru

In addition to expenditure priorities, Amir Khosru has set an ambitious revenue target, instructing the National Board of Revenue to take effective measures to raise the tax-to-GDP ratio to 8% in the next FY.

Describing the target as highly ambitious, a senior NBR official from the tax policy wing said achieving the 8% ratio within a year would require revenue growth of nearly 50%, which he termed "unrealistic" under current economic conditions.

"There has not been such a surge in economic activity that revenue collection could increase at that pace," he said.

According to NBR data, the tax-to-GDP ratio fell to 6.7% in FY2024-25. Over the past two decades, revenue collection has grown by an average of around 15% annually. Despite that growth, the ratio has stagnated or declined, prompting calls from within the revenue authority for more accurate GDP estimation.

Meanwhile, Towfiqul Islam Khan, additional director (research) at the Centre for Policy Dialogue, told this newspaper that implementing the BNP's election pledges would require revenue to grow at a high rate.

"Such growth is not impossible," he said, "but it will require extensive reforms."

Although a recent event organised by the Citizen's Platform for SDGs, Bangladesh, recommended revising the current budget for the remainder of the fiscal year.

NBR Chairman Abdur Rahman Khan, however, said the issue was not discussed at yesterday's meeting.

Local business leaders have urged the government to review the country’s reciprocal trade agreement with the United States after the US Supreme Court on Friday ruled that Trump’s sweeping emergency tariffs are illegal.

The trade deal, signed on February 9 by the interim government, had already been facing criticism. Businesses and economists argued that Bangladesh conceded too much in return for a reduction of the reciprocal tariff to 19 percent.

Besides, the deal was signed just two days before the national election, prompting questions over whether such a commitment should have been left to an elected government.

The court ruling has now complicated matters for countries that have already signed deals with the US.

By invalidating parts of the tariff regime and prompting President Trump to introduce a fresh 10 percent global duty under a separate legal authority, the ruling has cast worldwide uncertainty over how existing bilateral arrangements will operate.

Amid this chaos and confusion, Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), described the pact as “uneven”.

“The recently signed reciprocal trade agreement with the US is, in my view, an unequal deal. It should be reviewed to ensure that Bangladesh’s interests are adequately protected,” he said.

While the tariff agreement provides zero tariff access for products manufactured with US raw materials, Hatem said the benefit is conditional and limited. “In exchange, Bangladesh appears to have conceded on several difficult conditions,” he added.

After the court ruling, he now questioned the practical value of the new 10 percent levy. “It is still unclear how long this will continue,” he said, noting that the additional duty offers no distinct advantage to Bangladesh exporters.

AK Azad, managing director of Ha-Meem Group, said the legal development in Washington raises a more fundamental issue. “The court has struck down the tariff framework. If that is no longer in place, then what happens to the agreement signed just before the election?” he asked.

Azad said it is unclear whether the agreement automatically loses force following the ruling.

He suggested that the 10 percent global tariff could also face legal challenge, though he does not expect a sharp immediate impact on Bangladesh exports. Even if the agreement remains intact, he said, the government should reassess its options.

Anwar Ul Alam Chowdhury (Parvez), president of the Bangladesh Chamber of Commerce and Industry, said the US retains multiple statutory tools to shape trade policy.

Although certain tariff measures were declared unlawful, Washington has already invoked alternative provisions to impose the 10 percent duty and could initiate further trade investigations, he commented.

“They have multiple options at their disposal. We cannot predict which instruments they may use next,” he said.

In that context, Parvez questioned the haste in finalising the agreement and urged policymakers to prepare a clear negotiating strategy grounded in US trade law. “We need proper preparation and a realistic evaluation of our commitments,” he said.

Taskeen Ahmed, president of the Dhaka Chamber of Commerce and Industry (DCCI), also criticised the timing of the deal, describing the decision to sign it days before the election as “not prudent.”

“Such an agreement should ideally have been advanced by an elected government after carefully weighing all implications,” he said.

Ahmed said the DCCI has asked the new government to explore ways to review the arrangement. He said further measures from Washington could follow and that the agreement might affect Bangladesh’s trade relations with major partners such as China and India.

“The government should strategically assess the broader trade implications before moving forward,” he said.

Riad Mahmud, managing director of National Polymer Industries PLC, said Bangladesh could find itself in a stronger position if the agreement is rendered void as a result of the US court decision. However, there are several uncertainties.

There is confusion, he said, over whether the agreement lapses automatically or remains legally binding despite changes in the US tariff framework.

Asif Ibrahim, vice-chairman of Newage Group of Industries, described the ruling as a significant development in US trade policy.

He said businesses value stability, transparency and rule-based systems, which underpin investment decisions and long-term planning.

“The United States remains a valued and strategic trading partner for Bangladesh,” he said. “We hope both governments will continue constructive engagement to ensure predictable market access, strengthen bilateral economic ties and safeguard the interests of businesses and consumers in both countries.”

Bangladesh has met the criteria to graduate from Least Developed Country (LDC) status, but serious gaps in trade readiness, macroeconomic stability and institutional strength could threaten a smooth transition in November 2026, according to a new independent assessment commissioned by the United Nations (UN).

The report was prepared at the request of the interim government, which sought an independent review from the United Nations Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States (UN-OHRLLS).

Ahead of the scheduled graduation this year, business leaders had been urging the interim government to seek a delay of up to six years, arguing that the country is not ready for life without special trade privileges.

Shared with the Chief Adviser’s Office earlier this month, the report said that Bangladesh met the graduation thresholds for income, human assets and economic vulnerability in successive UN triennial reviews. The UN General Assembly approved graduation in 2021, granting a five-year preparatory period.

That window, however, has been anything but calm.

“Political instability and governance disruptions have severely constrained policy continuity, weakened institutional cooperation, and delayed or derailed key reform processes,” the report said, adding that the interim government’s mandate was inherently transitional.

Instead of laying the groundwork for a smooth transition, the past five years were marked by overlapping global and domestic shocks.

“Rather than a period of strategic preparation and institutional strengthening, the past five years were largely consumed by crisis management, economic stabilisation, and political survival,” said the report.

A student-led mass uprising in August 2024 brought down the previous government and ushered in an interim administration. “This political upheaval was superimposed on a macroeconomic crisis that had been accumulating for years.”

‘SUBSTANTIAL GAPS’

According to the report, trade preparedness remains a weak spot for Bangladesh.

The country currently enjoys preferential access to markets such as the United Kingdom, and has secured an economic partnership deal with Japan recently. But the European Union remains the biggest risk.

