Finance and Planning Minister Amir Khosru Mahmud Chowdhury said on Sunday the government is moving towards market-based and alternative financing while reducing reliance on bank borrowing, arguing that excessive state borrowing from banks puts pressure on private sector investment.

He made the remarks at a budget review dialogue in Dhaka organised by the Centre for Policy Dialogue, noting that steps to reduce reliance are included in the 2025–26 and 2026–27 budgets.

“I’ve been saying for 10 years that the government shouldn’t borrow excessively from domestic banks,” he said. “When the government takes money at 10 to 13 percent interest, it becomes difficult for the private sector to survive, and the question of how such expensive loans will be repaid looms large.”

The current FY26 budget will spend about BDT 1.25 trillion on interest payments, he said, limiting the government’s fiscal space. The budget was prepared in about one and a half months instead of the usual six, and the government inherited arrears from the previous administration, including about BDT 5 billion in unpaid electricity bills.

The minister said the government wants to transfer cash directly to housewives or eligible family members through family cards, without intermediaries. He said the mechanism recognises women’s domestic labour and is intended to strengthen social resilience, not only serve as financial assistance. Direct support for disabled people and food-security measures for farmers are also being expanded.

Despite constraints, education spending is set at 2 percent of GDP, with a target of raising it to 5 percent, he said. Preventive healthcare is being prioritised to reduce households’ out-of-pocket medical costs, alongside emphasis on skill development, reskilling and new skills creation.

Tyre importers, dealers and transport operators have urged the government to withdraw a proposed 20 percent supplementary duty on commercial vehicle tyres, arguing that the measure would increase transport costs and add to inflationary pressures.

At a press conference in Chattogram yesterday, leaders of the Chattogram Tyre Tube Importers and Dealers Group said the proposed duty would raise the overall tax incidence on imported commercial vehicle tyres to 96.1 percent from 64.25 percent.

They alleged that the measure seeks to protect local manufacturers, who meet only 10-15 percent of domestic demand, at the expense of an import-dependent market that supplies around 85-90 percent of the country’s commercial vehicle tyres.

“Tyres are not luxury goods; they are essential to the transport and supply chain,” said Main Uddin Ahmed, president of the organisation. “Higher tyre prices will increase operating costs for trucks, buses and cargo vehicles, ultimately pushing up the prices of goods and services.”

Rejecting allegations of duty evasion in tyre imports, he said imported tyres undergo 100 percent physical inspection and are assessed based on weight, leaving little room for under-invoicing or tax avoidance.

Representatives of transport owners’ associations who attended the event warned that higher tyre costs would raise freight charges and passenger fares, creating a ripple effect across the economy and putting additional pressure on consumers.

The speakers called on the government to reconsider the proposed duty and engage with stakeholders before finalising the measure.

Commerce Minister Khandakar Abdul Muktadir on Sunday said that the government is strengthening efforts to introduce a centralised online one-stop investment service to create a more business-friendly environment by simplifying and integrating licensing and approval procedures.

“The government is working to make the licensing and approval process easier, faster and more integrated so that investors don’t have to move from one office to another,” he said.

The minister made the remarks during a courtesy meeting with a delegation of the Japan-Bangladesh Chamber of Commerce and Industry (JBCCI), led by its President Tareq Rafi Bhuiyan, at the Ministry of Commerce conference room in the capital this morning.

Commerce Secretary Md Ataur Rahman Khan was also present at the meeting.

Highlighting ongoing reforms to improve the investment climate, Muktadir said the government aims to establish a digital platform through which investors can obtain all necessary approvals and services efficiently.

Referring to factory establishment procedures, he said completing all approvals within 15 days is not always feasible because the process requires inspections related to safety, risk management, fire protection, and environmental compliance.

To prevent delays in investment activities, he said, the government plans to introduce provisional licences that will allow investors to begin preliminary operations while completing the remaining formalities.

The minister said a roadmap has already been prepared to shorten approval timelines, with particular attention being given to sector-specific licensing requirements.

“Licensing needs vary significantly from sector to sector. The requirements for a power plant are different from those for a textile factory,” he noted.

He also announced that the Bangladesh Investment Development Authority (BIDA) will coordinate factory inspections under a unified mechanism.

Through this system, BIDA will schedule inspection dates and bring all relevant agencies together for a single joint visit, reducing administrative burdens on investors, he added.

On sustainable transportation, Muktadir said the government is seeking to reduce dependence on conventional fuels by promoting electric and hybrid vehicles.

While the government remains positive about the transition to electric vehicles, he said Bangladesh is not yet fully prepared for a complete shift to EVs.

As an interim measure, he said, the government is prioritising the import and use of plug-in hybrid vehicles to strengthen economic and energy security.

During the meeting, the JBCCI delegation stressed the importance of expanding Japanese investment and trade in Bangladesh and encouraged greater adoption of sustainable technologies.

The delegation also welcomed the proposed Bangladesh-Japan Free Trade Agreement, saying it would further enhance bilateral trade and investment cooperation between the two countries.

Reaffirming the government’s commitment to Japanese investors, the minister said, “We want to create an investment environment where an investor can access all necessary services with a single click on an online platform.”

Conventional banks outperformed Islamic banks in deposit collection, investment, and asset growth over the past year, mainly due to instability in the Islamic banking sector following the July 2024 uprising.

According to a recently released report by the Bangladesh Bank, deposits in conventional banks rose from Tk 15.22 lakh crore in April 2025 to Tk 17.16 lakh crore in April 2026, marking a year-on-year growth of 12.73 percent.

In contrast, deposits in Islamic banks increased from Tk 4.41 lakh crore to Tk 4.81 lakh crore over the same period, showing a moderate growth of about 8.98 percent.

“This steady growth in deposits in conventional banks can be primarily attributed to an unstable situation in the Islamic banking sector after the July 2024 uprising, which shifted depositor confidence towards conventional banks,” the BB report said.

The report added that following the July uprising, BB’s measures -- such as providing liquidity support, identifying weaknesses in banks and appointing administrators to improve management -- may help restore depositor confidence.

It also found that depositors mainly rely on Mudaraba-based deposits, which account for around 87.21 percent of the Islamic banking deposit base. As of April 2026, the deposit base is largely driven by the private sector, which makes up about 90.2 percent of total deposits.

In terms of assets, conventional banks recorded stronger and more consistent growth over the same period. Their assets rose from Tk 32.93 lakh crore in April 2025 to Tk 37.78 lakh crore in April 2026, a year-on-year increase of about 14.72 percent.

Islamic banks’ assets grew more slowly, increasing from Tk 9.14 lakh crore to Tk 9.56 lakh crore over the same period, reflecting a 4.58 percent rise.

The overall banking sector in Bangladesh saw strong investment growth between November 2023 and April 2026, with total investments increasing from Tk 18.99 lakh crore to Tk 24.45 lakh crore, a rise of 28.71 percent.

Within this, investments by conventional banks grew from Tk 16.73 lakh crore to Tk 18.53 lakh crore between April 2025 and April 2026, an increase of 10.71 percent.

Islamic banks’ investments rose from Tk 5.57 lakh crore to Tk 5.92 lakh crore over the same period, reflecting growth of about 6.26 percent.

“The year-on-year growth indicates gradual expansion, supported by rising demand for Islamic financing products, especially profit-and-loss sharing modes,” the report said.

From a sectoral perspective, the report added that Islamic banks’ investments were distributed across different areas of the economy, with the largest share going to industry and trade and commerce, highlighting their role in supporting productive and commercial activities.

The National Board of Revenue (NBR) has recorded its highest-ever revenue collection during the first 11 months of a fiscal year, collecting Tk3,60,642 crore during the July 2025 to May 2026 period, surpassing all previous records.

According to a statement issued today (21 June), revenue collection during the period increased by Tk32,856.22 crore compared with Tk3,27,785.78 crore collected during the same period of FY25.

The year-on-year growth rate stood at 10.02%.
The revised revenue collection target for FY26 was set at Tk5,03,000 crore. Against the target of Tk442,084 crore for the first 11 months, actual collection reached Tk3,60,642 crore, achieving 81.58% of the target and leaving a shortfall of Tk81,442 crore.

Among the major revenue wings, customs revenue grew by 7.08%, VAT collection rose by 10.05%, and income tax revenue increased by 12.54% during the period.

