The rate of development spending improved marginally in the first ten months of the current fiscal year 2025-26, but the amount of money spent during the period was actually lower compared to a year earlier.

Spending under the Annual Development Programmes (ADP) stood at Tk 86,516 crore during the July-April period, or 41.41 percent of the total revised allocation, according to data released yesterday by the Implementation Monitoring and Evaluation Division (IMED). In April alone, spending rose 5.22 percent.

The ten-month execution rate is slightly higher than the 41.31 percent achieved during the same period of FY25 but is Tk 6,908 crore less in absolute terms.

The revised ADP allocation for FY25 stood at Tk 2.16 lakh crore, while it was Tk 2.08 lakh crore for FY26.

The marginal uptick in the execution rate does little to reverse a multi-year slide in budget implementation.

The 10-month ADP execution rate stood at 49.26 percent in FY24, 50.33 percent in FY23, and 54.57 percent in FY22.

In FY25, the full-year development spending hit a historic low, with only 68 percent of the revised ADP implemented, the weakest performance since FY1976-77.

The decline in the actual money spent reflects the disruption of a mid-year political transition following the uprising, which prompted several project directors and contractors to step away from their positions. Economic uncertainty compounded the slowdown.

The Health Services Division has performed the worst, implementing only 22.15 percent of its July–April target despite rising concerns over healthcare access.

With two months left in the fiscal year, analysts say Bangladesh is on course for another year of weak ADP execution.

The shortfall may also dent revenue collection by the National Board of Revenue, which collects advance income tax and VAT from implementing agencies. However, lower execution could also help contain the budget deficit and reduce government borrowing from the banking sector.

Among top-allocated ministries, the Ministry of Science and Technology’s execution rate stands at 80 percent, driven largely by the Rooppur Nuclear Power Plant expenditures.

The Energy and Mineral Resources Division follows at 68 percent, and the Ministry of Agriculture at 62 percent.

Meanwhile, despite the sluggish implementation trend, the new BNP-led government has announced an ambitious development budget of Tk 3 lakh crore for the upcoming FY27.

Three private commercial banks — Mutual Trust Bank, Southeast Bank, and Trust Bank — have received formal approval from the Bangladesh Securities and Exchange Commission (BSEC) to disburse their declared stock dividends for the financial year ended 31 December 2025.

According to regulatory disclosures filed with the Dhaka Stock Exchange yesterday, the banks are utilising these stock issuances to strengthen their capital bases in alignment with Basel III requirements and to provide the necessary fiscal cushion for future business expansion.

These regulatory clearances allow the banks to convert retained earnings into equity paid-up capital, a strategic move often preferred by lenders to maintain high capital adequacy ratios while supporting larger credit portfolios.

Mutual Trust Bank received consent to issue a 12% stock dividend. The bank's financial performance for 2025 showed steady growth, with its consolidated earnings per share (EPS) rising to Tk3.14 from Tk2.93 in the previous year, while its net asset value (NAV) per share improved to Tk28.11.

The bank informed its stakeholders that it would soon re-fix and notify a new record date for dividend entitlement.

Southeast Bank secured the regulator's nod for a 7% stock dividend, which complements its 3% cash dividend recommendation. The bank recorded a sharp recovery in its bottom line, with consolidated EPS jumping to Tk2.51 in 2025 from just Tk0.32 in the preceding year. Its NAV per share also rose to Tk25.74.

The bank has scheduled 4 June as the record date for the stock dividend.

Trust Bank also obtained approval for a 5% stock dividend, having already recommended an 8% cash dividend for the same period. The lender reported a consolidated EPS of Tk3.38 and a NAV per share of Tk28.52 for the year. The record date for Trust Bank's dividend remains 11 June.

Trust Bank also obtained approval for a 5% stock dividend, having already recommended an 8% cash dividend for the same period. The lender reported a consolidated EPS of Tk3.38 and a NAV per share of

Tk28.52 for the year. The bank has scheduled 11 June as the record date for the stock dividend.

Chip giant Nvidia on Wednesday posted record quarterly revenue of $81.6 billion, blowing past Wall Street forecasts as insatiable demand for its artificial intelligence hardware powered another blockbuster quarter.

The results for the first quarter of fiscal 2027, ending April 26, marked an 85 percent jump from the same period a year ago and a 20 percent rise from the prior quarter, underscoring Nvidia’s status as the primary beneficiary of a global AI infrastructure buildout.

Net profit surged to $58.3 billion, more than tripling from $18.8 billion in the year-earlier period.

Nvidia’s data center business, which sells the processors powering AI systems at tech giants and technology companies worldwide, was the engine behind the quarter’s performance.

Data center revenue, which includes Nvidia’s key graphics processing units (GPUs), hit a record $75.2 billion, up 92 percent from a year ago.

A GPU is a specialized computer chip originally designed to render video game graphics at high speed, but Nvidia has since made it the engine powering artificial intelligence.

That pivot has made Nvidia the world’s most valuable company, on the back of huge demand for its AI hardware.

Demand for Nvidia products seems insatiable despite recurring talk on Wall Street that the AI spending spree could come to a halt.

Since its February earnings report, Nvidia has disclosed a $10 billion investment in Anthropic, a major deal with Meta, and a commitment to AI company CoreWeave targeting five gigawatts of AI facilities by 2030.

For the current quarter, Nvidia projected revenue of $91 billion, representing a further acceleration in growth.

Crucially, Nvidia said it was not assuming any data center revenue from China in its outlook, where its core product has been caught up in a geopolitical dispute between Beijing and Washington.

Nvidia boss Jensen Huang this week said he expected China to eventually open its market to high-end US chips that can train and run artificial intelligence systems.

The superpowers are in a fierce race for AI supremacy, and Nvidia’s H200 chip had until recently been barred from sale in China by Washington over national security concerns.

However, there is no sign that Chinese tech companies are buying them, as Beijing ramps up domestic chip development in a bid to challenge US dominance in the sector.

Investors shrugged off the results in the earnings report, with Nvidia shares down more than one percent in after-hours trading.

Wealthy countries topped their $100 billion annual climate finance goal for poorer nations for the third straight year in 2024, the OECD said today (21 May), but questions are growing over their ability to meet a new larger pledge.

Developed nations had long fallen short of their commitment to mobilise $100 billion a year by 2020, finally hitting the target for the first time in 2022 after the deadline was extended to 2025.

The money is aimed at helping developing countries, which are least responsible for global warming, invest in renewable energy and cope with the worsening impacts of climate change.

After providing $115.9 billion in 2022, wealthy countries sharply raised their contribution to $132.8 billion in 2023, according to the Organisation for Economic Cooperation and Development, which tracks the figures.

It increased slightly in 2024 to $136.7 billion.

Climate finance can come from governments in the form of bilateral aid, multinational development lenders like the World Bank, or the private sector.

