Treasury bill yields rose over the past week as increased government borrowing from banks, driven by mounting funding needs and weak revenue collection, put upward pressure on short-term interest rates.

According to data from the latest auction held today (12 April), yields on 91-day, 182-day and 364-day treasury bills increased by 31 to 33 basis points compared with the previous week. The yield on 91-day bills climbed to 10.16%, while 182-day bills rose to 10.33% and 364-day bills reached 10.39%.

A week earlier, on 6 April, yields stood at 9.85% for 91-day bills, 10.01% for 182-day bills and 10.08% for 364-day bills.

A senior official of a private bank said the rise in yields was primarily due to higher government borrowing from the banking system. "The government is facing a shortage of funds in its treasury, while revenue collection remains below target. As a result, it has increased its reliance on bank borrowing," he told TBS.

In addition to the regular auction calendar, the central bank conducted off-calendar auctions this month, raising Tk10,000 crore through 91-day treasury bills in two separate tenors to meet immediate funding requirements.

Treasury bill yields had previously crossed 11.5% before declining to below 10% in February this year, largely due to improved liquidity in the banking sector.

Economists attribute the renewed upward trend to increased government spending following the formation of a new administration after the national election, including expanded social support programmes.

A central bank official said treasury bill and bond yields are determined by the liquidity conditions in the banking system. "When liquidity supply in banks exceeds government demand, yields decline. Conversely, when demand for funds is higher, yields increase," the official explained.

Bankers noted that although the banking sector is not currently facing a liquidity shortage, the government's higher borrowing requirement has begun to push rates upward.

For the April to June quarter, the government plans to borrow Tk1,10,000 crore through treasury bills, including Tk44,000 crore in 91-day bills, Tk36,000 crore in 182-day bills and Tk30,000 crore in 364-day bills.

In addition, the government aims to raise Tk39,000 crore through treasury bonds to finance medium- and long-term needs.

Treasury bills are short-term government securities with maturities ranging from 91 to 364 days and are considered low-risk investments due to their fixed returns.

Treasury bonds, by contrast, are long-term instruments with maturities ranging from two to 20 years, through which the government raises funds for extended periods.

The DSE Brokers Association of Bangladesh (DBA) has asked the stock market regulator to extend the deadline for complying with new margin rules by three months.

In a recent letter to the Bangladesh Securities and Exchange Commission (BSEC), the association sought more time to meet the requirements set out in the Bangladesh Securities and Exchange Commission (Margin) Rules 2025.

The rules came into force on November 1 last year, and are designed to strengthen risk management, protect investors and boost market stability. Three key provisions must be implemented within six months, with the current deadline set for April 30.

In the letter, the association argued that the timeframe is too tight.

DBA said that brokerage houses need time for internal consultations, risk assessments, board approvals and integration of the new requirements into their operational systems.

The association said many firms are still finalising their policies and implementation plans due to a shortage of skilled personnel required under the rules, as well as limited technical support and client feedback.

The association also noted that aligning with risk-based capital adequacy standards requires system upgrades, staff training, internal audits and technology improvements.

Rushing the process could trigger operational errors or disrupt margin services, it added.

Moreover, thousands of existing loan accounts contain non-marginable securities of considerable value. Enforcing the six-month deadline, the association said, could prompt distressed sales, cause market volatility, inflict avoidable losses on retail investors and tighten liquidity.

It also pointed to the current strain on the capital market following the Middle East war and fuel crisis, mentioning that immediate enforcement would add to the pressure.

A measured transition is essential to protect investors, the letter said.

DBA said that an additional three-month extension, taking the compliance period to nine months until July 31, 2026, would allow brokerages to complete the necessary system and policy upgrades and ensure a smooth adjustment for existing loan clients.

“We respectfully seek your kind consideration and approval for an extension of the compliance timelines stipulated in the Margin Rules 2025,” added the association.

China's long-term strategy of diversifying energy sources and building stockpiles is helping it weather disruptions from the Iran war, although some sectors still face major snags, analysts say.

China is a net importer of oil and more than half of its seaborne crude came from the Middle East last year, according to analytics firm Kpler.

The conflict triggered by Israel and the United States against Iran has halted almost all shipments from the Gulf area for six weeks now, with a shaky ceasefire deal struck this week extremely unlikely to lead to an immediate recovery.

However, Beijing's long-running prioritisation of energy security has left it well-prepared for such shocks, analysts told AFP.

A "general concern about the geopolitical situation" in recent years has spurred Chinese leaders to ensure sufficient storage construction and stockpiling of strategic reserves, said Muyu Xu, senior oil analyst at Kpler.

Those efforts mean China now sits in a far better position than several of its Asian neighbours, such as Japan and the Philippines, she said.

But so far Beijing has not been "in a rush" to initiate releases from its substantial strategic reserves, said Xu.

'Vindicated'

This is partly because China's decades-long mission to diminish its traditional reliance on coal and fossil fuels is beginning to flourish.

The large-scale efforts to transition to renewable energy mean "China is relatively well placed" to deal with the current situation, said Lauri Myllyvirta, co-founder of the Centre for Research on Energy and Clean Air.

Wind, solar and nuclear capacity has been added to China's populous coastal provinces, while improved grid infrastructure carries electricity to them from inland.

"There would be much more oil and gas imports needed to power those provinces" otherwise, said Myllyvirta.

While dependencies still exist -- including in the vast manufacturing sector -- renewable energy is "helping a lot on the margin", he said.

Li Shuo, director of the China Climate Hub at the Asia Society, told AFP that the current energy crisis "vindicates China's long-standing 'all-of-the-above' strategy".

President Xi Jinping is seeking to leverage the renewables build-out even further as geopolitical turmoil mounts.

State broadcaster CCTV aired a segment on Monday in which Xi was quoted as calling for accelerated construction of a "new energy system" to safeguard energy security, although it did not mention the Middle East war.

'Teapot' trouble brewing

For Beijing, the "more serious risk" is not immediate energy shocks but a potential global economic downturn caused by the conflict, the Asia Society's Li said.

Some sectors will inevitably feel the pinch, presenting new hurdles for leaders struggling to jumpstart sluggish activity.

Among them are "teapot" oil refineries -- small, private outfits that have historically benefited from access to sanctioned Iranian and Venezuelan crude acquired at a discount.

The loss of Iranian crude could be a death knell for many of these operations, which are mainly concentrated in the eastern province of Shandong and are already reeling from Washington's military intervention in Venezuela this year.

Beijing likely has "mixed feelings" about that, Kpler's Xu told AFP.

On the one hand, teapots account for around one-fifth of China's refining capacity, also providing substantial employment, she said.

However, their lax environmental standards, less predictable tax generation and competition with state-owned giants means that their shutting down is "not entirely bad news for China", said Xu.

Chipmaking, which Xi has declared a strategic priority, is another sector likely to encounter challenges as the Strait of Hormuz remains shut.

Qatar is one of the world's few large-scale producers of helium -- vital for semiconductor manufacturing -- and supplies have ground to a halt since the war began.

The chemicals industry could also face "significant pressure" from the disruption, Michal Meidan from the Oxford Institute for Energy Studies wrote in a recent report.

On a national level though, she said, "the impacts can be smoothed out".

"While the economy will not be immune to higher prices and reduced economic activity, stakeholders are already taking pre-emptive measures in case the disruption is protracted," she wrote.

The DSE Brokers Association of Bangladesh (DBA) has requested a three-month extension from the capital market regulator to comply with newly introduced margin rules, citing concerns that the current April deadline could trigger massive sell-offs and further destabilise an already distressed market.

In a formal letter to the Bangladesh Securities and Exchange Commission, the DBA – a primary intermediary representing brokerage firms of the Dhaka Stock Exchange – urged the regulator to move the compliance deadline from 30 April to 31 July 2026.

The commission formulated Margin Rules 2025, which came into effect on 1 November, and introduced several critical requirements aimed at strengthening risk management, investor protection, and overall market stability.

However, in the newly introduced rules, three key provisions require compliance within six months by 30 April.

Saiful Islam, president of DBA, told The Business Standard, "The timeframe mandated in the rules is insufficient for compliance; that is why we have sought an extension."

He said that to comply with the rules, brokers would need to sell a significant amount of shares, which would put pressure on the market.