The NBR said revenue collection reached Tk3,89,953 crore by 20 June 2026, after collecting Tk29,311 crore during the first 20 days of June. This figure has already exceeded the total revenue collection of Tk3,70,843.03 crore recorded in the entire previous fiscal year.

The revenue authority expressed optimism that an additional Tk25,000 crore could be collected during the final 10 days of June, allowing total revenue collection in FY26 to reach a record Tk4,15,000 crore.

If achieved, the figure would still fall short of the revised target by around Tk88,000 crore but would exceed the previous fiscal year's collection by Tk43,157 crore.

To accelerate revenue mobilisation, the NBR has formed three separate task forces comprising field-level officials from the income tax, VAT and customs wings.

The task forces have undertaken various initiatives, including expediting cases pending before appellate authorities, tribunals and higher courts, strengthening tax recovery efforts, enhancing audit and compliance activities, monitoring tax and VAT collection at source, and intensifying customs risk management and post-clearance audits.

The NBR said these measures have helped boost revenue collection and that efforts to mobilise resources for the country will continue.

Bangladesh's cashew processing industry leaders have expressed concern over proposed tariff changes in the FY2026-27 budget, warning that the new structure could make imported finished cashews cheaper than locally processed products and threaten the viability of domestic processors.

Industry leaders say the proposed measures create an inverted duty structure by increasing the tax burden on imported raw cashew nuts while allowing finished cashew imports from India to continue benefiting from tariff preferences under the South Asian Free Trade Area (Safta) agreement.

They argue that the policy could put around 20 processing factories at risk and discourage planned investments worth hundreds of crores of taka.

The issue involves two categories of products – raw cashew nuts in shell, which are used by local processors, and shelled cashew kernels, the finished product sold in the market.

Industry insiders say five kilograms of raw cashew nuts are required to produce one kilogram of finished kernels.

Under the proposed budget, imports of raw cashew nuts in shell would be subject to 15% customs duty and 15% VAT, raising the total tax incidence from 13.58% to 40.38%.

At the same time, imported shelled cashews, particularly from India, would continue to receive preferential treatment under Safta reducing the impact of higher customs duties.

According to industry calculations submitted to the National Board of Revenue (NBR), the proposed structure would raise the cost of producing one kilogram of locally processed cashew kernels to about Tk1,725.

In comparison, imported finished cashews from India would cost around Tk1,282 per kilogram, creating a price difference of nearly Tk471.

Processors say such a gap would make local production commercially unsustainable.

"If this structure remains unchanged, factories will be forced to shut down as importers will be able to sell finished products at prices far below our production costs," said Robiul Islam Azad, managing director of Green Harvest Fresh Produce Ltd.

He said Bangladesh imports most of its raw cashew nuts from African countries because local production is insufficient.

"Bangladesh imports raw cashew mainly from African countries because domestic production is insufficient. These countries are outside Safta so we have to pay the full customs duty. Importers of finished cashews from India, however, benefit from preferential tariffs," he said.

NBR officials have defended the proposed measures, saying local farmers need protection from cheaper imports and should receive better prices for domestically grown cashews.

However, processors argue that domestic production remains too low to support such a policy.

Industry estimates show Bangladesh produces about 2,000 tonnes of in-shell cashew nuts annually, while demand exceeds 15,000 tonnes.

The country consumes around 3,000 tonnes of shelled cashews each year, of which local processors produce about 800 tonnes and imports account for the remaining 2,200 tonnes.

"Even for existing production, processors need over 4,000 tonnes of raw cashew nuts annually. Local production is only around half that amount. Imports are therefore a necessity, not a choice," BSRM Group Deputy Managing Director Tapan Sengupta said.

Industry seeks supplementary duty

Bangladesh's cashew processing industry emerged about a decade ago, supported by growing cultivation in the Chittagong Hill Tracts and other regions.

However, processors say they have long struggled to compete with imported products.

Entrepreneur Shakil Ahmed Tanvir, who established the country's first commercial cashew processing plant, said the facility ceased operations in 2022 after years of losses.

"Local processors have long faced unfair competition from imported kernels sold at prices below domestic production costs," he said.

Despite those challenges, several large companies have recently invested in the sector.

BSRM launched a processing plant in Chattogram in 2023 and announced plans to invest Tk157 crore in a larger facility at the Mirsarai Economic Zone.

Kazi Farms has also announced plans to invest Tk181 crore in a similar project.

Industry representatives warn that these investments could be delayed or reconsidered if the proposed tariff structure is finalised without changes.

They argue that increasing customs duties alone does not provide effective protection because imports from India continue to receive concessions under Safta, while raw cashew imports from countries such as Tanzania, Benin, the Ivory Coast and Ghana remain subject to the full duty burden.

To address the issue, processors have proposed imposing a 20% supplementary duty on imported shelled cashews instead of increasing customs duty.

They say a supplementary duty would apply equally to all imports and would not be offset by Safta preferences.

"Raising customs duty alone will not solve the problem because Safta reduces its impact. A supplementary duty would ensure fair competition and prevent cheaper imported kernels from dominating the market," said Mohammad Azad Iqbal Pathan, president of the proposed Bangladesh Association for Cashew Processors.

Industry leaders argue that conventional tariff comparisons fail to account for the economics of cashew processing. According to Robiul Islam Azad, the global average kernel outturn ratio is only 22%, meaning processors recover just 20-24 kilograms of edible kernels from every 100 kilograms of raw cashew nuts. "Because more than four kilograms of raw cashew nuts are required to produce one kilogram of kernels, the tariff on imported finished cashews should be at least 4.5 times higher than the duty on raw materials. Otherwise, local processors cannot compete with imported kernels," he said.

The Bank of Japan’s decision to raise a key interest rate is expected to have both positive and negative impacts on households and businesses. While interest earned on bank deposits will increase, burdens from borrowing, such as housing loans, will rise. Whereas the elderly are expected to benefit greatly from the interest rate hike, younger people are likely to be adversely affected.

In response to the central bank’s decision, three major banks -- MUFG Bank Ltd, Sumitomo Mitsui Banking Corp and Mizuho Bank Ltd -- announced Tuesday that they would raise interest rates on savings accounts by 0.1 percentage points to 0.4 percent, effective August 3. The rate stood at 0.001 percent in March 2024, when the Bank of Japan ended its negative interest rate policy, meaning that the new interest rate represents a 400-fold increase.

For MUFG and Sumitomo Mitsui, this will mark the highest level in 34 years, or since August 1992, at a time when the two banks had yet to be formed through mergers of their various predecessors. As for Mizuho, the new interest rate will be the highest level since the bank’s founding in 2002.

According to estimates by the Mizuho Research Institute, the overall household economy will see a net gain of ¥1 trillion per year after balancing the positive and negative effects of the interest rate hike. This will be primarily due to an increase in interest income, which translates into an average annual gain of ¥20,000 per household.

However, the degree of the benefits will vary for each household depending on the size of their deposits and borrowings. Generally speaking, older people with larger financial assets will benefit more from increased interest income, while younger households with large outstanding housing loans will tend to be more negatively impacted.

According to the company that operates mogecheck, a site comparing mortgages, in a case where ¥50 million is borrowed on a 35-year variable-rate mortgage and the variable interest rate rises to 1.25 percent, the monthly payment will increase by ¥5,900 to reach ¥147,043, compared to before the hike. Since 80 percent of mortgage borrowers choose variable-rate loans, many households are expected to be affected.

The total repayment amounts for student loans, education loans and auto loans are also expected to rise. As interest rates are determined based on various factors, such as government bond yields, borrowers may be forced to revise their repayment plans.

As the interest burden of borrowing increases, the interest rate hike will inevitably affect corporate management. Mizuho Research Institute estimates that ordinary profit across all industries, excluding the finance and insurance sectors, will be reduced by 1.0 percent, or about ¥1.1 trillion. Small and medium-sized companies with low profits against interest-bearing debt will tend to be affected. Businesses with capital of less than ¥10 million are projected to see their ordinary profit decline 6.6 percent.

Looking Back on 1995

The year 1995 — the last time the Bank of Japan’s key interest rate was at 1 percent — witnessed a series of major events, such as the Great Hanshin Earthquake and the sarin gas attack on the Tokyo subway.