Public climate finance slipped 2.6 percent to $101.6 billion in 2024 but private sector contributions surged 33 percent to $30.5 billion.

The OECD said the data needed to produce figures for 2025, the last year of the $100 billion pledge, would not be available before 2027 "at the earliest".

Raphael Jachnik, who led the report at the OECD, told AFP the dip in bilateral public finance partly reflected a return to more normal trends after a sharp rise in 2023.

- Trump guts aid programmes -

Climate finance has been a thorny issue at annual UN climate talks, as developing nations grew frustrated with the developed world for dragging its heels to fulfil its pledges.

Richer nations committed to a new goal at the UN COP29 summit in Azerbaijan in 2024, pledging to provide $300 billion a year by 2035 -- an amount still considered insufficient by developing nations.

They also set a less specific target of helping raise $1.3 trillion annually from public and private sources.

Jachnik said the international context "raises more fundamental questions" about the new $300 billion target.

US President Donald Trump, a climate sceptic who returned to office last year, pulled the world's richest country out of climate diplomacy and gutted its foreign aid programmes.

The European Union, the biggest contributor to climate finance, is under budget strains and seeking to ramp up military spending amid the wars in Ukraine and the Middle East.

Turkish Climate Minister Murat Kurum, who will chair the COP31 climate summit hosted by his country in November, said Wednesday that he would "hold donors accountable for the commitments they made under the $300 billion Baku finance goal".

"It is easy to say we support global climate action. But promises must be kept," Kurum said in a speech at a climate ministerial meeting in Copenhagen.

Western nations have pushed to broaden the contributor base to include countries that are still listed as developing but have now become wealthy, such as China and Saudi Arabia.

Developed countries, which are facing their own budget constraints and debt problems, have also insisted that the private sector play a bigger role.

- 'Total scandal' -

Asia was the main target of climate finance contributions in 2024, with 36 percent, followed by Africa at 31 percent.

As in previous years, most public climate finance took the form of loans in 2023 and 2024, accounting for 73 percent and 67 percent of the total respectively, according to the OECD.

Developing countries have argued that climate finance should come in the form of grants, as loans compound their debt problems.

"The rich world profits from the loans they provide to poor countries who are desperately trying to deal with climate change caused by the rich world. It's a total scandal," said Mohamed Adow, director of the Nairobi-based climate think tank Power Shift Africa.

"The countries least responsible for the climate crisis are being asked to take on debt to survive it," he said.

As the national budget for fiscal year 2026–27 is set to be placed amid rising global uncertainty, Bangladesh Institute of Development Studies (BIDS) Director General (DG) Dr AK Enamul Haque has stressed that the country's top economic priority should be the systematic implementation of the government's election commitments while simultaneously preparing for emerging global risks.

In an exclusive interview with BSS ahead of the upcoming national budget to be placed in the Jatiya Sangsad next month, he said, "One major issue is implementing the government's election manifesto. The commitments made to the people for the next five years should begin to be implemented systematically."

Dr Enamul warned that the ongoing conflict in the Middle East could trigger a fresh global food crisis and place additional pressure on Bangladesh's economy through rising commodity prices and supply disruptions.

"As a result of the war, global food shortages are likely to increase. Bangladesh must prepare in advance," he said.

Dr Enamul emphasised that the budget should allocate sufficient resources for government-led food procurement and imports to maintain adequate domestic supply and stabilise prices.

"The government should maintain strategic food stocks under its own supervision. If supply does not increase, inflationary pressure will worsen," he said.

He argued that relying only on cash assistance would not be enough in the current situation, as shortages in food supply could continue pushing prices upward.

"If there is not enough food in the market, simply providing money will not solve the problem," he added.

The noted economist also urged the government to prepare contingency plans for Bangladeshi migrant workers who may return from Gulf countries, especially from the United Arab Emirates (UAE), if regional instability deepens.

"There should be budgetary preparation for their rehabilitation through easier access to loans so they can start small businesses or income-generating activities after returning home," he said.

Highlighting climate-related vulnerabilities, Dr Enamul said Bangladesh must increase support for rural populations affected by heatwaves, flash floods, and crop losses, especially in haor regions.

He proposed expanding support for duck farming, cattle rearing, and livestock-based activities in flood-prone areas to create alternative sources of income for farmers.

"Haor farmers depend on a single crop. If that crop is destroyed, they lose income for the entire year. Alternative income sources are essential," he said.

While supporting temporary cash assistance for disaster-hit populations, he cautioned that excessive dependence on cash transfers without increasing food supply could intensify inflation.

The BIDS DG also stressed the importance of expanding the government's Open Market Sales (OMS) programme and improving food assistance for vulnerable groups.

"If rice and lentils are supplied through OMS, eggs should also be included to ensure balanced nutrition and support domestic producers," he said.

Referring to growing food insecurity risks, he cited international warnings that several countries could face famine-like conditions if the global situation deteriorates further.

"Bangladesh must prepare now because food insecurity is becoming a concern," he added.

Dr Enamul further suggested that the government expand the use of farmer cards and family cards to streamline social protection programmes and agricultural support.

"If agricultural inputs such as fertiliser and pesticides can be supplied at lower prices through farmer cards, it will help increase production," he said.

He also recommended integrating multiple welfare programmes under a unified family card system to improve accountability and reduce misuse.

"About 20% of the population already receives some form of government support. If these programmes are integrated strategically, fiscal pressure will not increase significantly," he noted.

On external trade strategy, Dr Enamul stressed that Bangladesh should strengthen economic integration with Asian economies as geopolitical tensions continue affecting European and Middle Eastern trade routes.

"Asia is still relatively neutral in the current conflict situation. Bangladesh should focus more on increasing exports to Asian markets, including India," he said.

He added that the FY27 budget should focus more on building long-term economic foundations rather than launching excessively ambitious projects.

"The main objective should be to maintain economic growth momentum and prepare the foundation for the next five years," he said.

In a move to convert its share money deposits into equity, Power Grid Company Bangladesh (PGCB), a state-owned power transmission company, is now set to issue preference shares to the government worth Tk1,529 crore.

In several tranches, Power Grid had already issued preference shares to the government worth Tk10,146 crore against funds received from the government for development projects.

Its balance sheet as of March 2026 shows that its preference share capital is 11 times higher than its ordinary share capital, with existing ordinary paid-up capital standing at Tk913.80 crore.

The Bangladesh Securities and Exchange Commission (BSEC) gave its consent on 20 May to issue 152.92 crore irredeemable and non-cumulative preference shares at a face value of Tk10 each.

The preference shares will be issued in favour of the Secretary, Power Division, Ministry of Power, Energy and Mineral Resources, against share money deposits for the year ended June 2025.

According to company sources, Power Grid received a substantial amount of funds from the government in the FY2024–25, against which it will now issue preference shares worth Tk1,529 crore.