"Currently, the capital market is going through a distressed situation resulting from the US-Iran war. In such a situation, if brokers comply with the rules, the market will suffer further," he added.

In the letter to the commission, the DBA said, "Brokerage houses require adequate time for internal consultations, risk assessment, board approvals, and integration into operational systems. Most brokerage houses are still in the process of finalizing policy and implementation due to a lack of skilled resources specified by the rules and adequate technical support and client feedback."

It said full alignment with risk-based capital adequacy necessitates significant system upgrades, staff training, internal audits, and technological enhancements. Rushed implementation may lead to unintended operational errors or temporary disruptions in margin services, said the DBA.

Regarding the sale adjustment of non-marginable securities from existing margin loan clients, it said thousands of existing loan accounts hold non-marginable securities of significant value. A six-month deadline could force distressed sales, create market volatility, cause avoidable losses on retail investors, and strain liquidity, said the DBA.

Moreover, during the current distress situation of the capital market due to the recent war and fuel crisis made it difficult to impose the rule, as it will affect the distress furthermore, it said. "A timely transition is essential to protect investor interests."

The association further said an additional three-month extension, making the total compliance period nine months up to 31 July 2026, would provide brokerages to complete necessary system and policy upgrades to ensure smooth, non-disruptive adjustment for existing loan clients.

According to of the commission, the total negative equity stood at Tk10,425 crore as of February 2025, including Tk8,005 crore in principal margin loans and Tk2,420 crore in accrued interest.

The stock market after the 2010 crash caught the gigantic negative equity problem as the regulator then verbally ordered firms not to trigger forced selling, according to sources.

A total of 146 firms – 102 brokerage houses of the DSE, 39 merchant banks, and five brokerage firms of the Chittagong Stock Exchange (CSE) – have been struggling with negative equity for years.

Negative equity refers to a deficit in owners' equity, which occurs when the value of assets used to secure margin loans falls below the outstanding loan balance.

Brokerage firms and merchant banks had extended margin loans to clients for share purchases, but the current market value of those shares is far below their purchase price.

Negative equity is created when a broker or merchant bank does not trigger the forced selling of securities that a client buys with money borrowed from the broker or merchant bank.

As a result, lenders have been unable to adjust the loans through share sales, causing the negative equity to persist for years. To ease the mounting pressure on lenders, the regulator has been extending deadlines for adjusting negative equity and maintaining provisioning.

If the loans are not recovered for one year, the firms need to keep provisioning against the total lending amount of principal. But the firms were able to maintain only Tk2,946 crore, and net provision deficit stood at Tk5,058 crore, the data showed.

Bangladesh can no longer afford “surreal” budgets built on inflated projections and political convenience, warned eminent economist Debapriya Bhattacharya.

He urged the government to confront its fiscal realities through difficult but necessary reforms.

“Don’t make a surreal budget -- an illusory one that defies realities. Artificially inflated expenditures and income may be politically saleable at the moment, but everyone knows these numbers cannot be delivered,” he said.

“However unpalatable it may sound, the government does not have the luxury of fiscal profligacy. The guiding factor must be the government’s available fiscal space,” he said.

In an interview with The Daily Star, the distinguished fellow of the Centre for Policy Dialogue (CPD) shared his perspectives on the government’s upcoming budget for the fiscal year 2026-27.

He outlined potential avenues for revenue mobilisation, flagged concerns over public expenditure, and stressed the need for a credible and transparent fiscal framework to navigate mounting economic pressures.

At the core of the upcoming budget lies a critical challenge: how to mobilise adequate revenue without overburdening taxpayers.

According to Debapriya, a significant portion of potential revenue is lost through tax exemptions.

“Income tax exemptions alone account for around 3 percent of GDP. If you add VAT and customs exemptions, total tax expenditures rise to about 6.8 percent,” he said, citing data from the National Board of Revenue (NBR).

But he cautioned against blanket removal.

“The priority should be rationalisation. We need to assess whether these exemptions are disproportionately benefiting certain business groups and whether they are actually improving productivity and competitiveness of the sector concerned,” he said.

Ensuring that small and medium enterprises receive adequate tax support should also be part of that review, he added.

Beyond tax dispensations, the government faces growing fiscal pressure from demand for subsidies and incentives.

“Subsidies account for about 1.8 percent of GDP, with a large share going to the power sector. There are also significant export and agricultural incentives, Debapriya said.

“When you combine tax expenditures, subsidies, and fiscal incentives, the total fiscal exposure reaches around 9 to 10 percent of GDP. Including contingent liabilities, it exceeds 12 percent. That is substantial for an economy which collects less than 7 percent of GDP as total revenue.”

To address the existing revenue gap, Debapriya stressed the importance of expanding the tax base. Out of 1.28 crore tax identification number (TIN) holders, less than 23 lakhs (18 percent) actually pay taxes.

“The principle should be low tax rates with high coverage,” he said. “We need to bring more people into the tax net rather than increasing the burden on a small group.”

He also highlighted the need to distinguish between taxable individuals and taxable income.

“Someone may be within the tax net but have little taxable income, while others with significant income remain under-taxed. That imbalance needs to be corrected.”

He suggested exploring new areas of taxation, including property and inheritance taxes.

“In most developed economies, inheritance tax is used to address intergenerational inequality. You cannot tackle inequality by taxing income alone; asset inequality is far greater in our country,” he said.

Asset recovery, particularly by bringing back stolen resources and making large defaulters pay, could also provide an additional source of revenue if pursued effectively, he added.

SHRINKING FISCAL SPACE

Debapriya warned that Bangladesh’s fiscal space is narrowing, as operating expenditures continue to rise. The newly elected government will have to prudently consider the recommendations made by the National Pay Commission 2025 under the interim government.

“Salaries, subsidies, and interest payments are consuming revenue budget,” he said.

“Debt stress is now emerging as a major macroeconomic challenge.” Currently, the debt servicing liabilities of the government -- domestic and external -- are almost double the amount of total public expenditure for health and education.

He noted that public expectations from the new government remain high. Some early measures based on electoral commitments may appear to be populist in nature. However, these initiatives are being rolled out in phases and remain relatively contained in fiscal terms, he added.

URGENCY OF TAX REFORMS

Debapriya stressed that delays in tax administration reform, particularly within the NBR, could undermine domestic revenue mobilisation.

“If the reform process is not completed quickly, especially the institutional restructuring, tax collection may suffer at a critical time,” he warned.

He pointed out that both revenue collection and public expenditure will peak during the last quarter (April-June) of the current fiscal year.

“Reducing human interaction, minimising discretionary power, and ensuring transparency through digital systems are essential for improving efficiency and accountability,” he said.

For Bangladesh, he concluded, the way forward lies in realism, discipline, and coherent policymaking.

“We often see policy contradictions-- where one measure offsets another. That reduces overall effectiveness,” he said. Thus, there is a need for consistency and coordination.

“The opportunity is still there,” he said. “But it is narrowing.”

The policy expert urged the finance minister to adopt a pragmatic but structured approach to fiscal reform, stressing the need for policymakers to look beyond immediate pressures.

“My suggestion is simple: take the hard path, but place it within a medium-term budgetary framework -- a three-year horizon. That way, people can be assured that short-term difficulties will lead to longer-term stability,” he said.

“You should not be overly concerned about what happens in just one year. The real focus should be on where the national economy would stand before the next national election, he observed.

Using an analogy, he explained the need for short-term restraint to enable long-term gains.

“If you want to make a long jump, you have to step back first, gather momentum, and then leap forward. This is that moment-- we may need to pull back now to create the space for consolidation and future growth.”

STALLED CAPITAL MARKET REFORMS

Debapriya pointed to the long-standing proposal of offloading shares of multinational companies (MNCs), state-owned banks and enterprises (SOEs) to deepen the capital market.

“This idea dates back to the former finance minister Saifur Rahman’s time, but implementation has been continuously aborted,” he said.

The interim government also gave instructions to bring in shares of profitable SOEs and multinational companies to the capital market. The government and the MNCs each were to offload at least 5 percent of their shares. “But to no avail.”

He attributed the failure to bureaucratic resistance, as officials often benefit from maintaining control over these entities. Offloading the shares would have given the capital market some positive vibes and, at the same time, generated some much-needed resources for the government.