On the economic front, the prolonged economic slump following the collapse of the bubble economy brought down a number of financial institutions, as they struggled with nonperforming loans. With the consumer price index stuck at zero percent growth, the nation fell into a long period of deflation.

The BOJ was in the process of cutting interest rates, lowering the official discount rate -- then the policy interest rate -- from 1.75 percent to 1 percent in April, and then to 0.5 percent in September.

Along with the economic slump, successive failures of banks and credit cooperatives in July and August stoked concerns about the financial system.

Meanwhile, the yen was appreciating, at one point strengthening to the ¥79 level to the dollar.

Monetary easing was aimed at simultaneously correcting the strong yen to improve the earnings of exporters, stimulating the economy and disposing of nonperforming loans.

However, progress stalled on the nonperforming loans issue, causing Hokkaido Takushoku Bank and the former Yamaichi Securities to fail in 1997.

As prices remained flat, the government acknowledged in 2001 for the first time since World War II that the Japanese economy was deflationary.

The BOJ introduced its zero-interest-rate policy in 1999 and maintained ultralow rates thereafter.

Haruhiko Kuroda, who became BOJ governor in 2013, pursued aggressive monetary easing, culminating in the adoption of a negative interest rate policy in 2016.

The World Bank’s board is set to approve $1.5 billion in budget support under three loan programmes for Bangladesh this month, a development that will bring much relief to the strained government finances amid the Middle East war.

Of this, about $800 million will be repurposed from existing project loans under the Rapid Response Option (RRO) window, $300 million for fertiliser imports and food assistance, and $400 million for banking sector reforms.

The breakthrough came after multiple rounds of talks in both Washington DC and Dhaka, The Daily Star has learnt from officials involved with the negotiations.

Bangladesh will need an additional $2.61 billion to pay the elevated energy and fertiliser import bills for the last quarter of fiscal 2025-26 because of the Iran war that began on February 28, according to a finance ministry impact analysis.

Subsequently, in April, the finance ministry sought urgent budget support from the WB and other donor agencies due to rising expenses for LNG, fuel and fertiliser imports following the Iran war, and the Washington-based multilateral lender is providing support as part of that request.

Any member state of the WB can restructure or repurpose up to 10 percent of its ongoing portfolio in the event of an unexpected natural or man-made emergency under the RRO window. Bangladesh applied to the WB on April 5 to receive assistance through the RRO.

Assistance under the RRO can be accessed in two ways. One is through the creation of a Contingent Emergency Response Project (CERP), which allows financing of emergency expenses such as food and other essential imports.

Bangladesh is set to repurpose $785 million from 12 projects through this CERP mechanism, which will be taken as budget support. Another $300 million will be taken as budget support to ensure food security.

And $400 million will be taken under the Financial Sector Support Programme for banking sector reforms. As part of the conditions, the government has agreed to scrap the much-criticised Bank Resolution Act, 2026.

The WB has also advised stricter enforcement of related-party lending rules, full supervisory powers for the BB and corporate governance aligned with international norms.

Relevant draft amendments prepared during the interim government were shelved due to opposition from bank owners, The Daily Star has learnt from finance ministry officials involved with the proceedings.

The Financial Institutions Division has now sent them back to the BB for review and consultation.

The other reforms include amending the Deposit Protection Act, enacting laws on distressed asset management and insolvency, and licensing small companies to recover bad loans under the BB regulation.

Two new laws, the Distressed Asset Management Act (DAMA) and the Insolvency and Bankruptcy Act, will be enacted.

Under DAMA, small companies will be licensed to recover bad loans with legal authority similar to banks, regulated by the BB.

The law will establish a framework for recovery, management, securitisation and trading of defaulted loans.

The World Bank Group’s International Finance Corporation will provide technical support.

The Insolvency and Bankruptcy Act will align with international best practices to strengthen insolvent banks and financial institutions.

State-owned banks will also undergo asset quality reviews (AQR).

The interim government conducted AQR in nine private banks, after which five were merged into Sommilito Islami Bank.

The WB’s programme documents noted structural weaknesses, including poor corporate governance, regulatory capture and politically influenced related-party lending.

Loopholes in definitions allowed complex inter-family relationships to obscure the scale of related-party lending, leading to fraudulent and willful defaults, and embezzlement by banks’ shareholders and management.

“A few big business groups siphoned off billions of dollars from the banking sector. In addition, the lack of proper enforcement and regulatory forbearance has exacerbated the problems, encouraging risky behavior, impacting market discipline and delaying necessary reforms,” the WB said.

State-owned banks are the most vulnerable, holding 27 percent of total assets, over $50 billion or 12 percent of GDP. Three state-owned commercial banks are systemically important.

In this context, the Financial Sector Support Project II is seen as critical for stabilising the sector.

It aims to strengthen deposit protection, improve supervisory capacity, and support resolution and restructuring, including reforms of state-owned banks.

“These interventions will address longstanding issues, improve authorities’ preparedness for and management of the current banking sector turmoil, paving the way for resolution and restructuring of weaker banks, including possible recapitalisation of the reformed SOBs.”

The programme is expected to restore stability, strengthen intermediation, and support long-term growth, the WB said.

China urged the Group of Seven to abide by market economy principles and international economic and trade rules and stop undermining the global trade order on Thursday, responding to the bloc’s latest joint statement that calls for reducing reliance on China for critical minerals and rare earths.

Foreign Ministry spokesman Lin Jian made the remarks at a regular press briefing. China’s position on safeguarding the stability and security of critical minerals and the global industrial and supply chains remains unchanged, Lin said. All parties share the responsibility to play a constructive role in this regard, he added.

He noted that China’s efforts to standardize and improve its export control system are consistent with internationally accepted practices and are intended to better safeguard world peace and regional stability and fulfill non-proliferation obligations.

“We urge the G7 to earnestly abide by market economy principles and international economic and trade rules, and stop using the rules of small exclusive circles to disrupt the international economic and trade order,” Lin said.

Shares of Beximco Pharmaceuticals gained 8 percent over the last two trading sessions on the Dhaka Stock Exchange (DSE), closing at Tk 145.3 yesterday, following reports that the company may be delisted from the London Stock Exchange.

Investors and brokers view potential efforts to prevent the delisting as a positive development, believing they could help resolve the issues that have weighed on the company’s shares since the filing of a petition challenging the appointment of independent directors to its board.

Although the drug maker’s business performance remained strong, its stock came under pressure due to the absence of financial disclosures.

The issue dates back to 2024, when the Bangladesh Securities and Exchange Commission (BSEC) appointed nine independent directors to Beximco Pharmaceuticals following a directive from the finance ministry.

The company subsequently filed a petition with the High Court challenging the decision. Since then, the board has not met to approve or discuss financial results, and the company has not published quarterly earnings reports or annual financial statements.

The lack of financial disclosures led to the suspension of trading in the company’s global depositary receipts (GDRs) on the Alternative Investment Market (AIM) of the London Stock Exchange on January 2.

The suspension was imposed after Beximco Pharmaceuticals failed to publish its audited annual report and accounts for the financial year ended June 30, 2025, by the AIM deadline of December 31, 2025, as well as subsequent financial disclosures.

Under Rule 19 of the AIM Rules for Companies, an AIM-listed issuer must publish its audited annual report and accounts within six months of the end of its financial year.

Under Rule 41, if securities remain suspended from trading for a continuous period of six months, the London Stock Exchange will generally cancel their admission to trading unless the underlying issues are resolved.

The Bangladesh Securities and Exchange Commission (BSEC) has urged the Dhaka Stock Exchange (DSE) to strengthen real-time market surveillance and regulatory controls to prevent market manipulation and protect investors' interests.

The call came during a meeting between BSEC officials and the DSE surveillance team at the commission's office today (21 June), where the two sides discussed measures to modernise the capital market surveillance system and improve market oversight, a BSEC press release says.

The meeting was attended by BSEC Acting Chairman Tanwir Habib Rahman, commissioners Nahid Mahtab and Md Nafiz Al Tariq, as well as senior officials from the commission's surveillance department. DSE Managing Director Nuzhat Anwar and Acting Chief Regulatory Officer Mohammad Shafiqul Islam Bhuiyan represented the stock exchange.