Under the government financing structure, 60% of disbursed funds is treated as equity and the remainder as loans, with the equity portion recorded as share money deposits.

At the end of March 2026, PGCB's outstanding share money deposits stood at Tk3,376 crore.

The shares issuance follows to comply with a notification issued by the Financial Reporting Council (FRC). The accounting regulator FRC directive, issued in 2020, said share money deposits must be converted into the company's capital within six months.

It also directed companies to include share money deposits when calculating earnings per share and dividends as soon as the funds are deposited, even before securitisation.

In line with the directive to comply, Power Grid gradually issued preference shares in favor of the government rather than issuing ordinary shares.

Preference shares are a class of shares where dividends are paid to holders before any distribution to ordinary shareholders. The government will accordingly receive dividends on the preference shares at a fixed rate before any dividend is declared for general shareholders.

The dividend rate for the government on the preference shares will be determined as a percentage of total capital, calculated as 25% of the assumed share of net profit after tax attributable to the preference shareholders.

Power Grid Company secretary Md Jahangir Azad said "The preference share issuance is a continuous process as we are instructed to issue shares against share money deposits after the end of the fiscal year."

"We are issuing shares for the government that was taken for the 2024-25 fiscal year. Every year, we will issue shares to the government that will be taken each year," he added.

Earlier explaining the dividend mechanism to The Business Standard, Power Grid Company secretary Md Jahangir Azad said, "Suppose preference shares account for 25% of the company's paid-up capital. If the company makes a profit of Tk100 in a financial year, the entitlement of the preference shares would be Tk25 from that profit. The government would then receive a 25% dividend on this Tk25 allocated to the preference shares."

In the first nine months of the current fiscal year, Power Grid reported that its revenue slightly grew to Tk2,386 crore, and made a profit of Tk570 crore.

At the same time of the previous fiscal year, its revenue was Tk2,218 crore and incurred a loss of Tk31 crore due to foreign currency fluctuation as it has to pay its foreign loans in foreign currency. The company's shares closed at Tk33.20 yesterday, up 3.11% from the previous session.

Bangladesh's state-owned enterprises (SOEs) drained nearly Taka 882 billion from the national exchequer in a single year, emerging as one of the country's biggest fiscal risks, according to a World Bank study.
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The study report highlighted that the deteriorating financial condition of public enterprises has become "unsustainable" at a time when Bangladesh is already facing falling revenue collection, slower economic growth and mounting pressure on public finances, BSS reports citing a press release.Personal finance courses

It said the growing losses of SOEs are consuming resources that could otherwise be invested in healthcare, education and social protection.

The findings were presented today at a dissemination workshop on the report titled "Financial Performance and Fiscal Risk of SOEs in Bangladesh" held at Pan Pacific Sonargaon in the city.

The study was conducted under the project on strengthening public financial management for better service (SPFMS), with the support of the Policy Research Institute (PRI) of Bangladesh.

According to the study, non-financial SOEs incurred a combined adjusted loss of Tk 441 billion in FY2024, while total net fiscal transfers from the government, including subsidies and development funding, climbed to around Tk 882 billion, equivalent to 1.7 percent of GDP.

Tanvir Ghani, Investment and Capital Market affairs Special Assistant to the Prime Minister, attended the workshop as the special guest.

Suraiya Zannath, Lead Governance Specialist, and team leader (SPFMS) WB, explained the context and objectives of the study and how the analysis will help frame policy and institutional reform.

Hasan Khaled Foisal, Additional Secretary, FD, delivered a presentation on the overview of SOEs, debt management and the macro-fiscal scenario, while Rahima Begum, Additional Secretary, FD, made the opening presentation highlighting the Public Financial Management Reform Strategy 2025-2030 relating to SOEs.

Henri Fortin, Lead Public Sector Specialist, WB, discussed international experiences of SOE reform and Immanuel Frank Steinhilper, Senior Governance Specialist, WB, presented global trends relating to SOEs.Economic trend analysis

Dr. Khurshid Alam, Executive Director, PRI, delivered the keynote presentation on the financial performance and fiscal risks of Bangladesh's SOEs.

The session was conducted by Mohammad Atikuzzaman, Sr. FMS, while Nazmus Sadat Khan, Economist, WB, delivered the closing remarks.

The study found that the energy and power sector accounted for the overwhelming majority of the losses.

The Bangladesh Power Development Board alone recorded losses exceeding Tk 444 billion in FY2024 due to high power generation costs, costly capacity payments to private power producers and electricity tariffs kept below production costs.

The report said politically influenced investment decisions, controversial contracts with independent power producers and weak corporate governance have severely undermined the sector's financial sustainability.

Other major loss-making entities include the Bangladesh Oil, Gas and Mineral Corporation, Bangladesh Rural Electrification Board, Trading Corporation of Bangladesh and several manufacturing corporations in the fertilizer, sugar and jute sectors.

The report observed that many manufacturing SOEs continue to incur persistent losses despite operating in competitive markets where private firms remain profitable. Local investment guides

The report also highlighted deep corporate governance weaknesses within Bangladesh's SOE structure.

It identified fragmented laws, bureaucratic control, weak oversight and lack of financial transparency as key reasons behind poor performance.

The report compared Bangladesh unfavorably with regional peers. While Bangladesh's SOEs posted a negative return on assets of 5.2 percent in FY2024, India's SOEs generated a positive return of 9.7 percent and Vietnam's recorded around 11.9 percent in recent years.

According to the study, Bangladesh could potentially mobilize more than Tk 1.2 trillion in additional fiscal resources if SOEs achieved a 10 percent return on assets and reduced their dependence on subsidies.

To address the crisis, the report recommended wide-ranging reforms, including restructuring commercially viable SOEs, introducing independent and professionally managed boards, strengthening financial disclosure requirements, reducing political interference and gradually opening monopoly sectors to competition.

It also suggested eventual privatization or closure of chronically loss-making enterprises that no longer serve strategic national purposes.

Oil prices gained more than 1 percent on ​Thursday, paring previous losses as investors monitored peace talks between the United States and Iran, while ‌supply tightness and US inventory drawdowns provided some support.

Brent crude futures rose $1.27, or 1.21 percent, to $106.29 a barrel by 0618 GMT, and US West Texas Intermediate futures were up $1.29 cents, or 1.31 percent, at $99.55.

Both benchmarks dropped more than 5.6 percent on Wednesday to their lowest in ​more than a week after President Donald Trump said talks with Iran were in the final stages, but ​also threatened further attacks if Tehran did not agree to a peace deal.

“The oil market remains overly sensitive to Iran-related headlines, with participants continuing to pin considerable hope on reports that talks ​between the US and Iran are progressing,” ING analysts said in a note on Thursday.