On the expenditure side, he expressed concern over the effectiveness of public spending, particularly under the Annual Development Programme (ADP).

“Many projects are delayed, repeatedly revised, and suffer from poor feasibility studies,” he said.

“Protracted land acquisition process and deficient project management, epitomised by inappropriate project directors, are also common.” There are more than 1300 projects under the ADP, one-third of which are six to eleven years old.

He recommended forming a dedicated review body to weed out the “zombie projects” that have been continuing without meaningful progress.

“There is also a need to appoint skilled project directors and, where necessary, bring in professionals from outside the government,” he added.

Improving the quality of spending, he noted, would increase public trust and tax compliance.

In the searing heat of April, hundreds of vehicles queue outside filling stations across the country – a stark picture of a fuel crisis unfolding on the ground. But the numbers tell a different story. In the first nine months of the current fiscal year, fuel imports rose by 13.66% and the import bill surged by an even sharper 28.82%.

Despite the higher inflow, shortages have persisted since early March after conflict in the Middle East escalated, raising fresh questions about how the supply system is being managed.

Data from the Chattogram Custom House show Bangladesh imported 57.4 lakh tonnes of fuel between July and March of FY26, compared with 50.5 lakh tonnes in the same period a year earlier. The basket includes diesel, crude oil, furnace oil, petrol, octane, jet fuel and base oil.

The import value stood at Tk43,733.58 crore. With duties and taxes of Tk9,686.63 crore, total expenditure reached Tk53,420.21 crore – up from Tk41,667.69 crore a year earlier. That means the government paid an additional Tk11,752.52 crore for a relatively modest increase in volume of 6,89,969 tonnes.

What drove the increase

The state-run Bangladesh Petroleum Corporation (BPC) imported 26.87 lakh tonnes of diesel, 16.02 lakh tonnes of crude oil, and 11.26 lakh tonnes of furnace oil during the period. Imports of petrol and octane, jet fuel and base oil also rose, while furnace oil declined.

Diesel imports alone increased by nearly 6,00,000 tonnes year-on-year. Crude oil imports were also significantly higher, while furnace oil fell by more than 3,00,000 tonnes.

Per-tonne import costs also climbed. Diesel cost Tk1,02,796 per tonne on average in FY26, up from Tk88,442 in FY25 – an increase of over Tk14,000. Other fuels saw similar per-tonne cost increases.

Analysts say the mismatch between volume and cost points to higher global prices and rising import expenses. But the scale of the increase has raised eyebrows.

Energy expert M Tamim said both the jump in consumption and the surge in costs appear unusual. "An additional nearly 6,00,000 tonnes of diesel use in just nine months is difficult to explain. The government should look into it," he told TBS.

He added that fuel prices remained largely stable for most of the period. "Apart from March, prices did not change much. So, a 28% increase in cost is not very clear."

Questions over cost spike

Majare Khorshed Alam, former general manager of Eastern Refinery Limited, also flagged the gap. "If imports have increased by around 13%, then a 28% rise in costs seems somewhat abnormal," he said.

He called for an independent audit. "If there has been any irregularity or corruption, it should be identified. And if the rise is due to mismanagement, corrective steps must be taken to bring costs to a tolerable level."

Khorshed noted that global crude prices were relatively stable between January 2025 and January 2026 – hovering around $81-82 per barrel – before rising later amid geopolitical tensions. "So the basis of such a large cost increase is not clear," he added.

Supply crunch despite higher imports

Even as imports increased, fuel shortages began appearing across the country from early March. Long queues formed at filling stations, and some outlets temporarily ran dry.

Experts say the problem lies less in imports and more in distribution.

Although BPC handles procurement, distribution is managed through three state-owned companies – Padma Oil Company, Meghna Petroleum Limited, and Jamuna Oil Company – which supply dealers nationwide.

Data suggest an unusual surge in fuel release just before the shortage emerged. Between 28 February and 6 March, the three companies together allocated around 25,000 tonnes of diesel per day – nearly double the usual demand for 12,000-13,000 tonnes.

In just seven days, about 1,75,000 tonnes were supplied, far exceeding the expected 84,000 tonnes. That is equivalent to roughly 16 days' worth of normal consumption being released within a week.

Officials said each company typically sells around 3,665-4,000 tonnes per day. But during that period, daily sales at each company rose to around 8,000 tonnes.

A senior official at Jamuna Oil, speaking on condition of anonymity, described the episode as clear mismanagement, questioning where such large volumes went in such a short time. He said, "Usually there is no cap on how much fuel the companies can sell daily. But, the authorities should have been more cautious when large quantities of fuel were being sold for days."

After the issue reached the energy ministry, daily allocations were scaled back to around 3,700 tonnes.

Hoarding feared

Experts suspect a large portion of the excess supply may have been hoarded.

"If 1,75,000 tonnes were sold in a week, dealers may have stockpiled a significant amount," said Tamim, adding that authorities should also examine whether any fuel was smuggled out.

Khorshed echoed similar concerns. He said pump owners and distributors often stockpile fuel expecting future price hikes. "Recent government drives have already uncovered several cases of excessive hoarding."

This kind of behaviour fuels panic and creates the perception of a shortage, he said, adding that authorities are trying to stabilise the situation, though lapses may have occurred.

Attempts to contact BPC Director (Operations) AK Mohammad Shamsul Ahsan and Director (Marketing) Md Sabet Ali for comments on the issue went unanswered.

Bigger picture

Bangladesh's annual fuel demand is around 72 lakh tonnes, with more than 92% met through imports by BPC. A portion of crude oil – about 15 lakh tonnes – is refined domestically by Eastern Refinery Limited.

The numbers do not point to a shortage of imports. Instead, they suggest gaps in monitoring, distribution and cost control.

Analysts say without tighter oversight and better coordination among agencies, such disruptions could recur – even when supply remains adequate on paper.

Bangladesh's Small and Medium Enterprise (SME) sector is witnessing a sharp decline in activity, with production down by as much as 30% in recent weeks amid the global energy crisis, rising raw material costs, and frequent load-shedding.

Mirza Nurul Ghani Shovon, President of the National Association of Small and Cottage Industries of Bangladesh (NASCIB), told The Business Standard that the situation is becoming untenable for many small-scale manufacturers.

"The energy crisis has pushed many institutions to the brink of closure. In many cases, production has already dwindled by 25% to 30%," Shovon said.

He noted that without a stable power supply, factories are unable to meet their production target, leading to a massive drop in output across the board.

The sector, which contributes over 28% to the national GDP and employs roughly three crore people, is currently navigating its toughest period since the pandemic.

The leather and chemical-dependent sectors are among the hardest hit. Ilias Hossain, the proprietor of Rajex Leather, revealed that essential production components have become extremely expensive.

"The price of chemicals used in leather processing has doubled, and in some cases, even tripled," Ilias claimed.

He added that the cost of imported raw materials from China – such as gum and pasting – has surged due to global supply chain disruptions linked to the Middle East conflict. "When raw materials cost this much, the price of every finished product, from belts to footwear, must go up, which then kills consumer demand."

While production is dwindling, sales are also being stifled by operational restrictions. Shofiqul Islam, owner of Topex Leather, pointed out that the government-mandated early closing of shops to save electricity has put businesses in a tight spot.

"We are forced to wind down by 7pm or 8pm. But our primary customers, specially service holders, usually come to shop after their office hours in the evening. Our wholesale and retail sales are taking a massive hit," Shofiqul explained.

Monoranjan Sarker Noyon, proprietor of Manikganj-based Noyon Handicrafts, told TBS that the current economic climate has forced a significant reduction in corporate and wholesale orders.

"Our production hasn't been hit significantly yet, but our orders have definitely decreased," Noyon said, noting that even long-term regular clients are unable to maintain their usual purchase volumes as consumer demand falters at the retail level.

Anwar Hossain Chowdhury, managing director of SME Foundation, echoed these concerns, stating that the impact on marginal and rural entrepreneurs is particularly severe.

"The supply chain is broken. Production and marketing are both suffering a negative impact that is easily predictable and deeply concerning," he added.