According to the release, discussions focused on the development and modernisation of the capital market, enhancing transparency, and preventing irregularities and manipulation to safeguard investors.

The DSE briefed the commission on recent measures it has taken to curb market manipulation. The stock exchange said it has been temporarily halting trading in shares of companies when unusual price movements or trading patterns are detected.

BSEC assured the exchange of its support in building a transparent, accountable and effective capital market.

The commission also advised the DSE to adopt international best practices in market oversight, including real-time surveillance systems and other necessary regulatory measures to deter manipulation.

Recently, the DSE suspended trading in shares of Shyampur Sugar Mills and Sonargaon Textiles following sharp and unusual price increases. Trading in both stocks resumed the following day after the temporary suspension was lifted.

Creating large banks which can operate across Europe is desirable for sustaining the continent’s financial system, the European Central Bank’s chief economist said Friday.

“Having a banking system that is too localised and, in turn, too intertwined with its domestic sovereign, is not a good recipe,” Philip Lane told a conference organised by French investment bank Natixis in Paris.

“From a macro point of view, it’s very important to have the risk sharing that comes from cross-border banking. That can be in terms of equity ownership, it can be in terms of funding, it can be in terms of common technology,” Lane added.

He was speaking as Italy’s second-largest bank, UniCredit, targets a hostile takeover of German rival Commerzbank, having launched a bid in May which expired Tuesday. The Italians’ longer-term aim is to merge Commerzbank with Germany’s HypoVereinsbank, owned by UniCredit.

The Milan-based bank made a bid valued at 35 billion euros ($40.6 billion) not just to take control of a rival in a fellow EU state but to cement its status as a European heavyweight.

Lane said if banks are unable to achieve mergers, they must seek other ways to reduce costs and risks in a period of rising fixed expenditure, amid the growing need for expensive cybersecurity systems.

Lane said he foresaw a relatively small number of giant banks in Europe and noted the arrival of purely digital banking players to the market, disrupting traditional banking models.

Established players must respond to this process by offering competitive products, embracing technological change along the way, he said.

Chinese Ambassador to Bangladesh Yao Wen has said with the tide at full swell and the wind in their sails, Prime Minister Tarique Rahman's official visit to China (23-26 June) holds "historic significance" and it will surely draw a "more magnificent blueprint" for the development of Bangladesh-China relations.

"Under the strategic guidance of the leaders of both countries, China-Bangladesh relations will forge ahead with more solid political mutual trust, more in-depth practical cooperation, and more robust international collaboration," he said ahead of the visit.

At the invitation of Li Qiang, Premier of the State Council of the People's Republic of China, Prime Minister Tarique Rahman is about to embark on an official visit to China and attend The World Economic Forum's 17th Annual Meeting of the New Champions (2026 Summer Davos Forum).
"On the journey of addressing global challenges, China and Bangladesh will always support each other and move forward hand in hand, making new and greater contributions to the stability and development of both countries, to the prosperity and progress of Asia, and to building a community with a shared future for humanity," said the Chinese ambassador.

During Prime Minister Tarique Rahman's visit to China, the leaders of the two countries will have in-depth exchanges of views on international and regional issues of mutual interest, further coordinate positions and build consensus.

China firmly believes that a "stable, prosperous and confident Bangladesh" will play a more active and constructive role in Global South affairs.

"Let us look forward to the full success of the visit and to the long-standing friendship between China and Bangladesh shining with even greater brilliance in the new era," said Ambassador Yao.

Looking ahead, he said, as China-Bangladesh relations stand at a new starting point that builds on past achievements and opens up new prospects, they are full of confidence and expectations.

On the political front, he said high-level exchanges and party-to-party exchanges between the two countries will become more frequent and in-depth, and political mutual trust will continue to reach new heights.

On the economic front, the ambassador said practical cooperation in areas such as the green economy, investment and business development will continue to expand, bringing more tangible benefits to the two peoples.

On the front of people-to-people exchanges, he said cooperation in education, culture, tourism, youth and other fields will become more vibrant and diverse, allowing the flower of China-Bangladesh friendship to bloom ever more brilliantly in the hearts of the two peoples.

At this important moment when Bangladesh and China are ushering in the next golden 50 years of diplomatic relations, he said in an article that prime minister's first visit to China holds historic significance in building on past achievements and charting the way forward.

This visit will surely inject strong impetus into the development of Bangladesh-China relations in the coming period and promote the upgrading of the Comprehensive Strategic Cooperative Partnership in both quality and substance, he said.

More Solid Political Mutual Trust

China maintains that all countries, regardless of size, strength or wealth, are equal members of the international community and have equal rights to participate in international affairs.

China firmly follows the principle of amity, sincerity, mutual benefit and inclusiveness on neighborhood diplomacy, and remains committed to non-interference in other countries' internal affairs and to providing support without any political strings attached.

"This vision has been fully reflected in China-Bangladesh relations," said the ambassador.

On 4 October 1975, Bangladesh and China officially established diplomatic relations, ushering in a new era of friendly exchanges.

In January 1977, Ziaur Rahman paid his first visit to China in his capacity as Chief Martial Law Administrator and Chief of Army Staff of Bangladesh.

China clearly expressed its support for Bangladesh in safeguarding national independence, laying a solid foundation for the development of bilateral relations.

Begum Khaleda Zia visited China nine times, including five visits as prime minister.

"Frequent high-level exchanges between the two sides have provided strong political guidance for the steady development of bilateral relations," said Ambassador Yao.

Over the past half century, regardless of changes in the international landscape, China and Bangladesh have always respected each other, treated each other as equals, and shown mutual understanding and support on issues concerning each other's core interests and major concerns, he said.

The two countries have become a vivid example of friendly cooperation and mutual benefit between developing countries.

"Prime Minister Tarique Rahman's visit to China at the beginning of his tenure fully demonstrates the high importance Bangladesh attaches to developing relations with China, and reflects the profound foundation of political mutual trust between the two countries," said the envoy.

At present, both Bangladesh and China are at critical stages of their respective national development, and both face difficulties and challenges on the way forward.

The year 2026 marks the beginning of China's 15th Five-Year Plan period.

China is advancing Chinese modernization on all fronts and forging ahead toward the strategic goal of building itself into a great modern socialist country in all respects.

Since its establishment, the new Bangladeshi government has taken a series of measures to maintain unity and stability, improve the economy and people's livelihoods, promote investment and employment, and move toward the goal of building a trillion-dollar economy by 2034.

"These efforts demonstrate its resolve to rise to challenges and press ahead with determination," said Ambassador Yao.

It is precisely because of such shared circumstances and shared aspirations that China and Bangladesh need more than ever to learn from each other and move forward together, he said.

During this visit, the leaders of the two countries will have in-depth exchanges on governance experience and share insights on major issues such as development, economic transformation and reform, further strengthen party-to-party exchanges, and promote more frequent high-level interactions and deeper strategic communication.

"It can be expected that, as exchanges on governance experience continue to deepen, political mutual trust between China and Bangladesh will become even stronger, and bilateral relations will continue to make steady and sustained progress," the ambassador said.

More In-depth Practical Cooperation

Economic and trade cooperation has always been the ballast and propeller of China-Bangladesh relations.

From 2010 to 2025, China remained Bangladesh's largest trading partner for 16 consecutive years.

China has also granted zero-tariff treatment to 100 percent of taxable items for Bangladeshi products exported to China and extended this treatment to 2028.

In the field of investment, China has become Bangladesh's second-largest source of investment.

Nearly 700 Chinese enterprises are registered with Bangladesh's investment authorities, covering a wide range of sectors including energy, transportation, textiles and garments, and information and communications, creating hundreds of thousands of jobs for local communities.

"China has become an indispensable and important development partner in Bangladesh's pursuit of development, economic transformation and modernization," said Ambassador Yao.

Prime Minister Tarique Rahman's visit will inject stronger momentum into Bangladesh-China economic and trade cooperation, he said.

The two sides will have in-depth discussions on expanding bilateral trade and optimizing the trade structure, and promote the entry of more high-quality Bangladeshi products into the Chinese market.

They will further deepen investment cooperation, accelerate project implementation, and attract more Chinese enterprises to invest and do business in Bangladesh.