“We’ve been in this ​situation multiple times before, which ultimately led to disappointment,” they added, forecasting an average Brent price of $104 a barrel in the current quarter.

Iran warned against further attacks and unveiled steps entrenching its control of the crucial Strait of Hormuz, mostly closed, though before ​the war it had carried oil and liquefied natural gas shipments equal to about 20 percent of global consumption.

On ​Wednesday, Iran announced a new “Persian Gulf Strait Authority,” saying there would be a “controlled maritime zone” in the Strait of Hormuz.

Iran ‌effectively closed the strait in response to the US and Israeli attacks that started the war on February 28. Most of the fighting has stopped since an April ceasefire, but while Iran is limiting traffic through Hormuz, the US has blockaded its coastline.

Supply losses from the key Middle Eastern producing region because of the war have forced ​countries to pull from their ​commercial and strategic inventories ⁠at a rapid rate, raising concerns about draining them.

The US Energy Information Administration said on Wednesday the country withdrew nearly 10 million barrels of oil from its Strategic Petroleum ​Reserve last week for its biggest drawdown on record.

Underlining the impact of the ​supply disruptions in ⁠was EIA data showing a bigger-than-expected decline in US crude oil inventories last week.

“The drawdown in oil inventories will make it difficult for oil prices to remain low,” said Mingyu Gao, chief researcher for energy and chemicals at China Futures.

“With ⁠the ​Strait of Hormuz blocked, global refined-product and onshore crude inventories are ​expected to fall below their lowest levels for this time of year in the past five years by late May and late June.”

Commerce Minister Khandakar Abdul Muktadir has announced that the government is undertaking regulatory overhauls to simplify business operations, including cutting down licensing times, ensuring consistent energy supply, and introducing structural exit routes for businesses.

The minister also said investment is the sole driver of job creation, which cannot be forced by laws or administrative decrees but must instead be supported by market-friendly policies.

He made the remarks while speaking at a policy symposium titled "Post-Uprising Economy & Geopolitics of Budget: Reminiscing the legacy of M Saifur Rahman" at a hotel in Dhaka today (22 May).

Muktadir, also the minister for industries, textiles and Jute, said, "To start a business in Bangladesh, an entrepreneur currently requires 25 to 26 licenses, taking an average of 350 days. This exhausts entrepreneurs before they even begin operations."

He stated that under the guidance of the prime minister, the government is drastically reducing these overlapping processes, with the changes becoming physically visible.

"As part of the reforms, the trade license issuance process – currently scattered across thousands of decentralised local government entities – will be centralised."

Additionally, the process for obtaining Import Registration Certificates (IRC) and Export Registration Certificates (ERC) will move entirely online, allowing entrepreneurs to download certificates digitally without visiting physical offices, he added.

The commerce minister also advocated for a fundamental shift in how the state views business failures.

Highlighting the lack of viable exit routes for struggling enterprises in Bangladesh, he called for bankruptcy frameworks similar to Chapter 7 or Chapter 11 insolvency codes used in developed nations.

"A business failure is not a criminal offense; it must be treated as a business issue. While willful default and money laundering must face the strictest punishments, genuine business failures should not be criminalised," he said.

Addressing the ongoing energy crisis, the minister noted that fuel shortages and weak policy implementation have left the country's installed industrial capacity underutilised, which costs the economy potential percentage points in GDP growth.

The government is actively working to ensure uninterrupted fuel supplies to production units, he assured.

Muktadir also raised concerns over high bank interest rates, which currently range between 13% and 15%. He pointed out that such rates are unsustainable for Bangladesh's labor-intensive, low-capital manufacturing sectors that operate on slim profit margins.

"To support these industries, the government, under the leadership of the finance minister, is planning to launch a scheme to provide off-shore funds at more tolerable interest rates," he said.

The government may reduce Advance Income Tax (AIT) at the import stage on primary and intermediary raw materials and other industrial goods from the existing 5% to 4%, in a move aimed at easing pressure on businesses and encouraging investment.

The upcoming budget may also introduce a provision allowing businesses to claim refunds of excess advance tax deducted after a specified period. Although the current system allows tax adjustment, most businesses fail to recover the excess tax due to various procedural complexities.

Sources related to the National Board of Revenue (NBR) budget process said the initiative is primarily intended to reduce the tax burden on businesses and improve working capital flow.

A senior NBR official, speaking to TBS on condition of anonymity, said, "Industries importing goods under Industrial Import Registration Certificates (IRC), which currently pay 5% AIT in certain cases, may see the rate reduced to 4%.

"If implemented, this will provide relief to industrial entrepreneurs and reflects the current government's investment-friendly approach."

Business leaders have welcomed the initiative but argued that the AIT rate should be reduced further, saying the current structure is inconsistent with tax justice principles.

Mir Nasir Hossain, former president of the Federation of Bangladesh Chamber of Commerce and Industries (FBCCI), told TBS, "Reducing AIT would be a positive decision, but it is still not enough."

Explaining his position, he said, "AIT is deducted at the import stage. A business first imports goods, adds value, sells products and only then generates income, at which point taxation should apply. Deducting tax before any income is earned is not logical."

Taskeen Ahmed, president of DCCI, also welcomed the initiative but said the AIT rate should not remain as high as 5%.

"AIT should be capped at a maximum of 2% because not all businesses generate the same level of income," he told TBS.

However, both business leaders acknowledged that the proposed reduction would have a positive impact on business and investment.

Under Bangladesh's existing income tax law, advance tax deducted at the import stage can later be adjusted against actual profits. Businesses with higher profits pay additional tax, while those with lower profits are entitled to refunds. However, businesses must submit extensive documentation to claim refunds, and even after doing so, the money often remains stuck for years. In some cases, legal procedures prolong the process even further.

As a result, many importers do not attempt to recover the money and instead add the cost to product prices.

An importer of escalators and electrical products, speaking anonymously, told TBS, "Getting AIT refunds is extremely difficult in practice. So we treat the amount as a business cost and add it to the price of products."

He added that if the government reduces the rate, it would lower business costs and ultimately help reduce costs for consumers as well.

Experts and economists have urged the government to use the national budget for the next fiscal year as a strategic instrument to revive economic growth while maintaining macroeconomic stability, warning that Bangladesh’s economy remains under severe stress amid persistently high inflation, sluggish private sector credit growth, and rising fiscal pressure.Economic trend analysis
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Speaking on Thursday, they said the country’s macroeconomic condition continues to be fragile, with inflation remaining elevated for an extended period, private sector credit growth dropping to a record low, and fears mounting over a possible fiscal shortfall in the upcoming fiscal year.

They also recommended undertaking robust reforms to create the conditions necessary for expansionary fiscal and monetary policies, alongside ensuring stronger discipline and accountability in economic management to secure the best value for public money.