Despite the challenges, some niche sectors like handmade crafts remain resilient. Jannatul Ferdous, founder of Bhumi Artisan, noted that while her production isn't fuel-dependent, the overall economic slowdown might eventually weigh on even the most specialised markets.

To prevent a total collapse of the sector, industry leaders are calling for immediate government intervention.

"The banks have moved away from single-digit interest rates and returned to higher tiers," Shovon of NASCIB remarked.

"With production down by 30% and costs rising, these high interest rates will finish us off. The government must ensure a return to single digit interest rate to keep the SME economy alive," he said.

By fishing, Rafique Majhi earns about Tk 500 on a good day, if luck favours him. The income has barely changed over the years. After the pandemic, when the cost of daily essentials began to surge, food was the first item he cut back on.

At Mahipur in Patuakhali district, his family began seeing fish or eggs on their plates less frequently.

Over time, that has worsened rather than improved. When catches fail or fishing bans are imposed, borrowing has become more frequent. Each day, Rafique’s struggle is to secure three meals, often only rice and vegetables.

After weeks of disrupted fishing due to fuel shortages, he is now anxious about surviving the next fishing ban from mid-April. “Prices of everything have gone up, but income has remained the same,” said the 52-year-old fisherman.

Like him, many low-income households across the country are under pressure as earnings fail to keep pace with rising prices. The difference between income growth and inflation have driven real incomes down.

Official data show real incomes have remained negative for four consecutive years.

“It’s impossible to cover all basic needs,” said Kabir Hossain, an employee at a fish depot at Mohipur Fish Landing Centre in the same southern district.

He said his children often ask for better meals, but he cannot afford them. To manage daily expenses, he relies on borrowing almost every month. The upcoming fishing ban is also a major concern.

According to the Bangladesh Bureau of Statistics (BBS), inflation has outpaced wage growth for 50 consecutive months up to March, despite a gradual rise in pay since February 2022.

The wage growth rate stood at 8.09 percent in March, 0.62 percentage points below inflation of 8.71 percent, according to the Wage Rate Index. In the previous month, the gap between inflation and wage growth was 1.05 percentage points.

Unlike Rafique or Hossain, Prashanna Kumar Roy, a farm labourer at Rajpur union in Lalmonirhat, is not concerned about fishing bans. But his pressure comes from rising farming costs, which he said have reduced his income.

Roy, who used to earn Tk 15,000 to Tk 20,000 a month during the farming season, said it is now difficult to earn even Tk 14,000.

After cutting all possible expenses, including exhausting the very small family savings and skimping on nutritious food, the 45-year-old labourer said any emergency, such as medical needs, now forces him to take loans, adding to existing debt.

These people belong to the country’s informal sector, which makes up about 84 percent of the total employed population of 6.9 crore. A large share of them are now at risk of falling into poverty or is already below the poverty line.

COMPROMISING NUTRITION INVITES LASTING CONSEQUENCES

Mohammad Lutfor Rahman, professor of economics at Jahangirnagar University, said low-income households are cutting back on protein-rich foods such as fish, meat, eggs, milk and fruit, relying instead on basic calorie intake just enough to work the next day.

He said such compromises could have long-term consequences.

“A malnourished workforce cannot remain productive, and their physical capacity declines over time,” Prof Rahman said, adding that children in low-income families risk falling behind in cognitive development.

He said weak labour demand is adding further pressure.

Several sectors, including construction, have recorded weak or negative growth in recent months, reducing demand for labour.

“At the same time, more people are entering the labour force, creating excess supply and pushing wages down.”

The prof also pointed to sluggish public spending. “ADP implementation has been among the lowest in decades, cutting off an important source of income for workers,” he added.

In its latest monthly update, the General Economics Division (GED) warned that rising energy and utility costs could further increase real income pressures as households face higher spending on electricity, gas and transport, disproportionately affecting lower-income groups.

“This divergence underscores intensifying real income pressures, as households face rising costs without corresponding wage adjustments,” said the report.

It added that stagnant wages in this context highlight the erosion of purchasing power, particularly among lower-income groups whose spending is dominated by essentials.

The February assessment suggested inflationary pressures are rising faster than wage adjustments, widening the mismatch between incomes and expenditure.

“This identifies a need for coordinated wage and price management, as inflationary pressures continue to undermine real income stability,” the report said.

In March, wage growth in agriculture stood at 8.10 percent, up 0.01 percentage points from February. Industrial wages rose to 8.02 percent, while services recorded 8.23 percent.

The Wage Rate Index tracks wages of informal daily workers across 63 occupations in agriculture, industry and services.

To ease pressure, Prof Rahman called for targeted intervention. “The government should expand subsidised food distribution and consider compensation measures so low-income households can at least maintain minimum nutrition and purchasing power.”

Bangladesh Bank reported a slight rise in nominal wage growth in the second quarter of fiscal year 2025-26, with the wage index increasing to 8.07 percent in December 2025 from 8.02 percent in September, although still below the previous fiscal year.

All major sectors saw marginal gains, with agriculture at 8.16 percent, industry at 7.91 percent and services at 8.24 percent, supported partly by Aman harvest demand. However, wage growth continued to lag inflation, keeping real wages negative and steadily eroding household purchasing power.

WAR SHOCKS COMPLICATE INCOME OUTLOOK FURTHER

Last week, the World Bank projected weaker economic growth for Bangladesh in the current fiscal year, saying an additional 12 lakh people will remain below the poverty line mainly due to the impact of the US-Israel war on Iran.

Before the conflict in the Middle East, about 17 lakh people were expected to move out of poverty this year. That figure has now dropped to 5 lakh.

At the $3 international poverty line, an additional 14 lakh people are projected to fall into poverty over the same period, it added.

The Washington-based multilateral lender said the conflict is likely to affect Bangladesh’s economy materially, compounding existing vulnerabilities, including high inflation, financial sector stress, limited policy space and weakened confidence.

Top finance officials from around the world will convene in Washington this week under the shadow of the war in the Middle East, which has delivered a third major shock to the global economy after the COVID pandemic and Russia's full-scale invasion of Ukraine in 2022.

Top International Monetary Fund and World Bank officials last week said they would downgrade their forecasts for global growth and raise their inflation predictions as a result of the war, warning that emerging markets and developing countries will be hit hardest by higher energy prices and supply disruptions.

Before the Iran war broke out on 28 February, both institutions had expected to lift their growth forecasts given the resilience of the global economy - even in the wake of major tariffs imposed by US President Donald Trump beginning last year. But the war has delivered a series of shocks that will slow progress on recovering growth and beating back inflation.

The World Bank's baseline estimate now projects growth in emerging markets and developing economies of 3.65% in 2026, down from 4% in October, but sees that number dropping as low as 2.6% if the war lasts longer. Inflation in those countries was now forecast to hit 4.9% in 2026, up from the previous estimate of 3%, and could spike as high as 6.7% in the worst case.

The IMF warned last week that ⁠about 45 million additional people could also face acute food insecurity if the war persists and continues to disrupt fertilizer shipments needed now.

The IMF and World Bank are racing to respond to the latest crisis and support vulnerable countries at a time when public debt levels have reached record levels and budgets are tight.

The IMF said it expects demand for $20 billion to $50 billion in near-term emergency support to low-income and energy-importing countries. The World Bank has said it could mobilize some $25 billion through crisis response instruments in the near-term, and up to $70 billion in six months, as needed.

But economists are urging governments to use only targeted and temporary steps to ease the pain of higher prices for their citizens, since broader measures could fuel inflation.

"Leadership matters, and we've come through crises in the past," World Bank President Ajay Banga told Reuters, lauding work on fiscal and monetary controls that had helped economies weather previous storms. "But this is a shock to the system."

Countries now face a tough balancing act managing inflation while keeping an eye on growth and the longer-term challenge of creating enough jobs for the 1.2 billion people who will reach working age in developing countries by 2035.

IMF and World Bank also face a far different global landscape with tensions running high between the United States and China, the world's largest economies, and the Group of 20 major economies hobbled in its ability to coordinate a response.

The United States currently holds the rotating presidency of the ⁠G20, which also includes Russia and China, but it has excluded another member - South Africa - from participation, complicating the group's ability to coordinate on this crisis.