They will also expand practical cooperation in emerging areas such as scientific and technological innovation, information and communications, green development and artificial intelligence.

"It is reasonable to believe that China-Bangladesh economic and trade cooperation will move toward higher quality and greater depth," said the ambassador.

China-Bangladesh friendship has long taken root in the hearts of the two peoples.

China has always acted with a sense of responsibility as a major country and carried out a series of livelihood projects in Bangladesh that benefit thousands of households.

China-contracted power projects in Bangladesh, including coal-fired, solar and wind power projects, have reached a total installed capacity of over one gigawatt, providing a continuous source of power for Bangladesh's livelihood development and people's daily lives.

China has donated advanced medical equipment to Bangladesh, including physiotherapy and rehabilitation equipment, ventilators and mobile surgical vehicles, contributing China's strength to protecting the health of the Bangladeshi people.

In the face of floods, China promptly extended a helping hand and provided Bangladesh with emergency relief supplies such as rubber boats, life jackets and generators.

"These concrete actions have brought the warmth of China-Bangladesh friendship to countless places in need. It can be expected that this visit will take livelihood cooperation between the two countries to a new level and bring the hearts of the two peoples even closer," said the Chinese envoy.

At the same time, personnel exchanges between the two countries are becoming increasingly frequent, and cultural exchanges and mutual learning are deepening.

Standing at a new starting point, this visit will open broader space for people-to-people exchanges between the two countries.

The two sides will promote cooperation in education, health and skills training, and help Bangladesh cultivate more professional talent suited to the needs of modernization.

They will deepen exchanges in media, film and television, and other areas, so that the two peoples can enhance mutual understanding and deepen friendship through more diverse interactions.

"It can be expected that the hearts of the two peoples will draw ever closer, and the future of China-Bangladesh friendship will be even brighter," he said.

More Robust International Coordination

As the world's largest developing country, the envoy said China has always been a natural member of the Global South and has always shared the same breath and destiny with fellow developing countries.

President Xi Jinping has on many occasions emphasized the importance of strengthening solidarity and cooperation among Global South countries and safeguarding their common interests.

He has called for pooling the strength of Global South countries in the spirit of equality, openness, transparency and inclusiveness, and promoting the reform of the global governance system in a more just and equitable direction.

At present, the world is undergoing accelerated changes unseen in a century.

Unilateralism, hegemonism and bullying practices are growing more rampant, and the cause of global peace and development faces severe challenges.

The more difficult the situation becomes, the more countries that uphold justice should stand together to jointly safeguard the legitimate rights and interests of developing countries and maintain world peace and stability.

Bangladesh is the second-largest economy in South Asia and has an important voice on global issues such as climate change, sustainable development and poverty reduction.

Recently, Bangladesh has won the presidency of the 81st session of the United Nations General Assembly.

"China has always deemed Bangladesh as an important partner in the Global South, and stands ready to work closely with Bangladesh in multilateral institutions such as the United Nations and the World Trade Organization to promote reform of the global governance system and jointly safeguard the collective interests of developing countries," said Ambassador Yao.

The government plans to borrow $2.8 billion from the International Islamic Trade Finance Corporation (ITFC) to finance imports of fuel oil, liquefied natural gas (LNG) and fertiliser in fiscal year 2026-27.

To this end, Bangladesh Petroleum Corporation (BPC) stressed that ITFC reduces its financing markup and the deal allows letters of credit (LCs) to be opened through any Bangladeshi bank. The corporation also proposed provisions allowing Bangladesh to import oil and gas from any energy-rich country, including but not limited to member states of the Islamic Development Bank (IsDB), in order to strengthen energy security and meet emergency requirements.

According to officials at the Economic Relations Division (ERD), negotiations on the financing proposal will take place during the Annual Financing Plan Meeting (FY2026-27) scheduled for 21-24 June in Jeddah, Saudi Arabia. The final financing amount is also expected to be determined during the meeting.

The Bangladesh delegation will be led by ERD Secretary Shahriar Kader Siddiky, Energy and Mineral Resources Division Secretary Mohammad Saiful Islam, and Agriculture Secretary Dr Rafiqul I Mohamed.

Proposed financing breakdown

According to ERD sources, a preparatory meeting held on 4 June decided on borrowing of $2.01 billion for fuel oil imports by BPC, $600 million for LNG imports by Petrobangla, and $200 million for fertiliser imports by the Bangladesh Agricultural Development Corporation (BADC).

BPC informed the meeting that its financing requirement for fuel imports in the current fiscal year was $1.65 billion, of which $700 million has already been disbursed. Due to rising global oil prices, the corporation requested a higher financing ceiling for the next fiscal year.

The meeting also decided to conduct a comparative analysis of fuel procured through ITFC financing and fuel purchased directly from the spot market to strengthen Bangladesh's negotiating position.

Petrobangla officials said the company had largely avoided excessive borrowing during FY2025-26 thanks to a relatively stable economy, continued remittance inflows and adjustments to domestic gas prices.

However, the conflict involving Iran has disrupted LNG shipments through the Strait of Hormuz, one of the world's most important energy transit routes.

As a result, Petrobangla plans to utilise the full $600 million financing facility available under existing agreements.

According to its FY2026-27 plan, major long-term suppliers, including QatarEnergy, OQ Trading Limited and Excelerate Gas Marketing Limited Partnership, have declared force majeure until June 2026, increasing Bangladesh's dependence on alternative sources and spot-market purchases.

Petrobangla expects to use financing for at least two LNG cargo purchases in June 2026 and plans extensive utilisation of the remaining balances under its existing financing agreements.

BADC seeks fertiliser financing flexibility

ERD sources said ITFC had planned a $500 million financing package for BADC in FY2025-26, comprising $200 million in confirmed financing and $300 million in contingency support.

A $100 million agreement for fertiliser imports was signed in September 2025. However, due to the ongoing Middle East crisis, ITFC has temporarily suspended the financing and the funds have yet to be disbursed.

BADC said Bangladesh had already agreed to receive up to $500 million in financing support from ITFC for food security purposes. However, the initial $100 million facility was tied exclusively to fertiliser imports from Saudi Arabia and remains unavailable because of regional instability.

ITFC has also requested additional information and documentation to process a further $200 million financing facility.

BADC has proposed that the remaining $200 million be released quickly and made available for fertiliser imports from any country in the world. It also recommended that future financing agreements avoid country-specific restrictions and allow imports from any source, particularly member countries of the Islamic Development Bank.

Participants at the preparatory meeting agreed that these proposals should be presented during the upcoming negotiations with ITFC.

ITFC's role in Bangladesh

ITFC operates as an autonomous member of the Islamic Development Bank Group, headquartered in Jeddah, Saudi Arabia.

The IsDB has been supporting Bangladesh since 1977. It began financing fuel oil imports for BPC in 1997, and since 2008 the support has continued through ITFC.

Between 2008 and FY2025-26, ITFC provided approximately $21.77 billion to support Bangladesh's energy security.

BPC imports Murban crude oil from ADNOC in Abu Dhabi and Arabian Light crude from Saudi Aramco. Janata Bank currently opens import LCs for Murban crude, while ITFC provides financing to settle payments. ITFC has also been directly financing Arabian Light crude imports after Agrani Bank stopped opening LCs due to the dollar shortage.

For LNG imports, ITFC signed a $100 million facility in 2024 and a $300 million facility in 2025, both extended until 2027 at a financing cost of SOFR plus 1.75%. Although a total LNG financing ceiling of $600 million has been approved for Petrobangla, it has not yet been fully utilised.

ITFC also provided $100 million to BADC in FY2025-26 for fertiliser imports at a rate of six-month USD SOFR plus 1.75%, along with a 0.20% administrative fee.

Push for higher financing ceiling

ERD officials said an ITFC delegation visiting Bangladesh in May 2026 expressed interest in continuing support for the country's growing energy needs and expanding financing into agriculture.

The ERD emphasised that food and agricultural security are now as important as energy security and formally requested that ITFC increase its overall financing ceiling to $3.5 billion for FY2026-27.

The proposal reflects rising global commodity prices, growing import demand and the need to safeguard Bangladesh's supply chains.

ITFC acknowledged the request and said any increase in financing would depend on Bangladesh's formal proposals and financing requirements.