These observations came at the launch of the Monthly Macroeconomic Insights report titled “Restoring Growth through Productivity Reforms: Pre-Budget Priorities”, prepared by the Center for Macroeconomic Analysis (CMEA) of the Policy Research Institute of Bangladesh.

Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD), attended the event as the chief guest at the event at PRI office, while it was chaired by Zaidi Sattar, chairman of the PRI.

“The economy now stands at a crossroads. Growth has slowed significantly, investment momentum has weakened, inflation remains elevated, and vulnerabilities in the fiscal, financial, and energy sectors continue to constrain policy space,” said Zaidi Sattar at his opening remarks.

Macroeconomic stabilization alone will not be sufficient to restore high and sustainable growth, he said, adding that the economy now requires a new phase of productivity-enhancing reforms.Local investment guides

He proposed reforms in the fields of rationalizing gargantuan tariffs, revamping trade openness, improving the investment climate, reforming the energy sector, restructuring state-owned enterprises, promoting FDI, and investing in critical infrastructure.

Dr Ashikur Rahman, Principal Economist of PRI, presented the keynote at the event.

He said that a disciplined budget anchored in macroeconomic stability, combined with sustained productivity-enhancing reforms, remains the most credible pathway for restoring Bangladesh’s growth momentum in the current environment.

The economy is facing a tough crossroads with inflation still elevated, fiscal space increasingly compressed by rising interest payments, and financial sector vulnerabilities continuing to constrain effective credit transmission; the room for expansionary fiscal or monetary stimulus remains limited, he further stated.

The government is considering setting tax rates in a more predictable framework – long sought by local and foreign investors – with the upcoming budget expected to outline rates for up to five years.

The rates introduced in last year's budget were set for a two-year period, covering FY2026-27 and FY2027-28. This means the upcoming budget will provide an indication of tax rates for the next five years.

An NBR senior official involved in tax policy formulation, speaking on condition of anonymity, told The Business Standard that businesses have long demanded a predictable tax regime.

He said investors and businesses want certainty over tax rates for at least three to five years to support long-term planning. "This year, we may be able to indicate tax rates for the next five years."

The idea of a predictable tax system has been a long-standing demand from both local and foreign investors. The Foreign Investors Chamber of Commerce and Industry (Ficci), the country's largest foreign investor lobby group, has repeatedly called for a stable and forward-looking tax framework.

Debabrata Roy Chowdhury, director of legal and corporate affairs at Nestlé Bangladesh, described the initiative as a welcome step. He said foreign investors have long argued that tax rates should remain stable for at least five years to support investment planning.

"If we can know the tax rates for the next five years, it would certainly be an investment-friendly move," he told The Business Standard.

Businesses typically face uncertainty ahead of national budgets due to frequent tax changes, some of which can also affect income and expenditure from previous fiscal periods.

Snehasish Barua, tax expert and managing director of SMAC Advisory Services Limited, said the move towards predictability is positive and reflects a key demand from the business community.

However, he cautioned that predictability alone may not be sufficient to attract investment. "If higher tax rates are locked in under a predictable system, it will not be investment-friendly.

Global trends show tax rates are declining, and higher rates could discourage foreign investment," he said.

The US dollar firmed on Thursday but stayed below a six-week peak as hopes that Washington was nearing a deal with Tehran to end the war in the Middle East capped further rises.

US President Donald Trump on ​Wednesday said negotiations with Tehran were in the final stages, while also warning of further attacks if Iran does ‌not agree to a deal.

The dollar, often a safe haven for investors, firmed 0.1 percent against the yen to 159.060 yen after falling for the first time in eight sessions against the yen on Wednesday.

Bank of Japan policy board member Junko Koeda added a measure of support for the yen with hawkish comments on Thursday, saying in ​a speech that the central bank needs to continue to raise rates with underlying inflation already around a 2 percent target.

​The euro was 0.2 percent down at $1.160050, after dipping on Wednesday to its weakest level since April 7 at $1.1583 before bouncing back.

The euro dipped after French PMIs for May showed the economy contracting at its sharpest pace in five and a half years.

“Terrible French ​PMI ... but ECB seems determined to raise rates,” said Kenneth Broux, head of corporate research FX and rates at Societe Generale, to explain ​the negative euro.

Traders meanwhile are awaiting euro area composite PMIs for May which will hit screens this morning.

Sterling was down 0.1 percent at $1.3421.

The dollar index , which measures the currency against the euro, yen and four other rivals, rose 0.2 percent to 99.295, down from a peak of 99.472 on Wednesday, the strongest level since April 7.r

Power, Energy and Mineral Resources Minister Iqbal Hassan Mahmood Tuku on Friday (22 May) said the government will float an international tender next Monday for offshore oil and gas exploration, while an investment-friendly solar energy policy is expected to be unveiled by June.

Speaking at a policy symposium in Dhaka, he said the government is prioritising energy security through expanded exploration, structural reforms in the power sector and diversification into renewable energy sources.

Tuku said Bangladesh has not carried out meaningful offshore exploration for the past 17 years despite securing maritime boundary settlements.

"The last major offshore exploration initiative was undertaken in 1991 under the BNP government led by former prime minister Khaleda Zia, which later enabled ongoing gas production by Chevron," he said.

"We achieved victory in maritime boundary disputes, but we have yet to extract resources from the sea. To address this, we are floating an international tender for offshore exploration next Monday," he added.

The minister said the government is strengthening state-owned Bangladesh Petroleum Exploration and Production Company (Bapex) through the procurement of new rigs.

Acknowledging Bapex's lack of deep-sea drilling expertise, he said the company has been advised to participate in the upcoming tender through joint ventures with international oil companies to ensure Bangladesh retains a strategic stake in offshore resources.

Highlighting the government's clean energy agenda, Tuku said work is underway on solar, wind and waste-to-energy projects, with a new solar policy aimed at attracting investment expected by June.

He said high import taxes on battery storage systems remain a major obstacle for private investors in the renewable energy sector.

"The current tax structure on solar batteries is too high, discouraging investors. We are working with the finance ministry to resolve these tax and tariff issues," he said.

The government is targeting at least 5,000 megawatts (MW) of renewable energy generation by the end of its term, however, Tuku expressed hope that the figure could reach 10,000MW if implementation proceeds smoothly.

The world built and commissioned more coal power in 2025, but used the polluting fuel less, with the United States the only major economy to substantially increase generation, analysis showed Thursday.

Coal is a key contributor to planet-warming greenhouse gas emissions, and phasing it out is crucial to taming climate change.

The growing affordability and abundance of renewable energy means solar and wind power can now cover growing electricity demand in much of the world.

That helped push coal generation down globally by 0.6 percent in 2025 from a year earlier, according to a new report from Global Energy Monitor, which has tracked coal power for more than a decade.