Almost three-quarters of Bangladesh’s merchandise exports benefit from LDC-specific preferences. That makes the transition more complex than for most countries that have graduated in the past.

Progress in energy and logistics has been slow. Besides, the economy still leans heavily on readymade garments, which generate more than four-fifths of export earnings. Efforts to diversify have yet to bear fruit, and new legal frameworks to support exporters are incomplete.

The wider economic backdrop adds to the strain.

Growth has slowed, inflation has stayed high, and the banking sector is in crisis. Public debt has climbed, and exports face global headwinds.

Sustained inflation has eroded purchasing power, pushing an estimated 90 lakh people into poverty. The poverty rate has risen from 18.7 percent in 2022 to about 21.2 percent in 2025, reversing gains made since the 1990s.

“The reversal of poverty reduction gains demonstrates the fragility of development achievements under macroeconomic stress,” the report said.

According to it, institutional readiness is also in question. Implementation of the Smooth Transition Strategy (STS) has been slow, while coordination and monitoring across ministries are patchy.

Non-performing loans have reached historic highs, limiting credit to the private sector.

The report said that real growth, which topped 7 percent before the Covid 19 pandemic, has lost momentum in recent years. Employment fell by 19 lakh between 2023 and 2024, with women bearing the brunt.

Meanwhile, external pressures are mounting.

The United States has imposed reciprocal tariffs of 19 percent on imports from Bangladesh, adding to existing duties and squeezing exporters further. More trade shocks during the transition could drive up adjustment costs.

CRITICAL VULNERABILITIES

The report identifies six major risks to smooth and sustainable graduation. Those are erosion of trade preferences, fiscal fragility, debt sustainability pressures, banking sector weaknesses, structural competitiveness gaps and limited access to climate finance.

Bangladesh currently enjoys duty-free access to the EU. After 2029, clothing exports to the bloc will face tariffs of 12 percent. But market competitors such as India and Vietnam will continue to pay zero duty.

The EU accounts for roughly half of Bangladesh’s exports, meaning even small shifts in competitiveness could have outsized effects.

Safeguard provisions under the EU Generalised Scheme of Preferences (GSP) remain unresolved.

“This represents the single most critical unresolved trade policy challenge with potential to severely erode competitiveness in Bangladesh’s largest export market.”

Another vulnerability is narrowing fiscal space and rising debt burden.

Revenue mobilisation fell to 6.8 percent of GDP in the financial year 2024-2025. Debt servicing now absorbs 31 percent of government revenue. In August 2025, the IMF World Bank Debt Sustainability Analysis moved Bangladesh from “low” to “moderate risk” of debt distress.

“This fiscal fragility severely constrains capacity to finance investments and social protection measures needed for graduation-related adjustments.”

Structural costs further weigh on competitiveness. Logistics costs amount to about 16 percent of GDP, well above the global benchmark of around 10 percent. Energy inefficiencies and infrastructure bottlenecks add to production expenses.

Setting out 157 time-bound actions across five pillars, the STS was adopted only in February 2025, limiting the effective implementation horizon before graduation.

“Stakeholder consultations consistently indicated slow and uneven implementation progress, with limited momentum in competitiveness-critical areas,” the report said.

WHAT NEXT?

The assessment urges Bangladesh to seek a safeguard waiver or alternative arrangement with the EU to avoid steep tariffs on apparel after 2029.

It also calls for faster tax reforms to lift the revenue to GDP ratio, a comprehensive plan to tackle non-performing loans and a reliable, reasonably priced energy supply for exporters.

Due to the “unprecedented and cumulative series of shocks”, many stakeholders believe the country may need three to five more years to prepare, according to the report.

It said Bangladesh could approach the UN Committee for Development Policy (CDP) to request a deferral on the grounds that exceptional circumstances have undermined its readiness.

The report stresses anchoring macroeconomic stability through credible monetary and exchange rate policies, ensuring foreign exchange access for exporters and shoring up the banking system before the graduation clock runs out.

Taking into consideration the prevailing constrained fiscal space and fragile macroeconomic situation, Debapriya Bhattacharya, convenor of the Citizen’s Platform for SDGs, Bangladesh, said the government should implement an economic stabilisation plan with a hard budget constraint for the remainder of the fiscal year (FY) 2025-26.

Implementing a hard budget constraint means the state will not step in when an organisation’s spending exceeds its income and it incurs losses, leaving it to bear the consequences of financial mismanagement and, if necessary, cease operations.

Along with the stabilisation plan, the government should realistically revise the current budget, Bhattacharya said at a media briefing titled “Economic Review at the Outset of the New Government”, held at BRAC Inn Centre in the capital, organised by the platform.

He identified fragile macroeconomic stability, weakened private investment and employment, and diminishing fiscal space as major challenges for the government sworn in on February 17.

In this regard, he added, if the foundation of an economy is weak, its structure cannot remain sustainable.

“Macroeconomic stability is the mother of all reforms,” he said, explaining that it can be assessed through at least four key indicators: inflation, interest rates, the exchange rate or value of the currency, and the domestic and external debt situation.

These four indicators must be closely and continuously monitored by the government, the eminent economist said. If inflation is not controlled, purchasing power declines. If interest rates are misaligned, investment suffers. If the exchange rate is unstable, both importers and exporters face uncertainty. And if the debt burden becomes unsustainable, financial sovereignty may be undermined.

Without consolidating macroeconomic stability, it will not be possible to sustainably increase private investment, generate employment, secure foreign financing, repay external debt, or ensure food security. Therefore, the overriding policy objective must be to restore and strengthen macroeconomic stability, Bhattacharya said.

The platform gave several policy recommendations. “A small cut in policy rate may be considered, as the higher policy rate is not working to reduce inflation,” said Towfiqul Islam Khan, Additional Research Director of the Centre for Policy Dialogue (CPD), while he gave a presentation at the event.

A small and gradual depreciation policy may be pursued, he said, adding it will incentivise remitters and exporters even if their cash incentive is cut. “Prioritisation of public expenditure will be required to reduce wastage as much as possible. Taking a miserly approach for the rest of FY26 is recommended.”

No more public money should be allocated for troubled banks in FY26, he stressed.

Recovery of stolen and bad assets should be given attention, both at technical (including diplomatic) and legal levels.

There should be no compromise in formulating a realistic revised budget for FY26, including projections for the debt stress situation, he added.

Bhattacharya recommended forming a “transition team.” Although not widely practised in Bangladesh, such teams are well established in many countries during a change of government.

The purpose of this team will be to conduct a transparent and systematic assessment of the situation inherited from the outgoing administration, examining financial commitments, contractual obligations, debt exposure, and policy decisions that will affect the incoming government.