An inter-ministerial preparatory meeting will finalise Bangladesh's position before the Jeddah negotiations.

The United States has started an investigation over “unfair” pharmaceutical pricing policies in Germany, a move that could lead to fresh tariffs.

US President Donald Trump’s administration has launched similar probes into dozens of trading partners over issues including forced labor and industrial overcapacity, leading to proposals of higher levies in some cases.

The US move on Thursday comes after the German government sought to overhaul its statutory health insurance system, including through lowering the prices public insurers pay for medicines, in a bid to rein in public spending.

The probe announced by the US Trade Representative’s office will determine if Germany’s “persistent underpayment for innovative pharmaceutical products” is “unreasonable or discriminatory and burdens or restricts US commerce”.

The move -- launched under Section 301 of the 1974 Trade Act -- came after the USTR pointed to evidence Germany has “unfair pricing” policies and practices.

Reduced revenue associated with such practices also appeared to contribute to reduced investment for research and development, among other issues, it added.

“As a result, the United States pays a disproportionate share of global R&D costs for innovative pharmaceuticals,” the notice said.

“President Trump has made clear that American patients should not be shouldering a disproportionate share of global pharmaceutical research and development,” US Trade Representative Jamieson Greer said in a statement.

He cited Germany’s plans to fast-track legislation “that would further reduce its spending on innovative pharmaceuticals.”

The US trade envoy’s office will next receive comments and hold a hearing in September as part of the investigation.

Germany’s health ministry confirmed ongoing talks with Washington on the issue.

“I assume the United States will honour the agreement we have in place. Reimbursements for modern, innovative medicines by our health insurance funds is a decision which falls within our national jurisdiction,” German Chancellor Friedrich Merz told reporters in Brussels on Friday.

Health Minister Nina Warken said earlier this week it would be tough for Germany to pay higher prices. “We have a tense financial situation in our health insurance system,” she said.

Germany’s VCI pharmaceutical industry federation said it took the US move “very seriously.”

“In an already tense trade policy environment, companies need reliability and planning certainty -- not a new source of disruption,” the group said in a statement to AFP.

Trump has rolled out sweeping tariffs since returning to the White House last year, though the US Supreme Court struck down many of them in February.

His administration has since turned to trade probes as officials look to reimpose more lasting duties.

This month, the USTR’s office proposed new tariffs of up to 12.5 percent on dozens of countries under its investigation into forced labor concerns.

Amid mounting fiscal pressure and growing development needs the government has embarked on a medium-term reform agenda aimed at making every taka of public spending count while strengthening revenue collection and safeguarding debt sustainability.
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The strategy outlined in the FY2026-27 national budget seeks to improve the quality and efficiency of public expenditure, raise the country’s revenue base, and reduce reliance on debt-driven growth as Bangladesh navigates a challenging economic environment marked by inflationary pressures and global uncertainties.

At the heart of the reform agenda is a strategic expenditure framework designed to ensure that public spending is aligned with national development priorities and delivers maximum economic and social returns.

Priority sectors include infrastructure, education, healthcare, energy, agriculture and employment-generating activities, according to budget document.

It also states that public investment in education and healthcare will be gradually increased to 5 per cent over time.

Future development projects will undergo economic appraisal, cost-benefit analysis and implementation-readiness assessments to ensure value for money and maximise development impact.

The budget document notes that the government intends to improve expenditure efficiency through the rationalisation of non-priority spending and stronger fiscal discipline across public institutions.

Subsidy programmes are expected to become more targeted and efficient so that benefits reach intended recipients while limiting fiscal pressures. Support for agriculture, food security and energy supply will continue, although inefficient subsidy arrangements will be reviewed and reformed, according to the document.

The document also highlighted reforms aimed at making social protection programmes more targeted, inclusive and effective through greater use of technology, digital beneficiary databases and enhanced monitoring systems.

Technology-based systems in public procurement, project implementation and budget management are also expected to be strengthened to improve transparency, accountability and efficiency, it added.

Bangladesh’s revenue-to-GDP ratio currently stands at around 8 per cent, while the tax-to-GDP ratio is about 6.8 per cent.

The government aims to raise these ratios to 11 per cent and 9.6 per cent respectively by FY2030-31 through policy and administrative reforms.

The document said that the government seeks to improve the country’s debt sustainability and restore Bangladesh’s debt risk rating from the current “moderate” category to a “low” risk category through stronger revenue mobilisation, sustainable budget deficits and modernised debt management.

The government intends to reduce dependence on debt-financed growth and promote production, employment and private investment as key drivers of long-term economic development, it added.

For FY2026-27, the government proposed a record public expenditure programme of Tk 9.38 lakh crore, marking an increase of about 19 percent from the original Tk 7.90 lakh crore budget of the previous fiscal year.

The expansion reflects the government’s strategy to stimulate economic recovery, strengthen public services and accelerate infrastructure development amid ongoing fiscal and inflationary pressures.

Total public spending is estimated at around 13.7 percent of GDP, up from 12.7 percent in FY2025-26, indicating a more expansionary fiscal stance.

Of the total outlay, the Annual Development Programme (ADP) has been set at Tk 3 lakh crore, a 30 percent increase over the previous year’s allocation, with Tk 1.90 lakh crore expected from domestic resources and Tk 1.10 lakh crore from foreign loans and grants.

The government prioritised investment in transport and communication networks, power and energy, education, healthcare, agriculture, employment generation and social protection programmes to enhance productivity and support long-term growth.

Revenue collection has been targeted at Tk 6.95 lakh crore, leaving a budget deficit of roughly Tk 2.43 lakh crore, which will be financed through domestic and external borrowing.

The budget also placed emphasis on improving expenditure efficiency through a strategic expenditure framework, under which major spending decisions will be assessed based on their economic and social returns.

According to budget documents, non-development expenditure stands at around Tk 6.38 lakh crore, reflecting significant commitments to salaries, pensions, subsidies, interest payments and social safety net programmes.

The increased spending is expected to support the government’s growth target of 6.5 percent and inflation target of 7.5 percent while advancing reforms aimed at modernising infrastructure, strengthening human capital and fostering inclusive economic development across the country.

Bangladesh will strongly place its desire to join the Regional Comprehensive Economic Partnership (RCEP), the world's largest trade bloc, as Prime Minister Tarique Rahman begins his twin visit to Malaysia and China, starting with engagements in Southeast Asian country Malaysia focused on broader cooperation in trade, investment, energy, and the labour market.

"Bangladesh's bid to become a 'Sectoral Dialogue Partner' of Asean [Association of Southeast Asian Nations] and join the 'Regional Comprehensive Economic Partnership' will be strongly highlighted," Foreign Secretary Asad Alam Siam told reporters at the Ministry of Foreign Affairs during a media briefing today (20 June).

Additional Foreign Secretary (Public Diplomacy and Other Priority Matters) AKM Shahidul Karim and other senior ministry officials were present at the media briefing.

Besides, the foreign secretary said, a strong call will be made to Asean member states including Malaysia to play a more active and effective role in the repatriation of forcibly displaced Myanmar citizens - the Rohingyas, he said.

Sectoral dialogue partnership offers Bangladesh a realistic and impactful pathway for engagement, a senior official told UNB, noting that Bangladesh has redoubled its efforts to achieve the status of Sectoral Dialogue Partner (SDP) with Asean.

The prime minister will pay an official visit to Malaysia on 21-22 June at the invitation of Malaysian Prime Minister Anwar Ibrahim.

Malaysian Prime Minister Anwar Ibrahim paid an official brief visit to Bangladesh on 4 October 2024, at the invitation of former interim government Chief Adviser Prof Muhammad Yunus.

During his visit, Prime Minister Tarique Rahman will lead a high-level delegation from Bangladesh that includes Foreign Minister Dr Khalilur Rahman, Adviser to the prime minister on Foreign Affairs Humaiun Kobir, Expatriates' Welfare and Overseas Employment Minister Ariful Haque Choudhury, Information and Broadcasting Minister Zahir Uddin Swapon and other senior government officials.

On the first day of the visit, the prime minister will be welcomed in Malaysia with a formal reception.

The next day (22 June), a private meeting will be held between the prime minister of Bangladesh and Malaysia at the prime minister's office in Putrajaya.