But despite the generation drop, coal power capacity -- plants that came online or were commissioned -- jumped 3.5 percent last year.

The overwhelming majority of that -- 95 percent -- was in China and India, GEM said.

China’s coal capacity grew six percent last year, but coal-powered electricity generation fell 1.2 percent, in part because of soaring renewable capacity.

The same was true in India, where capacity grew almost four percent, even as generation fell nearly three percent.

In both countries, “many of the provinces and states leading coal development are major coal-producing regions”, said Christine Shearer, project manager of GEM’s Global Coal Plant Tracker and author of the report.

They have “strong industrial incentives to keep building coal”, she told AFP.

US ACTIVELY INCREASES COAL

China is the world’s top emitter, while India ranks third behind the United States.

Beijing sees coal as a reliable failsafe for intermittent renewable supply, particularly for after power shortages several years ago.

India, the world’s most populous country, is leaning heavily on coal to meet soaring electricity demand. But coal’s persistence is also the result of infrastructure issues.

Non-fossil fuels already account for 50 percent of India’s installed capacity, but infrastructure and other issues mean the country still generates around three-quarters of its electricity from coal.

Globally, the retirement of coal power also slowed last year, with nearly 70 percent of units that were due to end operations instead staying online, GEM said.

In Europe, those missed targets were linked primarily to decisions taken during the 2022-23 energy crisis caused by Russia’s invasion of Ukraine.

In the United States however, retirement delays were due to a government push for coal, said Shearer. “US coal-fired generation rose by more than 80 TWh (terawatt hours) year-on-year, a figure so large that no other country came close,” she said.

The surge “was not simply a function of (demand) growth, it reflected a policy environment that actively encouraged it,” she added.

COAL ‘FAVOURITISM’

The energy crisis sparked by the US-Israeli war with Iran has seen some countries turn back to coal, reactivating idle coal units or delaying retirements.

In China, coal-fired power generation also jumped in the first part of the year, in part due to “underperformance” by wind and nuclear.

“But the oversupply and favouritism of coal power is an important factor,” added Lauri Myllyvirta, co-founder of the Centre for Research on Energy and Clean Air, and contributor to the report.

While figures from May suggest China’s coal generation may have dropped again, “the problem of excess coal capacity and entrenched favouritism of coal in the grid remain”, he told AFP.

Globally, coal-fired generation has risen 0.3 percent so far this year, Shearer said, while wind and solar generation has jumped 10 percent.

“Clean energy is absorbing most of the world’s new electricity demand, with coal barely growing at all,” she said.

Bangladesh expects an off-the-cuff US$1.835-billion financing from the World Bank for use before the close of the current fiscal year to cushion the economy against mounting external shocks, sources say.Local investment guides
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Of the amount, the financier has proposed an emergency financing fund worth up to $250 million for Bangladesh government to tackle fiscal pressures stemming from the ongoing Middle East conflict.

The proposed emergency Investment Project Financing (IPF) would be financed through the reallocation of cancelled and uncommitted funds from five of ongoing or closing projects.

The projects include the Resilience, Entrepreneurship and Livelihood Improvement Project, Dhaka City Neighborhood Upgrading Project, Bangladesh Road Safety Project, Bangladesh Environmental Sustainability and Transformation Project, and Jamuna River Sustainable Management Project-1.

The proposed IPF is expected to be placed before the World Bank Board for approval by June 29, 2026, with disbursement likely to begin the following day, according to officials familiar with the developments.

The multi-sector package, now in an advanced stage of preparation, is intended to support macroeconomic stability, strengthen fiscal resilience, and ensure continuity in key financial-and energy-sector operations.

The government has made significant progress in advancing the FY26 financing pipeline following discussions held during the WB Group and IMF Spring Meetings, according to a recent letter addressed to the government.

The letter complements earlier correspondence dated May 5, 2026.Emerging market research

"We are pleased to observe significant progress on the FY26 pipeline thanks to the leadership of the Minister of Finance and Planning," the letter reads.

The letter mentions: "In sum, up to u$1.835 billion can be processed before the end of FY26."

According to an official communications between the WB and the Economic Relations Division (ERD), the financing programme combines emergency liquidity support with medium-term structural assistance.

The largest component of the package is up to $785 million under the Contingent Emergency Response Component (CERP) Rapid Results Option.

The government has already appointed a project director within the Finance Division and completed the omnibus amendment needed to repurpose funds from host projects for emergency expenditures.

The government is now preparing the CERP activation package, including a crisis action plan and procurement framework, to facilitate rapid fund utilisation.

Another major component is the Financial Sector Support Project-II worth US$450 million, aimed at strengthening financial-sector stability and reform initiatives.

Negotiations on the project concluded on May 11, with minutes signed the following day.Maps

An official says Bangladesh Bank (BB) has sought an additional $50-million allocation as the Deposit Protection Fund has already utilised around 90 per cent of its existing resources.

An addendum to the negotiation minutes is currently under preparation following approval from the finance and planning adviser, keeping the project on course for WB Board approval by June 23.

The pipeline also includes $350 million in additional financing for the Energy Sector Security Enhancement Project to help absorb global fuel-price volatility and support energy-supply security.

A high official concerned says the government has already provided feedback on the project paper and indemnity agreement, while the WB submitted the final project paper for senior management clearance on May 12.

The WB has stressed the need for parallel implementation measures to ensure timely release of the funds before the end of FY2025-26.

Under the proposed arrangement, the Finance Division will deploy experienced officials in procurement, financial management and safeguard compliance to meet the accelerated processing timeline, according to a senior official concerned.

Major banking scandals, market manipulation, and financial misreporting have created severe capital shortages in banks and the private sector, Finance Minister Amir Khosru Mahmud Chowdhury said yesterday.

Addressing the “Financial Accounting and Reporting (FAR) Summit 2026” as chief guest at the Pan Pacific Sonargaon Dhaka, he said financial discipline in the banking and capital market sectors has not been restored despite repeated scandals.

He alleged several companies entered the stock market using false representations, which has discouraged strong firms from getting listed and weakened fair competition and price discovery.

Khosru, also the planning minister, said economic management institutions in Bangladesh have become increasingly ineffective, with accountability and monitoring systems failing to function properly.

He noted that regulatory bodies, including the Financial Reporting Council (FRC), play a vital role in ensuring transparency in corporate reporting, but said the overall governance ecosystem has weakened since the council’s establishment in 2015.

He warned against a culture of shareholders treating banks as personal property, despite banks operating mainly with depositors’ funds.

He stressed the need for a transparent and accountable financial system where regulators, institutions, and professional bodies properly discharge their responsibilities.

Referring to the self-regulation model of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) in issuing exporters’ utilisation certificates, he said similar accountability mechanisms are needed in accounting, auditing, and financial reporting.

The minister said Bangladesh is attracting strong interest from international investors and global fund managers, particularly in bonds and other instruments.