"You're trying to operate on consensus when there's no consensus in the world right now on anything," said Josh Lipsky, chair of international economics at the Atlantic Council.

Lipsky said statements by the IMF, World Bank and other multilateral lenders about their readiness to support countries hit hard by the war were clearly aimed at reassuring markets.

"It's a signal to private creditors. This is not a time to flee countries that are in problematic waters. They will have support from the multilateral development banks and the international financial institutions. This is not going to be COVID. This is something that we can handle."

TOUGHER CONDITIONS FOR MANY

Mary Svenstrup, a former senior US ⁠Treasury official now with the Center for Global Development, said many emerging market and developing economies entered the crisis worse off than just a few years ago, with lower buffers, higher debt vulnerabilities and lower reserves.

"We need to have this crisis be a catalyst for IMF stakeholders to really rethink how the Fund supports vulnerable countries with the recognition that we're going to be seeing more global shocks," she said. "We can't ask them to sacrifice growth and development for the sake of rebuilding buffers."

Svenstrup said countries should pursue more ambitious reforms if ⁠they received fresh funds. "There probably does need to be more financial support from the (international financial institutions) but it needs to be affordable, and it needs to be in the context of reform programs and potentially broader debt relief," she said.

Martin Muehleisen, a former IMF strategy chief who is now with the Atlantic Council, agreed, saying the IMF should work with donor countries to accelerate debt restructuring for borrowers and "get them off the debt cycle." New lending should be tied to a credible ⁠debt-reduction road map, he said.

Eric Pelofsky, vice president at the Rockefeller Foundation, said low-income and lower middle-income countries paid twice the amount to service their debts in 2025 than before COVID, limiting funds for education, health care and other critical social programs. Half were now in or near debt distress, up from a quarter, just a few years ago.

"This new conflict threatens any recovery that occurred since the pandemic or the Ukraine war, and it takes countries that have basically been treading water, trying to stay away from default, and keeps them in a long term debt-growth-investment trap," he said.

With a trillion?dollar economy in vision by 2034, the new government plans a big budget worth Tk 9.30 trillion for the next fiscal year for augmented funding of critically important sectors.Economic Forecast Report

In order to finance the substantially raised annual spending plan, the government has set a target to collect some Tk 7.95 trillion as revenue in the fiscal year 2026-27, officials say.

The decisions were made at a meeting of the committee for coordination on fiscal, monetary, and currency exchange on Friday night, as the budgeting exercise is getting in gear with little over two months left before the current fiscal year ends.

Official sources say the new government will have to make large allocations to fulfill a number of its electoral pledges in the next fiscal year, face the impacts of the ongoing conflict in the Middle East, and enhance salary of employees partially, and so the budget size is going to be increased significantly.

"The Middle East conflict alone is eating up a big portion of government subsidies now, but its impacts on the economy will be much bitter in the next fiscal year," says one official.

As such, he adds, the government is giving big target to the National Board of Revenue (NBR) for collecting revenue to meet the growing expenditure.

Also, the high revenue target is set as Bangladesh's tax-to-GDP ratio remains one of the lowest in the world by many accounts. The International Monetary Fund has pushed Bangladesh to increase the ratio to 9.20 per cent in the next fiscal year from the current rate of around 6.6.

In the new budget, sources have said, the size of the Annual Development Programme (ADP) is going to be Tk 3.0 trillion, significantly higher then the current development budget amounting Tk 2.3 trillion.Local Business Directory

The GDP-growth target has been set at 6.5 per cent for the next fiscal year while the government targets to keep inflationary pressure below 7.5 per cent then.

According to officials concerned, of the total ADP worth Tk 3.0 trillion for the next fiscal year, Tk 1.9 trillion, equivalent to 63.33 per cent of the total outlay, is set to be financed from government exchequer, while the remaining Tk 1.1 trillion is expected to be managed from external sources, mainly in the form of project loans and grants.

For the current fiscal year, the government initially approved an ADP of Tk 2.3 trillion, which was later revised down to Tk 2.0 trillion, comprising Tk 1.28 trillion from domestic resources and Tk 0.72 trillion from external financing.

The proposed allocation for the next fiscal year represents an increase of 48.44 per cent in domestic financing and 52.78 per cent in external financing.

According to Implementation Monitoring and Evaluation Division (IMED) data, ministries and divisions together spent Tk 591.34 billion up to February, accounting for 30 per cent of the total revised allocation.Personal Finance Software

The proposed ADP breakdown shows, Local Government Division (LGD) is set to receive the highest chunk of Tk 366.20 billion in the next fiscal, followed by the Road Transport and Highways Division (RTHD) with Tk 329.03 billion.

Health Services Division is likely to see a significant jump in allocation to Tk 206.08 billion, more than six-fold compared to its revised allocation of Tk 31.28 billion in the current fiscal, elevating its position to third from the 15th.

Power Division is expected to receive the fourth-highest allocation at Tk 191.86 billion, followed by the Ministry of Science and Technology with Tk 173.66 billion.

Among other sectors, Primary and Mass Education is set to receive Tk 168.48 billion in development budget, while Secondary and Higher Education Division is likely to get Tk 138.36 billion.

Sources say Finance and Planning Minister Amir Khasru Mahmud Chowdhury, who chaired the meeting, discussed the challenges now the country's economy faces due to the Middle East turmoil, especially the high import costs of fuel oils and gas and the possible way of their funding.

Also, he asked the finance officials to keep in mind "long-lasting impacts of the war fallouts on the economy, the inflationary pressure, and government's electoral pledges alongside gradual deregulation of the economy" while preparing the budget.

The government needs to allocate more to education, health, and social protection in the upcoming budget, and ensure that the funds are properly utilised to create a better future for every child in the country, development specialists and donor agencies said yesterday.

Speaking at a roundtable, they pointed out that utilisation of development budgets in both sectors has hovered around 50 percent for at least two fiscal years. The discussion, regarding strengthening investment in social sectors in the upcoming budget, was jointly arranged by The Daily Star and Unicef with support from the European Union.

Md Ashiq Iqbal, social policy and economic specialist at Unicef, said in fiscal year 2024-25 (FY25), utilisation of the development budget of education was 47.4 percent while it was 9.8 percent in the health sector.

According to him, the underutilisation of funds pointed to significant room for efficiency gains. “Over 50 percent gain is possible for education and health within the existing envelope.”

But he stressed that efficiency alone would not close the gap, as overall investment remains critically low to begin with.

The social policy expert noted that Bangladesh’s spending on education is one of the lowest shares in the world -- just 1.5 percent of its GDP on education against a government target of 5 percent.

The gap between current and target investment is 70 percent, which has widened over the past decade, he added. “Significant budgetary steps are required to progressively reach the target.”

Health spending stands at 0.7 percent of GDP, also among the world’s lowest. “The same thing is happening in the social protection budget too.”

Iqbal depicted the consequences of the spending failure, citing child welfare data.

Some 6.5 percent of primary school-age children are out of school, he said, adding that attendance falls sharply after primary school while foundational skills improve but remain far too low. “Bangladesh’s primary education progress is in stagnation.”

The Unicef official also said, “serious” risks persist in public health.

Two in five children and one in 13 pregnant women show elevated blood lead levels. The neonatal mortality rate stands at 22 per 1,000. Nearly two-thirds of children aged 6 to 23 months live in food poverty, as social protection coverage shrank in recent times.

In fiscal year 2024-25 (FY25), utilisation of the development budget of education was 47.4 percent while it was 9.8 percent in the health sector
Iqbal welcomed the commitments made by the ruling BNP in its manifesto on education access and quality, child survival, and malnutrition.

He called for allocating at least 2 percent of GDP to quality and inclusive education of children, with increased funding for foundational learning and teacher development, and at least 1.5 percent of GDP for health, with ringfenced vaccine budgets and free medicine for the poor.

Prof Rashed Al Mahmud Titumir, finance adviser to the prime minister, said the government inherited an economy burdened with multiple problems, further aggravated by current global pressures.

He explained that with inflation persisting, the government could not adjust fuel prices and was instead focusing on proper utilisation of spending.

The official also said the government was moving toward a universal social protection system to eliminate inclusion errors, exclusion errors, and fragmentation with one card per family for service delivery.