This transition team could consist of both political representatives and policy experts. Its task would be to conduct a kind of forensic review of each ministry’s financial and policy position and prepare a comprehensive briefing document. Such documents would serve as the foundation for informed decision-making.

Several areas should receive particular attention, such as the debt situation, both domestic and external. A clear understanding of loan terms, repayment schedules, interest rates, and contingent liabilities is essential for sound policymaking.

Apart from this, foreign agreements and memoranda of understanding (MoU) should be reviewed. Beyond agreements with any single country, all international commitments should be reviewed to assess their obligations, risks, and implications for the new government.

If the country is willing to reconsider aspects of its LDC graduation process, then it is equally reasonable to re-evaluate international commitments in that broader context, the economist said.

“Ultimately, slogans and stated goals are not sufficient. What is needed is a clear roadmap, strengthened institutional capacity, policy coherence, and accountability.”

Talking about several election pledges of the BNP, Khan said that the goal of a one trillion-dollar national GDP by 2034 is achievable.

However, pledges like raising foreign investment to 2.5 percent of GDP, raising the tax-to-GDP ratio to 15 percent, and allocating 5 percent of GDP each to health and education sectors are highly ambitious.

Pursue a coherent mid-term plan with realistic attainment targets in view of the election manifesto, he added.

CPD Distinguished Fellow Mustafizur Rahman also spoke at the event.

The newly sworn-in government faces a daunting economic landscape characterised by fragile macroeconomic stability, stagnant private investment, and a shrinking fiscal capacity, according to the Citizen's Platform for SDGs, Bangladesh.

The observations were shared at a media briefing titled "Starting Point of the New Government: An Economic Review," held at the BRAC Centre Inn, Dhaka today (19 February) where Towfiqul Islam Khan, additional research director at the Centre for Policy Dialogue (CPD), presented the findings.

The civil society platform emphasised that addressing these structural bottlenecks is critical for stabilising the economy and steering it back toward sustainability.

Towfiqul highlighted that despite a decline in global inflation, domestic levels remain stubbornly high.

The 12-month average inflation rate reached 8.77% in January, significantly exceeding the central bank's target of 7%.

Slow-paced wage growth

Towfiqul noted that while food inflation showed slight signs of easing, non-food sectors provided little relief.

Furthermore, the slow pace of wage growth continues to erode the real income of the working class, worsening the cost-of-living crisis.

The event also pointed out that while a relatively stable exchange rate and a modest rise in foreign exchange reserves have reduced some pressure on the balance of payments, other risks remain.

The government's heavy reliance on bank borrowing to finance the budget deficit, combined with Bangladesh Bank's foreign currency collection from the open market, is contributing to an increased money supply.

The ongoing stagnation in private investment has also led to a decline in employment.

According to a presentation shared during the event, approximately 21 lakh jobs were lost during the first half of the 2025 fiscal year.

New loans to repay old

Highlighting the shrinking fiscal space, Towfiqul stated that internal revenue collection is no longer sufficient to cover recurring expenditures, leading to an increasing trend of taking out new loans to repay existing debt.

Weak revenue collection and pressure of expenditures outside the Annual Development Programme (ADP) are further constricting policy options.

Notably, according to the CPD researcher, ADP spending in fiscal years 2025 and 2026 has dropped to historically low levels.

In light of these challenges, the platform recommended the adoption of an economic stabilisation plan, including strict budget ceilings for the remainder of the current fiscal.

It also urged the formulation of a realistic budget framework for the next fiscal, the formation of a multilateral development forum, and the implementation of a reform roadmap with specific timelines.

Citizen's Platform for SDGs, Bangladesh states that achieving macroeconomic stability will be difficult without a clear LDC graduation strategy and a medium-term plan based on realistic targets.

President Donald Trump said Saturday he is raising the worldwide tariffs on goods entering the United States from 10 percent to 15 percent "effective immediately," a day after the Supreme Court largely struck down his sweeping duties.

Trump said on his Truth Social platform that after a thorough review of Friday's "extraordinarily anti-American decision" by the court to rein in his tariff program, the administration was hiking the import levies "to the fully allowed, and legally tested, 15% level."

Rising costs of consumer goods and industrial materials are being driven by delays and lack of coordination at Chattogram Port, Finance and Planning Minister Amir Khasru Mahmud Chowdhury said today (20 February).

"These inefficiencies are affecting both industrial production and market prices. If port problems are addressed, cargo clearance will speed up and additional costs will decrease," he said after a meeting with the Port Users Forum at his Mehedibagh residence.

The meeting was attended by representatives from the port, customs, transport workers, and other relevant stakeholders.

The minister said each point was discussed in detail, examining where and why problems occur and the reasons behind rising costs.

Some issues were resolved immediately, while a few require further inter-ministerial coordination and will take several more days to finalise.

Khasru highlighted that different stakeholders at the port operate independently, creating a fragmented system. "Each group is running its own operations, forming separate zones of control. Responsibilities are unclear, which contributes to rising costs," he said.

He added that delays in cargo clearance, extra charges, and procedural complexities are significant factors behind increased costs.

"These additional expenses are being passed on to consumers and are reflected in both industrial production and market prices," he said.

"The impact is not limited to consumer goods. Almost all imported products, including raw materials used in industries, are affected, and the public bears the burden of these additional costs. With Ramadan approaching, special emphasis is being given to faster clearance of essential items. Delays in delivery could push up market prices, while faster clearance would help reduce these extra costs," he said.

He also said the government has taken initiatives to ease the pressure on the national economy caused by port inefficiencies.

"Some solutions have already been implemented today, and others will be finalised through discussion. We hope effective measures will be taken very soon. Once port operations speed up, cargo clearance will improve, production costs will decrease, and market price pressures will ease," Khasru added.

Gold prices rose more than 1 percent on Friday, supported by weaker‑than‑expected US GDP data, while investors digested President Donald Trump’s announcement of fresh global tariffs following the US Supreme Court’s tariffs ruling.

Spot gold was up 1.5 percent at $5,071.48 an ounce by 02:08 p.m. (1908 GMT). US gold futures for April delivery settled 1.7 percent higher at $5,080.90.

“It’s hard to see the president collecting his toys and going home; he will try to re-establish tariffs using other statutes which will promote volatility,” said Tai Wong, an independent metals trader.

Medium-term uncertainty won’t deter gold bulls, Wong added. Trump said that he would impose a 10 percent global tariff for 150 days to replace some of his emergency duties that were struck down by the US Supreme Court.