However, he said such investment depends on confidence in the country’s financial reporting, auditing, and governance systems.

He urged regulators and stakeholders to work together to establish global-standard practices and restore investor trust.

Virtually addressing the event, Rashed Al Mahmud Titumir, finance and planning adviser to the prime minister, said past failures in auditing and financial oversight were driven by weak standards, lack of accountability, and conflicts of interest, where audit firms effectively acted as their own regulators.

He said unreliable financial reporting, manipulated valuations, and weak regulation had pushed the banking and capital market sectors into crisis, resulting in loan defaults, instability, and repeated scams.

He added that thousands of small investors lost money due to misleading financial statements of listed companies, while honest entrepreneurs were disadvantaged as dishonest firms attracted investment by showing inflated profits.

He called for stronger regulation, greater independence and authority for the FRC, stricter punishment for fraudulent reporting, and adoption of international standards to restore investor confidence and strengthen economic governance.

Mahmud Hasan Khan Babu, president of BGMEA, said audit reports often failed to reflect the true condition of banks despite serious sectoral weaknesses.

He said asset quality reviews later exposed multiple irregularities, highlighting major gaps in financial reporting accuracy.

He added that poor reporting led to loans being granted to unqualified borrowers, while viable businesses struggled to obtain financing.

He also noted inconsistencies where companies showed strong financial positions to banks but reported losses to tax authorities, creating challenges in tax compliance and loan recovery.

Md Sajjad Hossain Bhuiyan, chairman of the FRC, presented the keynote paper at the event. The inaugural session was chaired by Md Khairuzzaman Mozumder, secretary of the finance division.

The summit was jointly organised by the FRC, the Institute of Chartered Accountants of Bangladesh, and the Institute of Cost and Management Accountants of Bangladesh.

A candid admission comes from the finance minister that many well-established companies are facing acute capital shortages, in a crunch he attributes to lack of "fair competition" and governance gaps.
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"Many big companies and banks are in serious capital shortage," Finance and Planning Minister Amir Khosru Mahmud Chowdhury said Wednesday while speaking as chief guest at the inaugural session of the first-ever Financial Accounting and Reporting (FAR) Summit held at a city hotel.

The summit was jointly organised by the Financial Reporting Council (FRC), the Institute of Chartered Accountants of Bangladesh (ICAB) and the Institute of Cost and Management Accountants of Bangladesh (ICMAB).

Turning to the predicament of banking sector, the finance minister said the current financial strain reflected deeper structural weaknesses, including distorted lending practices within banks.Bangladesh economic report

"Depositors keep money in banks, and loan approvals were often influenced by board-level decisions," he points out, adding that auditors should adopt stronger "self-regulation" to ensure transparency.

He stresses full transparency and accountability for restoring investor confidence and achieving long-term economic stability in the country.

"Bangladesh is now at a crossroads and all depend on the institutions," the finance minister implicitly reminds about the transition following political upheavals.

Mr. Chowdhury notes that the Financial Reporting Council would continue to exist but should focus on supervision and monitoring rather than direct enforcement alone.

"Every day, fund managers are contacting us-from Hong Kong, London, even JPMorgan. But if foreign investors see that our accounting is not up to international standards, they will be discouraged," he told the meet.

The minister also recalls delegating authority for issuing export-utilisation certificates to Bangladesh Garment Manufacturers and Exporters Association (BGMEA) during his tenure as commerce minister in a previous BNP government, and says the move had improved governance after earlier allegations of corruption at the Export Promotion Bureau.Financial literacy course

He strongly feels that Bangladesh needs a financial system built on institutional integrity.

"The current government wants a system of complete transparency and accountability."

The new custodian of exchequer alerts that Bangladesh's economic future depends on institutions such as FRC, ICAB and ICMAB. "No regulator can identify every mistake daily. Accountants and professional bodies must take the lead in self-regulation."

Mentioning that institutions have weakened over time due to past "governance failures", the minister alleges that financial irregularities and bank fund diversions were often linked to misleading accounts.

"Many companies listed on the capital market used false information. Investors were misled," he deplores.

Prime Minister's Finance and Planning Adviser Prof Rashed Al Mahmud Titumir, speaking as special guest, said weak auditing practices had contributed to financial-sector instability.

"In many cases, audit firms have become their own judges," he said through online platform, adding that regulatory gaps had deepened banking-sector vulnerabilities.Economic trend analysis

He says investors had suffered significant losses due to misleading financial statements, while banks had extended large loans based on inaccurate reports that later turned into defaults.

BGMEA President Mahmud Hasan Khan told the meet that out of 7,200 registered member-organisations only around 2,500 were now active, largely due to poor accounting practices.

"Inflated accounts can destroy organisations," he notes, adding that discrepancies between assets and liabilities were a common concern in the sector.

He also warns that lack of transparent accounting discouraged foreign buyers and reduced competitiveness in export markets. Chairman of FRC Md Sajjad Hossain Bhuiyan presented the keynote paper, titled 'Reliable Financial Reporting: Where Does It Really Matter?'

Finance Secretary Dr Khairuzzaman Mozumder chaired the inaugural session. ICAB acting president Rokunuzzaman and ICMAB president Kauser Alam also spoke at the event.

The summit featured two technical sessions attended by CFOs, auditors and policymakers from leading institutions.

Private sector credit growth fell to 4.72 percent -- a record low -- in March, marking another month of slowdown.

The downturn in loan flow was recorded at a time when Bangladesh elected a new government for five years after the general election, which many thought would bring an end to the dry spell in private investment.

The latest data has dampened those expectations. Rather, it has raised questions about what has gone wrong.

The obvious answer is the US-Israel war on Iran and the consequent closure of the Strait of Hormuz, a key maritime chokepoint, by Iran and its ripple effects on the global economy. Oil prices, as well as gas, fertiliser and various other commodity prices jumped, unnerving investors.

Many investors who planned to make a fresh start after the election held back amid an uncertain global economic environment, risks of imported inflation and worries over the war fallout on Bangladesh’s economy, a net import-dependent country.

“None invests under such an unstable environment,” said Taskeen Ahmed, president of the Dhaka Chamber of Commerce and Industry.

The record-low credit growth, he said, reflects that investors are “downbeat” because of the economic pressure since the Covid-19 pandemic. The Russia-Ukraine war, worsening energy crisis, persistent inflation and rising interest on bank loans were some of the challenges they faced over the last few years.

The war has added a fresh concern for entrepreneurs. So, this low credit growth is a culmination of all these factors, Ahmed said.

Sohail R K Hussain, Managing Director of Bank Asia PLC, said many investment decisions have been deferred as investors fear that the local currency may be devalued further, since several countries have devalued their currencies against the US dollar amid global uncertainty.