In addition, he said, for the first time, farmers would also receive cards through scheduled banks, entitling them to multiple subsidies. The government hopes to reduce errors and create fiscal space through these initiatives.

The government was also focusing on transparency and accountability in spending, with budget implementation effectiveness and digitalisation of revenue collection among its priorities, Titumir added.

The PM’s adviser also flagged that conditions attached to loans taken by the previous government from the International Monetary Fund (IMF) were creating pressure that “may not be child-friendly or women-friendly”.

Criticising the United Nations for reportedly not speaking out on these issues, he called for better coordination and harmonisation in the intergovernmental organisation.

Rana Flowers, country representative of Unicef Bangladesh, said she recognised that the government inherited an economy where debt obligations are rising, and economic uncertainties came from the global arena.

She pointed out that the situation demands figuring out how to use limited resources efficiently.

The Unicef official urged the government to focus on improving capital development, child education and social protection.

Rasheda K Choudhury, executive director of the Campaign for Popular Education, said education spending should be treated as an investment in human capital.

“If we curb corruption, if we curb violence against women and if we curb drug addiction, it will free up substantial funds for social sectors,” she said, urging the government to actively court non-resident Bangladeshis for support.

Prof Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue, said the government needs to prioritise its spending and draw up plans to adjust investment in the social sectors.

Gitanjali Singh, country representative of UN Women, called for higher social sector allocations alongside a tracking system to ensure expenditure efficiency.

She also urged the government to raise tax revenue and shift toward progressive taxation, given the constraints on fiscal space.

Prof Abu Eusuf, executive director of Research and Policy Integration for Development (RAPID), called on authorities to publish the actual education budget by subtracting the technology budget from it, and urged the reinstatement of the child budget.

He also asked for the social protection budget to be broken down clearly, separating pension obligations from other programmes.

Furthermore, the policy expert proposed establishing eight top-class hospitals -- one per division -- so that people do not need to travel to Dhaka for specialised care.

On revenue, he noted that tax exemptions amount to 6 percent of GDP and urged the government to widen the tax base without pressuring existing taxpayers.

Mahfuz Anam, editor and publisher of the Daily Star, said he has been covering child issues for many years as a journalist, and the same stories keep recurring.

While the country has made some advances, it remains far from where it needs to be, he added, urging all to use the newspaper to improve child rights issues.

Kishower Amin, programme manager of Public Financial Management, said revenue reform was essential, including reform of the revenue board and full digitalisation of tax systems.

Without higher revenue collection, she said, increases in health and education spending would not be possible.

Mosammat Ayesha Akther, deputy director of the National Academy for Educational Management of the Ministry of Education, Shumon Sengupta, Country Director of Save the Children in Bangladesh, Lole Valentina Lucchese, programme manager of Social Protection of EUD, and Stanley Gwavuya, Chief-SPEAR of Unicef, also talked at the event.

Mongla Port operations have come to a near standstill as lighter vessels responsible for unloading and transporting cargo from commercial ships are unable to operate due to a severe fuel shortage, leading to mounting financial losses for importers.

Owners of lighter vessels say most of their fleet is now idle due to the fuel crunch, disrupting cargo handling from mother vessels and delaying vessel turnaround time. As a result, importers are being forced to pay penalties for the extended stay of commercial ships at the port's outer anchorage.

They further said that since the outbreak of conflict in the Middle East, they have been unable to secure adequate fuel supplies from depots in Chattogram.

Vessel owners also complain that despite repeated appeals by the Lighter Vessel Owners' Association to the Ministry of Power, Energy and Mineral Resources, no effective remedial measures have been taken.

Sources say hundreds of empty lighter vessels have been anchored in the Pashur River in Mongla for several days. A similar situation has been observed in Rupsha and at Jetty no 4 and 5 in Khulna, where hundreds more vessels remain idle due to the fuel shortage.

Cargo from large mother vessels at the outer anchorage is usually transferred to lighter vessels and then transported via river routes to terminals in Dhaka, Narayanganj and other parts of the country. However, the fuel shortage has severely disrupted these operations.

Owner of MV Mimtaz lighter vessel Md Khokon said his vessel has been waiting for fuel for several days. "We are unable to get fuel from SK Enterprise as depot supplies are insufficient. This is the situation for all vessels," he said.

Mohammad Mamun, production officer at Seven Circle Cement in Rupsha, said delays in cargo unloading from commercial ships are causing significant financial losses.

"We are paying penalties of around $17,000 per day for each commercial vessel. Delays are increasing costs, and our plant is facing raw material shortages," he said.

Azadul Haque, AGM of Sheikh Cement Factory, said production has been completely halted due to the crisis. "Supply of raw materials is being disrupted and workers are sitting idle," he said.

HM Dulal, owner of Messrs Nuru and Sons, marine dealer and agent of Meghna Petroleum Limited in Mongla, said fuel demand has increased due to various government development activities, including river dredging and canal excavation, putting additional pressure on supply.

Engineer Prabir Hira, manager (operations) at Meghna Petroleum Limited in Mongla, said supply disruptions caused by the Iran conflict have affected fuel availability, and distribution is being carried out in line with government directives.

Despite no major surge in revenue collection, the government is planning a 50% increase in development spending in the upcoming 2026–27 fiscal year compared to the revised target of the current fiscal year.

To this end, the Ministry of Finance is set to allocate Tk3 lakh crore for the Annual Development Programme (ADP) in the upcoming budget, of which 1.90 lakh crore will come from government funds and around Tk1.10 lakh crore from foreign loans and grants, according to relevant officials.

In the current fiscal year, the government initially allocated Tk2.30 lakh crore for the ADP in the original budget. However, implementation fell short of expectations, leading to a downward revision to Tk2 lakh crore. Of this, Tk1.28 lakh crore was planned from domestic sources, while Tk72,000 crore was expected from external financing.

Data from the Implementation Monitoring and Evaluation Division (IMED) shows that, as of February, ministries and divisions have spent Tk59,130 crore, which is 30% of the revised total allocation.

The Local Government Division (LGD) is set to receive the highest allocation of Tk36,620, which is about 12.21% in the proposed Tk3 lakh crore ADP in the next fiscal year.

Roads Transport to get 2nd highest share; then Health

The Roads Transport and Highways Division (RTHD) is expected to secure the second-largest allocation at Tk32,903 crore, approximately 11% of total ADP allocation, according to preliminary estimates.

In a major shift, the Health Services Division's allocation is projected to rise sharply to Tk20,608 crore—more than six times higher than its revised allocation for the current fiscal year—lifting the sector from 15th to third position in the ADP ranking.

The Power Division is likely to receive the fourth-highest allocation of Tk19,186 crore, followed by the Ministry of Science and Technology with Tk17,366 crore.

Meanwhile, Tk16,848 crore is expected to be allocated to primary and mass education, while the Secondary and Higher Education Division may receive Tk13,836 crore.

Officials from the Planning Commission said emphasis has been placed on improving ADP implementation by aligning projects with medium-term resource availability, ensuring feasibility studies before approving large projects, strengthening project monitoring, and maximising the use of project loans.

Recommendations also include enhancing the capacity of project directors, improving financial management, and strengthening budget implementation monitoring systems.

Meanwhile, ADP implementation rates have shown a declining trend in recent years. From FY2021–22 to FY2024–25, the implementation rate fell to 67%, and based on spending trends in the first eight months of FY2025–26, it may remain below 80%.

However, during the July–February period of the current fiscal year, implementation progress stood at just 29.6%.

The Bangladesh Poultry Industries Association (BPIA) has urged the government to halve taxes on the poultry sector in the proposed 2026-27 national budget.

According to a budget proposal sent to the National Board of Revenue recently, BPIA said production costs in the poultry industry have nearly doubled over the past five years, putting significant pressure on farmers.

As expenses continue to outpace earnings, many are forced to shut down operations.

Mosharaf Hossain Chowdhury, president of BPIA, said that in the current fiscal year, corporate tax in the sector has been raised from 15 percent to 27.5 percent, advance income tax from 1 percent to 5 percent, and turnover tax from 0.6 percent to 1 percent.

Such high tax rates are unprecedented for food production sectors globally, he said, adding that the increases have driven up the cost of poultry feed and other essential inputs.