The Supreme Court declared illegal his broad global tariffs imposed under the International Emergency Economic Powers Act, ruling that he had overstepped his authority under that law.

Data showed US economic growth slowed sharply to a 1.4 percent annualized rate in Q4, well below economists’ forecast of 3 percent, as the government shutdown and softer consumer spending hit activity.

Separately, the Fed’s preferred inflation gauge, the Personal Consumption Expenditure index, rose 0.4 percent in December, above expectations for a 0.3 percent increase.

“(The data) shows inflation is still present in the marketplace ... but with GDP coming in lower, it suggests the economy is not close to a turning point. There are still many unknowns and uncertainties around the US economy, and that is supportive for gold,” said RJO Futures senior market strategist Bob Haberkorn.

Traders still expect two 25-basis-point rate cuts by the Fed this year, with the first expected in June.

Gold, considered a safe-haven asset when there is geopolitical and economic uncertainty, also tends to do well when interest rates are low.

A landmark ruling by the US Supreme Court torpedoing Trump tariffs effectively upsets Bangladesh's trade arrangements with the United States, prompting calls for a cautious reassessment of the recently signed bilateral deal.

The media-highlighted "blow" to President Donald Trump's tariff regime -- which threw world trade order into a vortex -- comes close on the heels of Bangladesh electing a new government. Business community has been requesting it to go for a review and renegotiation of the trade deal signed by the immediate-past interim government.

Business leaders and economists told The Financial Express Saturday that the verdict has effectively altered the legal foundation of the reciprocal tariff regime on which much of the Bangladesh-US agreement was based.

They note that commitments reportedly linked to the tariff framework -- including large-scale import arrangements ranging from US wheat to Boeing aircraft -- may now need to be reviewed if they were tied to the invalidated measures.

In this evolving situation, analysts say, Bangladesh must closely monitor developments in Washington and carefully evaluate its obligations under the agreement. With the legal and policy context shifting rapidly, a measured and legally sound reassessment may be essential to safeguard the country's trade interests.

Dr Zaidi Sattar, Chairman of Policy Research Institute of Bangladesh (PRI), says as of now, reciprocal tariffs come to "naught" as a result of the Supreme Court judgment. But RT is replaced with a 10-percent levy for 150 days.

As for the US-BD Reciprocal Trade Agreement, 19-percent RT will be replaced with 10-percent tariff. What is not clear as yet is if the 10 per cent will be on top of existing tariffs, which is 16.5 per cent on RMG and footwear.

"Then the new situation gets worse for BD, except that the saving grace is the 'Buy American Cotton Act 2025', which allows duty-free export of apparel that uses US cotton and MMF."

He says, "If anything, it creates a messy situation on two grounds: what about refund of tariff rev already collected, and what happens to the US-BD Reciprocal Trade Agreement"

Shovon Islam, Managing Director of Sparrow Group, says the reciprocal tariffs became "null and void" following the American apex court's decision.

"The President has to follow the Supreme Court's ruling. There are no ifs or buts," he notes.

According to the apparel exporter, if any agreement entered into by a US government department -- including the Office of the US Trade Representative (USTR) -- was based on modifying or applying the reciprocal tariffs, then that specific portion of the agreement would also lose its legal standing.

However, he clarifies that other components of trade agreements not directly linked to the reciprocal tariffs, such as commercial buying and selling commitments, would remain valid unless separately challenged.

Mr Islam notes that, based on information from US business partners, the Bangladesh-US trade agreement has not yet come into effect. As the deal-required exchange of formal notifications remains incomplete, its current status is still unclear.

He adds that buyers who have already paid tariffs are preparing to seek refunds from the US Treasury if the reciprocal duties are formally withdrawn.

In his view, any attempt by President Donald Trump to reintroduce similar tariffs would require fresh legislation in Congress -- a process he describes as lengthy and politically challenging.

Meanwhile, corporate America is a making a demand for US$130 refund of import tariffs already paid under the new tariff regime.

Dr Abdur Razzaque, chairman of Research and Policy Integration for Development (RAPID), says the Supreme Court ruling leaves limited room for ambiguity from a legal perspective, although its practical implications remain uncertain.

The reciprocal tariffs were introduced under the International Emergency Economic Powers Act (IEEPA), but the court held that the statute does not authorise tariff measures of unbounded scope, magnitude and duration, given Congress's constitutional primacy in tariff-setting.

For Bangladesh, he mentions, the immediate implication is that the bilateral arrangement now stands on shifting ground.

"A large part of the agreement's logic was anchored to a specific tariff regime," he observes. And if that regime's legal basis is removed, the agreement must be reviewed clause by clause to determine what remains enforceable and what has become redundant.

The economic analyst adds that the court order would likely lead to the abolition of reciprocal tariffs, but bilateral agreements already concluded would not automatically become void. Determining which provisions are directly linked to the reciprocal tariffs will require careful legal interpretation.

He also notes that the existing 19-percent tariffs on Bangladeshi exports -- reportedly negotiated down from a proposed 37 per cent under reciprocal terms -- could be reduced to 10 per cent in line with the newly announced uniform tariff applied to all countries.

Prof Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD), says the core justification for the reciprocal trade agreement has weakened significantly.

"If the original legal basis of those tariff measures has been cancelled, then the rationale for the agreement also becomes questionable."

He suggests that Bangladesh reassess the deal in the light of the changed policy landscape in Washington. The agreement is scheduled to take effect two months after the exchange of formal notifications -- a process that has yet to be completed -- leaving room for further dialogue.

Mr Rahman argues that if the reciprocal tariff structure no longer stands, related commitments -- including expanded market access and other concessions -- may also warrant reconsideration.

However, he points out that the newly announced 10-percent additional tariff applies to all countries, meaning Bangladesh is not being singled out in the revised framework.

At the same time, he cautions that the US administration retains authority under Section 232 of its trade law to impose product- or country-specific tariffs on national-security grounds. If such measures are introduced, Bangladesh would need to continue negotiations accordingly.

He also questions the timing of the agreement, reportedly signed just two days before the national elections in Bangladesh, and calls for a transparent review by the newly elected government.

Sri Lanka's 2022 sovereign default offers a cautionary lesson for Bangladesh as external borrowing rises and large infrastructure projects expand.

A recent study by researchers from SOAS University of London, comparing the two countries, warns that similar policy patterns could heighten long-term risks if corrective steps are delayed.

From around 2008, both Bangladesh and Sri Lanka shifted towards infrastructure-led growth, investing heavily in ports, highways and energy facilities, often financed through external partners.