Immediately after the tête-à-tête (a private conversation between two persons), a bilateral meeting will be held between the high-level delegations led by the heads of government of both countries where bilateral issues of mutual interest will be discussed.

Discussions will be held on establishing greater cooperation between the two countries in various fields including trade and investment expansion, energy cooperation, the halal economy, the semiconductor industry, agriculture, education, and people-to-people contact.

In particular, the issues of recruiting new Bangladeshi workers in various sectors in Malaysia, recruiting more professionals, ensuring facilities and benefits for workers and developing the skills of Bangladeshi workers will be discussed with importance.

During this visit, one Memorandum of Understanding (MoU) on cultural cooperation is expected to be signed, said the Foreign Secretary.

In addition, a Terms of Reference is likely to be exchanged with Malaysia to initiate negotiations on a Free Trade Agreement (FTA).

Some other documents related to bilateral cooperation are under discussion. The prime ministers of the two countries will be present at the signing ceremony of the bilateral cooperation documents.

There is also a possibility of a meeting between the prime minister and potential investors in Malaysia.

The two prime ministers will hold a joint press conference, and the prime minister of Malaysia will host a luncheon in honour of his Bangladeshi counterpart.

"We believe that this visit will play a very important role in elevating the existing bilateral and economic relations with Malaysia to a new level," said the Foreign Secretary, noting that Dhaka is hopeful the visit will further strengthen bilateral relations based on mutual respect, trust, and cooperation between the two brotherly countries.

The prime minister is scheduled to leave for Kuala Lumpur tomorrow afternoon (21 June) and, from Kuala Lumpur, will leave for China on Monday afternoon (22 June).

The Foreign Secretary indicated that the delegation sizes for the prime minister's visits to Malaysia and China have been kept relatively small, comprising 27 and 28 members respectively. "We tried to keep it at a logical level," he said.

Recently, Bangladesh's national budget for the fiscal year 2026-27 was presented to the Jatiya Sangsad. Following it, public discussions have focused on issues such as: where the necessary financing for the budget will come from; how much scope there is for being frugal by cutting on expenditures; and how the obstacles to implementing the proposed initiatives can be overcome.

Furthermore, more than 100 days have already passed since the current government assumed office. From a geopolitical perspective, the government faces various global economic challenges while also confronting numerous domestic economic problems. Against this backdrop, a relevant question arises: what should Bangladesh do on its journey forward?

In the post-budget period, the government must focus on three key areas. The first is the reform of revenue collection. This requires increasing the tax-to-GDP ratio as well as widening the tax net and the tax base. Bangladesh currently relies more heavily on indirect taxes than direct taxes. As a result, the tax burden falls disproportionately on ordinary citizens, and government revenues become more volatile to global economic shocks. Bangladesh should, therefore, shift toward greater reliance on direct taxation.

In addition, the efficiency in tax collection must be improved. In this regard, there was a proposal to divide the National Board of Revenue into two units, assigning tax policy to one unit and tax administration to another. This proposed reform is yet to be implemented.

The second one is the reform of the structure and the process of government expenditure. Given the significant constraints on financing public spending in the current fiscal year, the government must carefully prioritise its expenditures. Both in fulfilling the electoral manifesto of the government and in selecting development projects, decisions must be made objectively regarding which initiatives deserve priority. Projects that are necessary and that directly contribute to productive economic activity should receive precedence. Large-scale mega projects should, for the time being, be deferred. For the time being, economic realities rather than political considerations should guide future government initiatives.

Third, project implementation processes must be reformed to ensure the swift execution of budget proposals. Traditionally, government programmes and projects have faced various obstacles – some arising from legal complexities, others from excessive procedural requirements and bureaucratic layers. As a result, projects are delayed and prolonged, while also creating opportunities for corruption. Reform across every stage of implementation should therefore be a government priority.

In the post-budget period, the government must focus on three types of challenges: lingering problems, deepening problems, and emerging problems. Among Bangladesh's lingering problems are poverty and deprivation, economic slowdown, unemployment, inflation, and inadequate investment. Poverty appears to have increased recently, and around 36 million people are currently living below the extreme poverty line.

Bangladesh's economic growth rate is currently just above 3%. Both agriculture and industry are experiencing sluggish growth. According to government data, around 3 million people are currently unemployed. Inflation has remained high for an extended period and shows little sign of declining. Domestic and foreign investment have also slowed noticeably.

In the coming years, the government must focus on an inclusive, pro-poor growth strategy, centred on employment-led growth. This requires greater emphasis on the agricultural sector. Human resource development is essential for achieving higher growth, which in turn requires increased investment in education and healthcare, as well as policies oriented toward human development.

To reduce inflation, structural reforms in market systems are necessary, alongside the creation of strategic reserves of essential commodities. In terms of investment, incentive-based economic policies alone are insufficient. Reforms are also needed in the investment environment, including infrastructure, political stability, law and order, and security.

Among the deepening problems are inequality, financial sector distress, the burden of foreign debt and subsidies, violence against women, and environmental degradation. Inequality has become a profound issue in Bangladesh, where the wealthiest 10% of the population own three-fifths of the nation's wealth, and the richest 1% control one-quarter of all wealth. Loan defaults in the banking sector amount to nearly Tk6 trillion. Thousands of crores of taka have been illicitly shipped abroad. Bangladesh's external debt currently stands at approximately $110 billion. In the last fiscal year, the government provided subsidies worth Tk109,000 crore across various sectors. Violence against women has reached a toxic level, not only curtailing women's economic empowerment but also threatening their very existence. Climate and environmental degradation are not merely environmental crises; they are also development challenges.

There is no alternative to economic democratisation if inequality and disparity are to be reduced. Inequality exists not only in outcomes but also in opportunities. Therefore, merely removing structural regulations within the economy is not sufficient; access to resources and opportunities must be ensured for poorer segments of society. In the financial sector, establishing economic discipline and a visible framework of transparency and accountability is essential.

Addressing defaulted loans may require a combination of legal action, loan restructuring, and other coordinated measures. Regarding foreign debt, Bangladesh could engage with international financial institutions, explore debt restructuring arrangements, and also seek financing opportunities from international capital markets.

Subsidies across various sectors should be rationalised and carefully evaluated. A phased roadmap for reducing subsidies should then be developed. At the same time, efficiency and productivity must be increased in order to lessen reliance on subsidies. The state has a unique role in promoting gender equality and women's empowerment. Achieving this requires government commitment and prioritisation, effective policies and law enforcement, and partnerships with families and society. Under no circumstances should violence against women be tolerated. A sustainable development strategy that integrates economic growth with environmental protection deserves government commitment and priority. Existing effective plans should be implemented without delay.

Among the emerging challenges are wars and conflicts arising from geopolitical shifts, global political instability, and the spread of "economic nationalism." As Bangladesh is part of the global economic system, issues such as the Ukraine war, the Covid-19 pandemic, and the recent Middle East war have negatively affected its energy situation, import-export trends, overseas employment and remittances, exchange rates, and foreign exchange reserves.

At the same time, the rise of economic nationalism means that many major powers and developed countries are adopting more inward-looking economic policies. This could create difficulties for Bangladesh in securing grants, loans, and trade preferences. Developed countries are increasingly favouring bilateral relations over multilateral arrangements with developing nations like Bangladesh, potentially depriving them of the benefits of multilateral cooperation.

To address these issues, the government must adopt forward-looking and proactive policies. For example, Bangladesh could establish strategic energy reserves, diversify energy import sources, develop alternative energy options, and improve energy efficiency. Likewise, in response to economic nationalism, Bangladesh may consider forming regional alliances with other developing countries to strengthen trade and economic cooperation.

Another emerging issue is Bangladesh's graduation from the category of Least Developed Countries to that of developing countries. Bangladesh has requested the United Nations to delay this graduation process by three years, and a decision is expected next month.

If the request is approved, Bangladesh must strengthen its capabilities and capacities over the next three years to ensure that no obstacles remain to graduation. This requires careful preparation. It should also be remembered that, after graduation, Bangladesh will lose certain international benefits such as grants, concessional loans, and preferential tariff treatment. Therefore, preparation is also needed for the post-graduation period. Bangladesh has already developed a strategy paper for this transition. What is now required is its effective and phased implementation. In light of a possible delayed graduation, a revised and clearly defined roadmap could be prepared.