Chowdhury called for an immediate reduction of existing taxes and duties by half to ensure the safeguarding of small and medium-scale farmers and sustain industry growth.

Without such measures, it will be increasingly difficult for marginal farmers to survive, he said

The BPIA president also stressed the need to eliminate middlemen and extortion practices across the supply chain, from farms to retail egg markets.

In addition, he called for electricity subsidies, easier access to credit, and prioritising poultry farmers under government agricultural support programmes.

Md Safir Rahman, secretary general of the BPIA, said that without special incentives in the upcoming budget, investor interest in the poultry sector may decline, potentially slowing the emergence of new entrepreneurs.

Garment exports from Bangladesh to the United States fell 2.54 percent to $5.59 billion in the July-March period of the current fiscal year.

The US accounts for about 20 percent of the country’s total annual apparel exports.

Exports to the United Kingdom, the third-largest destination with a 12 percent market share, also dropped 1.61 percent to $3.30 billion during the period, according to data from the Export Promotion Bureau compiled by the Bangladesh Garment Manufacturers and Exporters Association, published yesterday.

Amid a volatile global supply chain, shipments to Canada edged down 0.26 percent to $961.34 million in July-March.

Exports to non-traditional markets declined sharply, falling 8.05 percent during the period.

Overall, readymade garment (RMG) exports stood at $28.58 billion in July-March, marking a 5.51 percent year-on-year decline.

Shipments to the European Union, which accounts for 49 percent of Bangladesh’s total apparel exports, also fell 6.99 percent to $14.02 billion, as per the data.

India has further ​raised a windfall tax on exports of ‌diesel and aviation turbine fuel it imposed last month to ensure adequate domestic supply.

In a government notification on ​Saturday, India’s finance ministry increased the tax ​on diesel exports to 55.5 rupees per litre from 21.5 rupees per litre, and on ​exports of aviation turbine fuel to 42 rupees ​per litre from 29.5 rupees per litre, effective immediately. India also last month cut excise duty on petrol and diesel by ​10 rupees ($0.11).

Separately, to control a rise in airfares, ​it has also capped a monthly increase in aviation turbine ‌fuel prices for domestic airlines at 25 percent in April. Jet fuel accounts for up to 40 percent of an airline’s expenses. Global oil prices have surged past $100 ​per barrel ​as the flow of oil through the Strait of Hormuz, which serves as a conduit ​for 40 percent of India’s crude oil ​imports, remains heavily restricted due to the US-Iran war.

India, which ranks among the top five refining nations globally and is ​also the world’s third-biggest oil ​importer and consumer, relies heavily on overseas supplies.

Amid the prolonged fallout from the Russia-Ukraine conflict and emerging geopolitical risks from Iran-US tensions, Bangladesh's capital market is standing at a critical crossroads. For years, the narrative of our equity market centred on expansion and "new projects". However, in a high-interest-rate environment where the Taka's depreciation has inflated project costs, the priority must shift from growth to survival.

To revitalise our thinning IPO pipeline, the newly appointed adviser to the Prime Minister on Investment and Capital Markets, Tanvir Ghani, along with the Bangladesh Securities and Exchange Commission (BSEC), needs to rethink a fundamental constraint: the utilisation of IPO proceeds for debt repayment.

A market in retreat

The numbers tell a sobering story. Since the brief post-pandemic surge in 2021, appetite for Initial Public Offerings has sharply declined – from 13 IPOs in 2021 to zero in 2025. This stagnation is not merely a symptom of "poor quality" companies. Many robust, Tier-1 firms are currently over-leveraged, burdened by heavy debt taken for capital expenditure over the last four to five years. In the current climate, these firms cannot feasibly justify further expansion, yet they are bleeding from double-digit interest rates. The problem is structural, not reputational.

The BSEC deserves credit for its recent efforts in modernising the valuation process for IPOs with premiums. By refining these methods to reflect intrinsic value, the Commission has finally addressed long-standing valuation anomalies. However, the next logical step – to truly breathe life into the market – is providing these corporates the flexibility to repair their balance sheets.

The 30% ceiling: A barrier to consolidation

On 30 December 2025, BSEC finalised the Public Offer of Equity Securities Rules, 2025. While the commission amended valuation methods, one particular clause remains a bottleneck: a maximum of 30% of IPO or RPO proceeds may be used for repayment of outstanding loans or investments. While the rule ensures that loans being repaid were used for legitimate BMRE (Balancing, Modernisation, Replacement, and Expansion) purposes, the 30% cap is increasingly out of touch with corporate reality.

For a company with a high debt-to-equity ratio, an IPO that only clears 30% of its debt does not move the needle on its credit rating or profitability. If a firm is forced to deploy the remaining 70% of proceeds into new projects it does not need – or cannot afford to operate due to soaring energy costs – the IPO becomes a burden rather than a blessing. The rule, intended to protect the market, is instead keeping quality issuers away from it.

A concrete illustration

Consider a mid-sized Bangladeshi textile manufacturer – call it company ABC – that invested Tk400 crore in factory expansion between 2020 and 2022, financed primarily through term loans at rates that have since risen to 13-14%. Today, company ABC is profitable at the operating level: it generates positive EBITDA, its plant runs at 70% capacity, and its export receivables are regular. But its interest burden consumes nearly half of its operating profit, leaving little room for retained earnings or dividend distribution.

Company ABC wishes to raise Tk250 crore through an IPO. Its debt repayment need is Tk200 crore. Under the current rule, only Tk75 crore may go toward debt repayment. The remaining Tk175 crore must fund "new projects" – yet company ABC has no immediate CAPEX pipeline, no additional capacity need, and no appetite to add fixed costs in an uncertain energy environment. The result: either company ABC walks away from the exchange entirely, or it lists with an artificially constructed use-of-proceeds that satisfies the regulator but serves no genuine business purpose.

Had the cap been set at 80% or eliminated for qualifying firms, company ABC could reduce its interest burden by Tk200 crore, improve NPAT by an estimated Tk26-28 crore annually, and emerge as a fundamentally stronger listed entity – one that attracts institutional investor confidence rather than undermining it.

Why a higher threshold makes sense

Allowing a significantly higher proportion of IPO proceeds to be used for debt repayment offers several systemic benefits. First, firms replace high-cost bank debt with permanent equity capital, immediately boosting NPAT and improving return on equity. Second, by migrating corporate debt from the banking sector to the capital market, we reduce pressure on a banking system already struggling with non-performing loans. Third, in a volatile global economy, a lean and deleveraged company is more resilient than an over-extended one. Finally, a company with a repaired balance sheet – lower gearing, stronger interest coverage – is fundamentally more investable, and far more likely to sustain its listing price post-IPO.

What peer markets tell us

This is not an untested idea. India's SEBI imposes no numerical ceiling on the proportion of IPO proceeds directed toward debt repayment. Its 2025 amendment to the ICDR framework explicitly recognised capex-loan repayment as equivalent to capital expenditure – acknowledging that paying off a factory loan is economically indistinguishable from building one. Malaysia's securities commission similarly sets no regulatory cap, focusing instead on disclosure and time-bound deployment. Across the globe, the philosophy is consistent: disclose the intended use of proceeds, and let the market determine whether the proposed capital restructuring is acceptable.

Bangladesh's 30% statutory cap is an outlier in this landscape, substituting regulatory prescription for investor judgment.

A workable reform

The BSEC should consider a temporary three-to-five-year window during which the cap is lifted for companies meeting clear eligibility criteria: positive operating cash flow for at least two of the three preceding fiscal years; an auditor's certificate confirming that loans proposed for repayment were used for BMRE-eligible purposes; a pre-IPO debt-to-equity ratio exceeding 2.0x; no default classification with any scheduled bank or financial institution; and a 24-month undertaking against drawing new bank financing for overlapping CAPEX purposes. These criteria preserve the spirit of the original rule while creating a transparent, operationally credible pathway for genuinely over-leveraged but fundamentally sound firms.

The path forward

To bring the market back to life, we must stop viewing debt repayment as a "waste" of IPO funds. If a company used bank loans to build a factory three years ago, that factory is already a national asset. Paying off that loan with public equity is simply a change in capital structure – not a loss of value. Our peer regulators in India and Malaysia understand this. Without this flexibility, IPO activity will remain subdued, and our best corporate houses will continue to stay away from the exchanges – preferring to suffer under the weight of bank interest rather than enter a market that does not give them room to breathe.