In Sri Lanka's case, about 65% of foreign debt accumulated during that period was linked to energy projects, many of which were underutilised and generated limited economic returns.

The result was rising debt without sufficient growth to service it.

The study notes that Bangladesh's external debt has grown rapidly in recent years, alongside significant cost escalations in major infrastructure projects.

Projects awarded through non-competitive government-to-government arrangements were found to be substantially more expensive than those procured through transparent bidding.

Weak oversight and overpricing increase repayment burdens over time.

One key lesson from Sri Lanka is that crises can emerge suddenly.

Gradual increases in debt indicators may appear manageable, but vulnerability surfaces when a country struggles to meet interest or principal payments on time.

The researchers warn that Bangladesh could face a more exposed period between 2028 and 2032 if governance weaknesses persist.

To avoid such a scenario, the study recommends tighter expenditure control, stronger domestic revenue mobilisation and improved project governance.

Ensuring competitive procurement, limiting cost overruns and strengthening institutional oversight would help contain debt risks and protect fiscal stability.

Bangladesh’s economy last week witnessed a mix of post-election gains in the capital market alongside data underscoring underutilised development spending. While investors regained confidence following the national polls, systemic challenges in fiscal management and trade readiness remain pressing.

The following is a recap of major stories covered by Star Business:

Rebuilding business confidence cannot wait (Feb 15)
Business leaders and economists urged the government to restore investor trust to revitalise the private sector. They noted that persistent law-and-order challenges and weak institutional coordination have eroded confidence, making immediate policy interventions essential for a sustainable turnaround.

Stocks jump to 18-month high after vote (Feb 16)
The Dhaka Stock Exchange surged following the national election, with indices hitting an 18-month high. Investors displayed renewed optimism as political clarity returned, sparking a buying spree across sectors and sharply increasing daily turnover.

US trade deal overshadows Bangladesh’s economic freedom (Feb 17)
A newly signed trade agreement with the US offers a 19 percent reciprocal tariff but imposes restrictive clauses. Critics argue that the requirement to use US-origin cotton for duty-free access may benefit Washington more than Dhaka’s garment industry.

Development spending plunges to 16-year low (Feb 17)
Implementation of the Annual Development Programme fell to a 16-year low due to political unrest and bureaucratic delays. Only a fraction of the allocated budget was utilised, threatening GDP growth targets and slowing critical infrastructure projects nationwide.

Interim govt stopped macro bleeding but couldn’t reignite growth (Feb 18)
While the interim administration stabilised foreign exchange reserves and narrowed the current account deficit, industrial growth remains stagnant. High inflation and energy shortages continue to hamper manufacturing, preventing full recovery.

Legal fights heat up in telecom sector (Feb 19)
Major telecom operators are locked in intensifying legal disputes with the regulator over audit claims and spectrum fees. These courtroom battles risk disrupting future investment and service quality in one of the country’s most dynamic sectors.

‘Substantial gaps’ found in LDC readiness (Feb 20)
A recent assessment revealed significant shortcomings in Bangladesh’s preparation for graduating from Least Developed Country (LDC) status. Experts warned that without addressing supply chain weaknesses and securing GSP+ benefits, the export sector faces a steep competitive cliff.

The Dhaka Stock Exchange (DSE) extended its losing streak today (19 February), marking the fourth consecutive session of decline since the national election.

Over the four trading sessions, the benchmark DSEX shed a cumulative 135 points, reflecting persistent selling pressure and cautious investor sentiment.

Today, the DSEX fell 53 points to close at 5,466. The blue-chip DS30 index dropped 12 points to 2,098, while the Shariah-based DSES declined 10 points to end at 1,095.

Turnover on the premier bourse plunged 40.17% to Tk560 crore, down from Tk936 crore in the previous session, indicating weaker market participation. Of the 392 issues traded, only 46 advanced, while 313 declined and 33 remained unchanged, underscoring the broad-based downturn.

Market participants attributed the slump to investor caution as they assessed the post-election political and economic landscape.

Many investors remained on the sidelines, awaiting clearer signals on policy direction and the formation of a new securities commission.

The lack of clarity regarding regulatory leadership and potential reforms continued to weigh on sentiment.

Analysts said uncertainty over possible regulatory changes and expectations surrounding appointments at the securities regulator contributed to subdued trading activity. Institutional investors, in particular, appeared reluctant to take fresh positions without greater visibility on policy continuity and market-stabilisation measures.

Over the past year, prolonged political uncertainty and regulatory decisions that failed to restore investor confidence have driven a sustained market downturn. A significant number of retail investors exited the market, while institutional and high-net-worth investors largely stayed inactive, leading to notable declines even in fundamentally strong stocks.

All major large-cap sectors closed in the red. The NBFI sector posted the steepest loss, falling 1.75%, followed by Engineering (1.46%), Fuel & Power (1.23%), and Telecommunication (1.20%). Pharmaceuticals declined 0.94%, Food & Allied lost 0.67%, and the Bank sector edged down 0.12%.

Block market transactions accounted for 3.5% of total turnover, reflecting limited negotiated large-volume trades.

Analysts believe the market may gradually stabilise in the coming months if policy consistency and investor-friendly measures are ensured.

Robi Axiata, the country's second-largest mobile network operator, posted a net profit of Tk937 crore in 2025 – its first annual profit since listing on the stock exchange five years ago. The earnings represent a 33.3% year-on-year growth compared to 2024.

Riding on improved profitability, the board recommended a 17.5% cash dividend – Tk1.75 per share – the highest since its market debut in 2020. The proposed payout accounts for 97.8% of the company's total profit for the year. In 2024, Robi declared a 15% cash dividend.

The board approved the financial statements and dividend at a meeting held today (19 February).

Managing Director and CEO Ziad Shatara said that despite a continued decline in voice revenue, the operator managed to deliver positive revenue growth driven by strong expansion in data services. Growth was supported by a substantial increase in data and 4G users, alongside higher data consumption per subscriber.
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He noted that sustained high inflation and challenging macroeconomic conditions constrained subscriber spending, moderating overall revenue growth. He also highlighted that 62% of total revenue was contributed to the government exchequer through various taxes, describing the tax regime as excessively burdensome for industry progress.

However, with nearly 70% of active subscribers now using 4G, Shatara said Robi is positioning itself as the preferred operator for digitally savvy consumers.

The company credited its operational excellence strategy for strengthening financial resilience amid a challenging revenue environment. Disciplined capital allocation ensured network investments aligned with demand growth, service quality improvements, and long-term efficiency gains.

In 2025, Robi deployed an additional 4G sites across 40 districts, expanding coverage in underserved areas.