Let me conclude by saying that Bangladesh will face many obstacles in the coming years due to both global and domestic factors. These challenges are complex, but they are not insurmountable. With commitment, goodwill, integrity, and strong leadership, the government can confront them and, through collective effort, find effective solutions.

Economists, business leaders and academics have questioned the realism of the proposed budget's revenue targets and growth assumptions, warning that stronger institutions, accountability and implementation capacity will be critical to achieving its objectives.
They also questioned whether increased allocations for agriculture, health, education and gender inclusion would translate into tangible outcomes without stronger institutions, accountability and monitoring mechanisms.

The issues were discussed during the latest episode of the Policy Research Institute Centre's (PPRC) flagship policy dialogue series Ajker Agenda, titled "PPRC Budget Analysis", held virtually on Friday and moderated by PPRC Executive Chairman Hossain Zillur Rahman.

The discussion brought together former National Board of Revenue (NBR) Chairman Muhammad Abdul Mazid, former President of BKMEA Md Fazlul Haque, former Vice-Chancellor of Bangladesh Agricultural University M A Sattar Mandal, ActionAid Bangladesh Country Director Farah Kabir, Dean of the Faculty of Social Sciences at the University of Dhaka Mohammad Mainul Islam, and former Country Representative of the Malala Fund Musharraf Tansen.Bangladesh economic report

Focusing on revenue mobilisation, fiscal accountability and NBR reforms, Muhammad Abdul Mazid questioned whether the government's ambitious revenue targets could be achieved without a stronger economic base and greater transparency within the tax administration.

He argued that revenue collection ultimately depends on economic activity and productive investment.

"Revenue ultimately comes from a functioning economy. If productive sectors and private enterprises receive the necessary support, revenue collection will naturally improve," he said, expressing concern about the pace and effectiveness of the proposed reforms within the revenue administration.

Examining the budget from the perspective of business competitiveness and implementation feasibility, Md Fazlul Haque observed that many of the government's projections appeared to be based on expectations of a rapid economic rebound.

While welcoming several business-friendly administrative measures, he stressed that sustainable recovery would require stability in the banking sector, uninterrupted energy supplies and further improvements in law and order.

"The budget appears to assume that the economy will recover quickly, but recovery requires time. Achieving the expected outcomes will depend on creating an environment where businesses have confidence to invest and expand," he said.Economic zone consulting

Turning to agriculture and rural livelihoods, Prof Dr M ASattar Mandal questioned whether the proposed measures adequately reflected the realities faced by millions of smallholder farmers across the country.

He noted that previous initiatives had often encountered difficulties in identifying genuine beneficiaries and ensuring effective implementation at the grassroots level.

While acknowledging the government's continued focus on agriculture, he argued that the budget lacked a comprehensive strategy for transforming the sector through innovation, mechanisation and technology adoption.

"Agriculture requires a comprehensive long-term strategy. Alongside supporting farmers, we must also focus on modernisation, technological adaptation and the transition towards smart agriculture," he said.

Assessing the budget from the perspectives of gender equality, climate vulnerability and economic inclusion, Farah Kabir questioned whether increased allocations under gender-related programmes would generate meaningful opportunities for women and vulnerable communities.

She emphasised the need for greater investment in skills development, care services and access to emerging economic sectors.

"The real challenge is ensuring that budget allocations create opportunities. Women need access to skills, new sectors and support systems that enable meaningful economic participation," she said.

On healthcare financing and demographic challenges, Prof Dr Mohammad Mainul Islam examined whether the proposed allocations were sufficient to address Bangladesh's evolving health needs.Personal finance tips

He highlighted the importance of family planning within the broader public health agenda and expressed concern that dedicated allocations for this area remained insufficiently visible despite mounting demographic pressures.

"Increasing health spending is important, but ensuring effective utilisation is equally critical. Population health and family planning require sustained attention if Bangladesh is to maintain its development gains," he said.

Despite a significant increase in education spending, Musharraf Tansen questioned whether additional allocations would lead to measurable improvements in learning outcomes.

Referring to persistent deficiencies in literacy and numeracy among schoolchildren, he argued that the central challenge lay not in the volume of expenditure but in the effectiveness of its utilisation.

"The real challenge is not the size of the budget but how it is used. Unless investments improve learning outcomes through better teaching and effective implementation, increased allocations may not deliver the expected results," he said.

Concluding the discussion, Hossain Zillur Rahman stressed that the success of the FY2026-27 budget would depend less on policy declarations and more on implementation performance.Bangladesh economic report

"The real test of any budget lies not in its promises but in its implementation. Strong institutions, accountability and evidence-based policymaking will determine whether these ambitions deliver meaningful benefits for citizens," he said.

He further argued that budget implementation should be accompanied by a structured three-month monitoring framework within the country's governance system to ensure timely execution and corrective action where necessary.

The economist also highlighted the need to address persistent inequalities in peripheral regions, improve doctor-patient relationships in primary healthcare services, and recognise that technology alone cannot overcome deep-rooted weaknesses in the education system.

"All our ambitions are undermined by three institutional diseases-corruption, implementation delays and failures, and institutional waste arising from the proliferation of unnecessary offices and projects," he observed.

The discussion underscored a common concern among participants that while the proposed budget contains ambitious targets and expanded allocations across several priority sectors, its success will ultimately hinge on effective implementation, institutional reform and rigorous monitoring.

Without addressing longstanding governance weaknesses, they warned, the gap between budgetary commitments and real-world outcomes may continue to persist.

A fresh government move gets underway to open negotiations with the International Monetary Fund (IMF) in mid-July to secure some US$4.0 billion under a new lending package to attain macroeconomic stability, officials say.
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The fresh loan move comes after the newly elected government has decided to scrap the ongoing credit programme that loses steam in prolonged negotiations on part of the Fund about disbursement of the remaining tranches of a $5.5-billion loan.

To this end, a delegation of the IMF will visit Dhaka next month to discuss the new financial arrangement to support Bangladesh's economic-reform programme, they add.

Ivo Krznar, the IMF Mission Chief for Bangladesh, will lead the team which will stay in Dhaka on July12-17 discussing the credit programme with the Bangladeshi authorities on their reform agenda and policy priorities.

The new credit programme will replace the ongoing $5.5-billion loan arrangement that now has become stalled after the Tarique Rahman-led government expressed unwillingness to continue with the deal made by the now-defunct Awami League government back in 2022.

Finance ministry officials say they are now taking preparation by gathering necessary facts and figures to begin the discussion. Also, they are listing the reform measures that will be carried out during the three-year tenure of the bankrolling recipe.

A senior finance official says the present government is scrapping the ongoing credit programme finding many of the previously listed reform measures tough to implement at this stage.

"However," he says, "in the new programme the IMF may not agree to ditch those important reform measures but may accept their implementation at a later stage."

Citing an example, another finance official says reform measures for boosting revenue mobilisation, bifurcation of the revenue board, and banking-sector reforms and greater exchange-rate flexibility will definitely be included in the new credit programme with the IMF.

Earlier this month, the IMF in a press release said the IMF staffs were engaging with the Bangladeshi authorities on their reform agenda and policy priorities as part of the Fund's consideration of possible next steps.

"Any new arrangement would need to be based on Bangladesh's balance-of-payments needs and strong policy commitments anchored by a credible reform agenda, and would be subject to the IMF's policies and executive board approval," said Ivo Krznar in the statement.

It recognised that the macroeconomic and political context changed substantially since the Fund-supported programme was approved in January 2023, and the authorities now faced a more complex set of challenges. Banking-sector weaknesses and low revenue mobilisation underscore the need for a renewed and sustained reform effort.

The IMF granted $4.7 billion worth of loan to Bangladesh in January 2023 amid macroeconomic instability created due to the Covid-19-related volatility and war in Ukraine.

The macroeconomy of the country began to be destabilised as export earnings fell, remittance inflow tumbled, and foreign-exchange reserves squeezed. Thereafter, the government turned to the IMF for credit support where the lender came up with reform proposals to help revive the economy of Bangladesh.

The loan was scheduled to be given in seven installments by May 2026. In June last year, the loan amount was increased by another dollop of $800 million. Until now, Bangladesh has received $3.595 billion under the lending package.