He added that during the last seven to eight years of the Awami League-led government, there was excessive lending to some large borrowers; as a result, the market is now correcting, and demand has weakened.

Mir Nasir Hossain, former president of the Federation of Bangladesh Chambers of Commerce and Industry, said the slowing credit flow is bad for investment and employment.

One main factor is soaring interest rates, which has made borrowing costly not only for fresh loans but also for existing loans. Banks are also reluctant to extend commercial loans. Many make hefty profits by investing in government bonds for secure returns.

For Hossain, the latest private credit growth data is an ominous sign. “It is really very concerning.”

Abdur Razzaque, chairman of Research and Policy Integration for Development, echoed similar concerns. To him, the exceptionally weak private sector credit growth is a critical warning sign of a deeper private investment crisis.

“It reflects a unique situation in which firms are reluctant to expand, banks are increasingly constrained or unwilling to take credit risks, borrowing costs remain high, public borrowing is absorbing financial space, and uncertainty over energy, inflation, external conditions and the exchange rate continues to weigh on business decisions.”

A number of factors -- rising non-performing loans, provisioning pressure, undercapitalisation, fragile depositor confidence and liquidity constraints -- have weakened banks’ capacity to lend, while uncertainty over borrower quality has reduced their willingness to extend fresh credit.

“In effect, the banking system is becoming more defensive. It is protecting its balance sheets rather than supporting new investment.”

Razzaque said the overall situation is quite unusual as Bangladesh is facing both weakened demand for credit and a lacklustre supply response from the banking system.

“This combination risks pushing the economy into a low-equilibrium trap: firms are not investing because confidence is weak, banks are not lending because risks are high, production remains subdued because investment and imports are compressed, and slow activity then further weakens the case for new lending. Breaking this cycle will require more than marginal changes in credit targets.”

However, Md Ezazul Islam, director general of Bangladesh Institute of Bank Management, said credit demand will pick up from April to May as political stability returns. “It seems that the sluggish phase has bottomed out,” he said.

However, Razzaque said the recovery of private sector credit growth will remain difficult unless the government recognises the wider consequences of excessive borrowing from the banking system.

“When public borrowing offers banks a safer and easier return, private enterprises are pushed further to the margins. Restoring credit growth, therefore, requires not only lower inflation and a more stable exchange-rate environment, but also credible banking-sector repair, disciplined public borrowing, improved confidence, and a clear policy signal that productive private investment will again be treated as the central engine of growth.”

He said the government and the central bank should increase lending to the small and medium enterprise (SME) sector at low interest rates under refinance schemes.

He also said ongoing legal reforms could help improve the investment climate further.

The National Board of Revenue (NBR) is on course to miss its annual revenue target for the current fiscal year, extending its run of shortfalls to a tenth straight year.

Revenue officials blame the shortfall on a slowing economy, ambitious targets and inefficient collection.

In the first 10 months of fiscal year 2025-26, the tax authority collected Tk 3.27 lakh crore, falling Tk 1.04 lakh crore short of the July-April target, according to provisional revenue data released yesterday.

To avoid another shortfall, the NBR would have to collect Tk 2.27 lakh crore in the remaining two months, a goal officials describe as a “herculean task”.

Economists too say that is unrealistic. Collecting nearly half of the full-year target in the final two months would require an unprecedented surge.

“The NBR is set to miss its target this year,” said Towfiqul Islam Khan, additional director (research) at the Centre for Policy Dialogue (CPD). “This will significantly constrain the government’s fiscal space.”

Measured against the original annual targets, the situation looks worse. By that yardstick, the NBR has failed to meet its goal for 14 consecutive years.

As revenues fall short, the government is leaning more heavily on borrowing.

In the July-February period of FY26, net deficit financing rose 67 percent year-on-year to Tk 1.05 lakh crore, up from Tk 63,040 crore in the same period last year. Of that, Tk 88,309 crore came from the banking system, according to Bangladesh Bank data.

Despite the shortfall, the government has set a revenue target of Tk 6.95 lakh crore for the next fiscal year, covering both tax and non-tax income. That implies growth of at least 42 percent over the revised FY26 target.

CPD Additional Director Khan called it a “near-impossible revenue challenge”.

“No historical benchmark supports this,” he said, noting that even the most optimistic compound annual growth rate between FY01 and FY19 was 15.6 percent and would still leave a Tk 1.3 lakh crore shortfall.

“For FY27, the budget deficit and the government’s financing capacity are more likely to become the main anchors of public financial management, rather than expenditure ambitions alone,” he added.

He said much of the country’s foreign borrowing is tied to the Annual Development Programme (ADP), leaving limited flexibility in public spending.

“At the margin, the government’s ability to mobilise domestic revenue will determine the extent of total public expenditure in FY27,” he added.

Last month, Finance Minister Amir Khosru Mahmud Chowdhury told parliament that the tax-to-GDP ratio has dropped from about 11 percent to below 7 percent.

The fallout from the US-Israel war on Iran has added pressure to state finances, as the government has been forced to buy fuel at elevated prices. Bangladesh imports about 95 percent of its energy, and state agencies have increasingly turned to the volatile spot market.

“The mounting costs are bleeding the exchequer,” the minister said on the sidelines of the IMF-World Bank Spring Meetings in Washington last month, citing nearly $2 billion in additional energy import costs following supply disruptions.

“On top of that, the tax-to-GDP (ratio) is not increasing because of business stress; the businesses are in bad shape,” he said, adding that if businesses do not recover, tax receipts will not improve.

He said the government has sought budget support from development partners and is pursuing structural reforms. It has prepared an action plan aimed at building a trillion-dollar economy by 2034, centred on investment, jobs and macroeconomic stability.

INCOME TAX GROWTH OUTPACES VAT

In the July-April period, income tax recorded the strongest growth among major revenue heads. Collections rose 11.59 percent year-on-year to Tk 1.09 lakh crore, accounting for 33.5 percent of the total.

Value-added tax (VAT) remained the largest single source of revenue, contributing 38 percent of the total. Receipts increased 11 percent to Tk 1.26 lakh crore.

Revenue from import duties and supplementary taxes grew more slowly, rising 8.87 percent to Tk 90,762 crore.

In April alone, VAT collection contracted by 3.17 percent year-on-year. Facing mounting pressure, the NBR is considering structural changes for the next fiscal year.

A senior revenue official said yesterday that the board is proposing several fiscal measures in the upcoming budget to expand the tax base.

It is also weighing steps to strengthen collection, including reintroducing a wealth tax, raising rates for the ultra-rich and rationalising existing exemptions.

“We will also strengthen enforcement to curb tax evasion and gradually reduce existing tax exemptions, aiming to raise revenue collections,” he said.

The NBR also plans to raise the top marginal income tax rate for ultra-rich individuals from 30 percent to 35 percent, with the measure tentatively scheduled for FY28.