According to a press release, total revenue rose marginally by 0.4% year-on-year to Tk9,992.2 crore. While voice revenue declined 2.9%, data revenue grew 5.1% compared to 2024. Earnings per share stood at Tk1.79.

Total capital expenditure reached Tk1,304.1 crore during the year. In the fourth quarter (October–December), revenue rose 2.9% quarter-on-quarter to Tk2,584.9 crore.

At the end of 2025, Robi's active subscriber base stood at 5.74 crore. Data subscribers reached 4.45 crore, while 4G subscribers totalled 3.99 crore. Data users accounted for 77.5% of active subscribers, and 69.5% were 4G users – the highest proportions among operators in the country.

The operator's network now includes over 19,000 4G sites, achieving 98.98% population coverage. As the first operator to launch 5G services in Bangladesh, Robi said it continues to build the ecosystem necessary for broader 5G expansion.

Robi Axiata is a public limited company majority-owned (61.82%) by Axiata Group Berhad. India-based Bharti Airtel holds 28.18% of the shares, while the remaining 10% is owned by public shareholders.

AGM

The annual general meeting (AGM) has been scheduled for 22 April, while the record date has been fixed for 16 March to determine eligible shareholders.

According to its price-sensitive information, the company's net asset value (NAV) stood at Tk69.86 billion, with NAV per share rising slightly to Tk13.34 from Tk13.08 at the end of 2024.

Its net operating cash flow per share also increased to Tk9.04, up from Tk8.83 in 2024.

Last year, Robi Axiata Limited secured a no-objection certificate from the Bangladesh Bank in favour of SmartPay Limited to operate as a Payment Service Provider (PSP).

SmartPay Limited, a wholly owned subsidiary of Robi Axiata, is a private company limited by shares incorporated under the Companies Act, 1994. Its principal activity is to provide fintech-driven electronic payment services, including bill payments and other related services.

Aziz Mohammad Bhai, a sponsor director and chairman of Olympic Industries Limited, has announced his intention to purchase 1 crore shares of the company through the block market of the Dhaka Stock Exchange (DSE).

According to a disclosure published on the DSE website today (19 February), he plans to acquire the shares at the prevailing market price within the next 30 working days.

The transaction will be executed through the block market, a platform generally used for large-volume trades between institutional and strategic investors, helping to avoid sharp price fluctuations in the regular trading session.

Following the announcement, Olympic Industries' share price rose 2.10% to Tk155.30 apiece on the Dhaka bourse, reflecting a positive market response to the sponsor director's move.

Market analysts say such declarations are often viewed as a sign of confidence in a company's fundamentals and future prospects.

At the prevailing price of around Tk155 per share, the proposed acquisition of 1 crore shares would amount to approximately Tk155 crore. The sizeable investment is expected to increase the sponsor director's shareholding in the company, although details of his existing stake were not disclosed in the filing.

Olympic Industries is the country's largest branded biscuit manufacturer and a leading player in the fast-moving consumer goods sector. It produces a wide range of biscuits, confectionery and bakery products, supported by a strong distribution network in both domestic and export markets.

According to its financial statements for the July-December period of 2025, the company posted revenue of Tk1,548 crore, up from Tk1,490 crore in the same period a year earlier. Its earnings per share stood at Tk5.99, compared to Tk5.82 previously. As of December 2025, its net asset value per share was Tk65.34.

The ruling by the Supreme Court of the United States limiting President Donald Trump's use of emergency powers to impose sweeping tariffs should modestly ease policy uncertainty for Bangladesh's apparel exporters.

Bangladesh had been subject to a 19% "reciprocal" tariff under the recent US-Bangladesh trade arrangement, so the invalidation of those IEEPA-based duties reduces the risk of sudden, across-the-board tariff hikes imposed under emergency authority.

For Bangladesh's garment sector - highly dependent on the US market - predictability is almost as important as the tariff rate itself.

Although Trump has announced a new 10% global tariff under a different legal provision, its uniform application across countries effectively restores a more level playing field in the short term, compared to the differentiated reciprocal regime.

In terms of immediate order flows, I would not expect a sharp spike right away. US buyers typically place apparel orders months in advance, and sourcing strategies are shaped by longer-term considerations related to cost, compliance, and logistics.

However, the court decision could improve buyer sentiment by reducing legal uncertainty and the prospect of retroactive duties. Some American retailers may briefly pause to assess the evolving policy environment, especially given Trump's signal that he intends to pursue tariffs under alternative legal authorities.

If the new 10% tariff proves more stable and predictable than the earlier emergency-based regime, it could gradually support steadier order volumes from US importers.

However, I am concerned that a new set of restrictive trade measures from the US administration may be forthcoming, which could continue to disrupt the global trading system.

In this context, the hastily concluded trade agreement between Bangladesh and the United States - signed by the interim government just days before the national election - is already being questioned. Under this agreement, Bangladesh's interests appear to be significantly underrepresented. Moreover, the future of the agreement remains uncertain in light of the evolving legal and policy landscape.

On competitiveness, Bangladesh could see a relative advantage if higher country-specific tariffs on major competitors - particularly China - remain constrained or face legal scrutiny.

If the tariff gap between Bangladesh and higher-cost suppliers widens or becomes more predictable, US brands may accelerate diversification toward Bangladeshi factories.

However, competitiveness will still hinge on productivity, lead times, compliance standards, and infrastructure - not just tariffs.

In the bigger picture, the ruling reinforces constitutional limits on executive trade authority, which may lead to more congressional involvement in future tariff decisions.

For Bangladesh, a more rules-based US trade environment would likely be preferable to abrupt, executive-driven shifts.

Dr Selim Raihan is the executive director of the South Asian Network on Economic Modelling (Sanem).

US trading partners in Asia started weighing fresh uncertainties on Saturday after President Donald Trump vowed to impose a new tariff on imports, hours after the Supreme Court struck down many of the sweeping levies he used to launch a global trade war.

The court's ruling invalidated a number of tariffs that the Trump administration had imposed on Asian export powerhouses from China and South Korea to Japan and Taiwan, the world's largest chip maker and a key player in tech supply chains.

Within hours, Trump said he would impose a new 10% duty on US imports from all countries starting on Tuesday for an initial 150 days under a different law, prompting analysts to warn that more measures could follow, threatening more confusion for businesses and investors.

In Japan, a government spokesman said Tokyo "will carefully examine the content of this ruling and the Trump administration's response to it, and respond appropriately."

China, which is preparing to host Trump in late March, has yet to formally comment or launch any counter moves with the country on an extended holiday. But a senior financial official in China-ruled Hong Kong described the US situation as a "fiasco".