It is time to prioritise financial stability over forced expansion.

State-owned National Tubes Ltd, the country's only government-run steel pipe manufacturer listed on the stock exchanges, has reported a sharp decline in performance, with sales nearly halving in the first nine months of FY2025–26 amid weakening demand.

According to company disclosures approved by the board on Thursday, the firm's net sales dropped 50% year-on-year to Tk18.15 crore during the July–March period, down from Tk36.24 crore in the same period of the previous fiscal year.

The steep fall in revenue pushed the company into losses, reversing its profit trend from a year earlier.

National Tubes posted a net loss of Tk5.57 crore for the nine-month period, compared to a profit of Tk2.66 crore in July–March of FY25. Its loss per share stood at Tk1.60.

Operating cash flow also deteriorated significantly, with net operating cash flow per share falling to Tk0.17 as of March 2026, compared to Tk1.09 in the same period a year earlier.

The company's net asset value was recorded at Tk473 crore, according to its financial statements.

In the third quarter alone (January–March), National Tubes incurred a loss of Tk1.31 crore, a sharp reversal from a profit of Tk1.42 crore in the same quarter of the previous fiscal year. Quarterly revenue also declined by 40% to Tk8.12 crore from Tk13.51 crore a year earlier.

The company attributed the downturn to a broader fall in demand for steel pipes across key industrial and utility sectors.

National Tubes supplies pipes to major gas distribution and utility operators, including Titas Gas, Bakhrabad Gas Distribution Company, Jalalabad Gas Transmission and Distribution System, BAPEX, WASA, Fire Hydrant Company, and various manufacturing and real estate firms, according to its website.

Established in 1964 as a private-sector enterprise, National Tubes was nationalised in 1972 and placed under the Bangladesh Steel and Engineering Corporation (BSEC). It was later converted into a public limited company in 1989, with 49% of its shares offloaded to the general public.

City Bank PLC has reported a record-breaking financial performance for 2025, posting a consolidated net profit of Tk1,324 crore, which represents a robust 31% growth from the Tk1,014 crore recorded in the previous year.

The record profit was driven largely by a sharp rise in investment income from government securities.

Reflecting the strong earnings, the bank's board of directors has recommended a 30% dividend for 2025, comprising 15% cash and 15% stock, up from the previous year's 25% total dividend, which included 12.5% cash and 12.5% stock. The annual general meeting is scheduled for 7 June, while 3 May has been set as the record date, according to a disclosure filed on the bank's website.

The bank's latest financial disclosures reflect a remarkable turnaround over the past five years, with profits steadily climbing from Tk549 crore in 2021 to over Tk1,300 crore in 2025, underscoring its strengthening earnings base despite a challenging economic environment.

Its earnings per share rose in tandem with profitability, increasing by 31% to Tk8.71, while net asset value per share surged by 33% to Tk40.67. Its net operating cash flow per share stood at Tk47, indicating strong liquidity support for the bank's operations.

Despite the headline profit growth, the bank's core banking income faced pressure during the year. Its interest income from loans increased by around 22% to Tk5,471 crore, up from Tk4,501 crore a year earlier.

However, this growth was overshadowed by a much steeper rise in interest expenses on deposits, which surged by 71% to Tk5,186 crore. As a result, the bank's net interest income remained relatively modest at Tk285 crore, reflecting narrowing spreads amid rising funding costs.

The bank's record profit was instead powered by its non-core income streams, particularly investments in government Treasury bills and bonds. Income from treasury instruments more than doubled during the year, jumping 114% to Tk3,562 crore. Overall income from investments, fees, commissions, exchange, and brokerage activities reached Tk4,506 crore, significantly higher than the previous year's Tk1,661 crore.

This surge in investment income played a pivotal role in offsetting the pressure on traditional lending operations and helped push operating profit up by 16% to Tk2,727 crore from Tk2,351 crore in 2024.

City Bank's performance aligns with a broader trend in the banking sector, where several listed banks have reported record profits for the year despite subdued private sector credit growth.

Earlier, Prime Bank PLC and Shahjalal Islami Bank PLC also announced strong earnings, posting profits of Tk910 crore and Tk368 crore, respectively.

Market insiders said the banking sector faced weak demand for private sector loans in 2025 amid a sluggish business environment. As a result, many banks shifted their focus toward fixed-income instruments such as Treasury bills and government bonds, where yields rose to double-digit levels during the year.

This strategic reallocation of funds enabled banks like City Bank to capitalise on higher returns from relatively risk-free investments, compensating for the decline in traditional interest-based income. Analysts, however, caution that sustained reliance on such income sources may not be viable in the long run if interest rate conditions change.

Runner Automobiles Limited, a listed motorcycle manufacturer, is witnessing a continued divestment by its foreign investment partner, Brummer Frontier PE II (Mauritius) Limited.

In its latest move, the investment firm, a concern of Sweden-based Brummer & Partners, has declared its intention to sell 50 lakh shares of the company within a specified timeframe at prevailing market prices.

According to disclosures published on the Dhaka Stock Exchange, Brummer Frontier will dispose of the shares from its existing holdings through the market. Based on the current market price, the total value of these shares stands at around Tk20 crore.

However, this is not a new development. The share sale is part of the investor's long-term, phased exit strategy.

A transaction of this size has naturally had an impact on the market. In the short term, selling pressure weighed on the stock, leading to a 6.30% decline in its price. Yesterday, the share closed at Tk38.70 on the DSE.

Previously, on 27 April 2022, the investment firm had announced the sale of 1 crore shares from its holdings. At one point, Brummer Frontier held 24.93% of Runner Automobiles' total shares.

Currently, the investor holds 1,83,04,347 shares, representing around 16% of the company's total shareholding. The planned sale of 50 lakh shares will come from this remaining stake.

Speaking to The Business Standard, a top official of Runner Automobiles said that the decision to sell shares lies entirely with the board of the investment firm.

He explained that after the post-IPO lock-in period expired, Brummer Frontier obtained regulatory approval to sell its shares. Based on that approval, the firm has been gradually offloading its stake.

The official further noted that decisions regarding the timing and volume of share sales are determined solely by the investor's board, taking into account market conditions, share price, and internal investment strategies.

He also clarified that Runner Automobiles' management or board has no role in this matter, adding, "This is part of the investor's exit strategy and is not directly related to the company's operations or performance."

Brummer Frontier first invested in Runner Automobiles in 2013, injecting around Tk105 crore to acquire a significant stake. The objective was to accelerate the company's growth, strengthen corporate governance, and eventually secure a profitable exit.

Later, in 2019, Runner Automobiles was listed on the stock exchange through an initial public offering (IPO). While this opened up ownership to general investors, Brummer Frontier's shares were subject to a lock-in period. Following the expiry of that period, the investor began gradually reducing its stake.

There are several logical reasons behind Brummer Frontier's ongoing share sales, most of which are aligned with the typical lifecycle of private equity investments.

Firstly, private equity funds do not invest permanently. They aim to exit after a certain period by realising returns. Brummer Frontier's fund has now crossed a decade, making it necessary to return capital to its investors.

Secondly, during its tenure, Brummer Frontier contributed to significant improvements in Runner Automobiles, including enhancements in corporate governance, management structure, and environmental and safety standards. Having achieved these milestones, the firm is now in the phase of monetising its investment.

Thirdly, portfolio rebalancing is another key factor. Global investment funds frequently adjust their portfolios to explore new opportunities across sectors and geographies.

Meanwhile, Runner Automobiles has recently signed an agreement with Chinese electric vehicle manufacturer BYD Auto Industry Company.

However, the company has stated that the final investment size and potential financial impact under the Master Supply and Manufacturing Agreement (MSMA) have not yet been determined.

According to Runner, the MSMA serves as a framework for vehicle production under the Completely Knocked Down model, where components will be imported and assembled locally.

The company noted that a comprehensive feasibility assessment is currently underway. This includes determining the investment size, evaluating production capacity, analysing supply chain requirements, assessing market potential, and projecting revenues and costs.

However, no final commercial or financial terms have been established under the MSMA so far.