Christopher Hui, Hong Kong's secretary for financial services and the treasury, said Trump's new levy served to underscore Hong Kong's "unique trade advantages".

"This shows the stability of Hong Kong's policies and our certainty ... it shows global investors the importance of predictability," Hui said at a media briefing on Saturday when asked how the new US tariffs would affect the city's economy.

Hong Kong operates as a separate customs territory from mainland China, a status that has shielded it from direct exposure to US tariffs targeting Chinese goods.

While Washington has imposed duties on mainland exports, Hong Kong-made products have generally faced lower tariff rates, allowing the city to maintain trade flows even as Sino-US tensions escalated.

Before the Supreme Court's ruling, Trump's tariff push had strained Washington's diplomatic relations across Asia, particularly for export-reliant economies integrated into US-bound supply chains.

Friday's ruling concerns only the tariffs launched by Trump on the basis of the International Emergency Economic Powers Act, or IEEPA, intended for national emergencies.

Trade policy monitor Global Trade Alert estimated that by itself, the ruling cuts the trade-weighted average US tariff almost in half from 15.4% to 8.3%.

For those countries on higher US tariff levels, the change is more dramatic. For China, Brazil and India, it will mean double-digit percentage point cuts, albeit to still-high levels.

In Taiwan, the government said it was monitoring the situation closely, noting that the US government had yet to determine how to fully implement its trade deals with many countries.

"While the initial impact on Taiwan appears limited, the government will closely monitor developments and maintain close communication with the US to understand specific implementation details and respond appropriately," a cabinet statement said.

Taiwan has signed two recent deals with the US - one was a Memorandum of Understanding last month that committed Taiwan to invest $250 billion and the second was signed this month to lowering reciprocal tariffs.

More confusion

Analysts say the Supreme Court's ruling against Trump's more aggressive tariff measures may offer little relief for the global economy. They warned of looming confusion as trading nations brace for moves by Trump to find other means of using levies to circumvent the ruling.

Thailand's Trade Policy and Strategy Office head Nantapong Chiralerspong said the ruling might even benefit its exports as uncertainty drove a fresh round of "front loading", where shippers race to move goods to the US, fearing even higher tariffs.

In corporate disclosures tracked by Reuters, firms across the Asia-Pacific region reported financial hits, supply shifts and withdrawals as levies escalated through 2025 and early 2026.

A five-day meeting of the UN Committee for Development Policy (UN CDP) is set to begin tomorrow in New York City, where Bangladesh's graduation-related submission will be assessed.

Dr Debapriya Bhattacharya, a CDP member and head of its Enhanced Monitoring Mechanism (EMM), a sub-committee under UN CDP, was traveling to New York last night to attend the sessions.

The EMM sub-committee is also scheduled to meet this week and will review the current situation of countries that have already completed their graduation process, as well as those in the pipeline. The three countries currently in the pipeline are Bangladesh, Nepal, and Laos.

"One of the sessions of the UN CDP meeting will discuss the status of Bangladesh, Nepal, and Laos, which are waiting in the graduation pipeline. It will be scrutinised what progress these countries have made so far and whether they are prepared for graduation at the end of the year," Debapriya told The Business Standard before leaving Dhaka.

Bangladesh seeks 3-year deferral of LDC graduation

The EMM sub-committee reviews how smoothly graduating and graduated LDCs are progressing. It also analyses whether countries that have already graduated are actually able to maintain sustainability. Bangladesh's request for graduation deferral will also be discussed at the meeting.

"There is a crisis button under the EMM. If Bangladesh pushes the button, then the nature of the stated crisis will be analysed and cross-checked with the latest data. Besides, the graduation assessment report of Bangladesh submitted to UN CDP last year will also be taken into consideration. In particular, the information provided in the government's report last November will be weighed against the new application," he said.

The economist also said that Economic Relations Division (ERD) Secretary Md Shahriar Kader Siddiky, who has now requested a postponement of graduation, had stated in November that everything was on track. Bangladesh's level of commitment to implementing its Smooth Transition Strategy during the graduation period will also be taken into consideration.

Referring to the instance of graduation deferment of Solomon Islands, Debapriya said that the head of the country's government had written the letter seeking time for graduation preparedness, while Bangladesh's request letter was signed by a secretary.

The interim government's Council of Advisers had decided not to seek a deferral of graduation. However, the new government submitted such a request immediately after assuming office. Nepal and Laos have not made any new applications, he said.

Therefore, according to the CDP member, the experiences of these two countries will also be reviewed while assessing Bangladesh's request.

The day after assuming office, the new government formally applied to defer Bangladesh's graduation from the Least Developed Countries category by three years.

On Wednesday, the ERD secretary sent a letter to José Antonio Ocampo, chair of the UN CDP, which operates under the UN Economic and Social Council (Ecosoc).

The letter mentioned a range of domestic and external challenges and requested that the LDC graduation timeline be extended until 24 November 2029. Under the previous decision, Bangladesh is set to graduate on 24 November this year. The third and final review process ahead of graduation is currently underway.

At the urging of leaders of the country's top business bodies and several economists, the immediate past interim government had recommended pursuing an extension until 2030 in coordination with other countries, such as Nepal and Laos, which are on a similar graduation track. The final decision on the matter, however, was left to the elected government.

On Wednesday, after taking charge, Commerce Minister Khandaker Abdul Muktadir told journalists that all necessary steps would be taken to delay LDC graduation.

He said the ministry had begun working on the issue immediately and would move swiftly in coordination with the ERD to advance the deferral process. Later that same day, the ERD secretary sent the letter to the CDP chair.

High-cost infrastructure projects awarded largely through non-competitive contracts, coupled with weak revenue mobilisation, are increasing Bangladesh's exposure to external public debt risks, according to official data and a new independent study.

Although external debt inflows continue to rise, government revenue growth has failed to keep pace, pushing key debt indicators closer to risk thresholds.

According to the Economic Relations Division's (ERD) latest Flow of External Resources into Bangladesh report, the debt-to-revenue ratio climbed to 16.92% by the end of FY2024-25, up from 16.53% a year earlier. The IMF's indicative threshold for this ratio is 18%.

The ERD cautioned that without faster revenue growth, Bangladesh may lose its current "comfortable position" in servicing external debt.

Infograph: TBS
Infograph: TBS
Key debt indicators edging upward

Other external debt indicators present a mixed picture.

The debt-to-exports of goods and services plus remittances (XGS) ratio improved slightly, falling to 105.87% at the end of FY2024-25 from 110.09% a year earlier, well below the IMF's 180% threshold.

The debt-to-GDP ratio, though still low by international standards, is rising gradually. It stood at 18.99% at the end of FY2024-25, up from 17.03% in FY2023-24, against a 40% benchmark.

Bangladesh's total medium- and long-term (MLT) external debt reached $77.279 billion as of 30 June 2025, compared with $68.822 billion a year earlier — an increase of $8.457 billion. Net government external borrowing during the year amounted to $5.832 billion.

Exchange rate movements also played a role. The appreciation of the US dollar against the SDR and other currencies added $2.510 billion to the debt stock in dollar terms. Meanwhile, depreciation of the taka increases debt servicing costs in local currency.

Liquidity indicators show mounting pressure. The interest service ratio for MLT debt rose to 2.96% in FY2024-25 from 2.87% the previous year. The total debt service ratio — principal and interest payments as a share of exports — increased from 7.16% to 8.12%, reflecting the beginning of principal repayments on several loans.

The debt service-to-revenue ratio rose sharply from 9.17% to 11.41%, underscoring the strain created by rising obligations and sluggish revenue mobilisation.

While these metrics still indicate manageable liquidity risk, they suggest growing pressure on fiscal space.

External debt up 377% since 2009

Concerns over longer-term sustainability were amplified by a recent study by researchers from SOAS University of London, supported by the Open Society Foundations and Change Initiative.

The study found that Bangladesh's external debt increased from $23.5 billion in 2009 to nearly $112 billion in 2025 — a 377% rise.

Over the same period, one out of every Tk5 in government revenue is now spent on interest payments alone, before repayment of principal.

Analysing 42 mega infrastructure projects undertaken between 2009 and 2025, the study found that 29 projects experienced average cost escalation of 70.3%. Around 35% of infrastructure project costs were estimated to have been lost to corruption and inefficiency.

The study, titled "Corruption in Infrastructure Projects in Bangladesh and Sri Lanka: Implications for Public Debt," found that projects awarded through direct government-to-government (G2G) arrangements were, on average, more than 400% costlier than those procured through transparent competitive bidding.

It warned that unrestricted G2G contracts and weak oversight significantly increase long-term debt burdens and macroeconomic risks.

Speaking at a discussion in Dhaka this week, development economist Mushtaq Khan of SOAS said even small differences in contract pricing — particularly in power sector projects — can translate into hundreds of millions of dollars in long-term liabilities.

"Once the project is awarded, the inflated benefits are shared among insiders. This is not unique to Bangladesh; it is a global phenomenon," he said, adding that easier access to large external lenders has enabled many developing countries to accumulate infrastructure-driven debt at unsustainable levels.

Lessons from Sri Lanka

The study draws parallels with Sri Lanka, which pursued a similar infrastructure-led growth strategy and eventually defaulted in 2022.

Around 2008, both countries shifted toward high-value infrastructure investments, including ports, highways and energy facilities, often financed by external partners such as China and India.

In Sri Lanka's case, roughly 65% of foreign debt accumulated during that period was linked to energy infrastructure, much of it underutilised or poorly planned, generating insufficient economic returns.

The result was mounting debt without corresponding growth dividends — a dynamic that ultimately contributed to its crisis.

In FY2024-25, Bangladesh's outstanding MLT external debt stood at 152.7% of export earnings, up from 146.12% a year earlier. While this does not yet signal acute solvency risk, the upward trend is notable.

The study warns that if corruption-driven overpricing and governance weaknesses persist, Bangladesh's debt-to-GDP ratio could rise to 65–70% by 2030.

It characterises Bangladesh as having moved from a "low-risk stability phase" to a "moderate-risk acceleration phase."

"Sri Lanka's 2022 default could not be predicted simply from gradual trends. Crisis happens when a country suddenly cannot meet a day's interest or principal payment," the study notes.

While Bangladesh remains in a comparatively safer position, the researchers warn that 2028–2032 could become a vulnerable period if corrective measures are delayed.

They recommend tighter expenditure management, stronger tax collection and improved project governance to prevent rapid debt acceleration.

Legacy projects weigh on fiscal space

Former Planning Commission member and ex-secretary Arastoo Khan also acknowledged the risks posed by high-cost, less essential infrastructure projects.

Although the interim government has curtailed new borrowing, he said current debt pressures largely stem from liabilities linked to large projects undertaken in the past decade.

"Bangladesh was previously in a relatively comfortable debt position, but taking multiple high-cost projects simultaneously has created pressure on debt management," he said.

He cited the $12 billion nuclear power plant project, which requires annual interest payments of around $400–450 million.

The challenge, he added, is not borrowing per se, but abnormal cost escalation and overpricing. In many cases, project costs reportedly increased by 25–30%, significantly inflating debt burdens.

While international agencies generally consider a debt-to-GDP ratio of up to 40% manageable, he warned that continued investment in high-cost, low-return projects could make the situation "highly risky" in the coming years.

The study concludes that infrastructure-driven debt accumulation is fundamentally a governance issue, arguing that genuine economic competition — rather than additional layers of rules — is essential to break collusive arrangements and strengthen accountability.

Expatriate Bangladeshis have sent over $2 billion in remittances during the first 18 days of February, as money transfers surged ahead of Ramadan and Eid.

According to data released by Bangladesh Bank on Thursday (Feb 19), if this upward trend continues, total remittances for the month are expected to cross the $3 billion milestone.

Central bank statistics show that January 2026 saw an inflow of $3.17 billion, marking it as the third-highest monthly total in the country's history. The current fiscal year (FY 2025–26) has shown robust growth, with total remittances reaching $21.56 billion between July 1 and February 18.

This represents a significant 22.3 percent increase compared to the $17.63 billion received during the same period of last fiscal year 2024-25.

The historical peaks for monthly remittances remain:

$3.29 billion (March 2025 – fueled by Eid-ul-Fitr)

$3.22 billion (December 2025)

$3.17 billion (January 2026)

Impact on Reserves

Economists believe the surge in formal channel transfers is a result of a stabilized exchange rate and a decrease in illegal hundi activities following the political transition in August 2024. This influx is providing a much-needed boost to the nation's foreign exchange reserves.

As of February 17, the country's gross reserves stood at $34.54 billion. However, according to the IMF’s BPM-6 calculation method, the net reserves are currently valued at $29.86 billion.

Banking officials and experts point to two primary drivers:

Ramadan Preparation: Families in Bangladesh face higher expenses during Ramadan, prompting expatriates to send more money home.

Increased confidence in the banking sector and a stable dollar rate have encouraged migrants to shun illegal channels in favor of official ones.