Remittance inflows in Bangladesh remained above $3 billion for the sixth consecutive month, hitting $3.42 billion in May, as expatriates sent more money home to support family spending for Eid.

Bangladesh Bank data showed that inflows rose by 15.34 per cent in May compared with those of $2.96 billion in May 2025.

The figure was $3.12 billion in April, $3.75 billion in March, $3.02 billion in February, $3.11 billion in January and $3.22 billion in December

In the first 11 months of the 2025-26 financial year, remittance receipts increased by about 19 per cent to $32.75 billion, compared with those of $27.5 billion in the corresponding period of the previous fiscal year, reflecting sustained growth in inflows.

Bankers said that seasonal factors played a key role in the surge, as migrant workers typically send higher amounts to support family spending for Eid.

This year, Eid-ul-Azha, one of the biggest religious festivals of the Muslims, was observed on May 28.

They also pointed to the ongoing Middle East conflict as an additional factor.

Many expatriates reportedly sent larger sums or transferred savings back home due to concerns over potential disruptions in host countries and financial uncertainty linked to the war.

The interbank dollar rate rose to about Tk 122.75 in May from Tk 122.27 in late February, indicating growing pressure on the local currency.

Bangladesh recorded more than $30 billion in remittance inflows for the first time in the 2024-25 financial year, with total receipts reaching $30.32 billion, up from $23.91 billion a year earlier.

Monthly inflows have remained above $2 billion since August 2024.

Officials said that policy support had contributed to the steady rise.

Since January 2022, the government has provided a 2.5 per cent cash incentive on remittances sent through formal banking channels.

Improved exchange rates and stricter monitoring of cross-border transactions have also encouraged expatriates to avoid informal transfer systems.

Higher remittance earnings have helped ease pressure on the balance of payments and support foreign exchange reserves.

According to the Bangladesh Bank, reserves stood at $30.1 billion under IMF methodology on June 1, while gross reserves were around $34.76 billion.

The Bangladesh Securities and Exchange Commission (BSEC) has again rejected Daffodil Computers Limited's plan to issue shares against loans, according to a stock exchange disclosure.

After facing the rejection of its initial plan, the IT sector firm in November last year reapplied to the commission for converting Tk49 crore loans, availed from one of its associate firms of the Daffodil Group, into equity.

With the shareholders' approval through an extra-ordinary general meeting (EGM), after revising its plan, it again applied to the commission, but the commission rejected converting loans into equity citing that the regulator is not in a position to accord its consent.

Daffodil Computers had availed Tk49.03 crore loans from Creative International, a concern of Daffodil Group. To offset the loan, it had planned to issue shares in favour of the lender company.

In its revised plan, the listed company sought stock market regulator nod to issue shares at Tk15 each with a plan of issuing total 3.27 crore shares.

In December 2024, its board had approved and subsequently submitted the plan to the commission to issue shares at Tk10 each against the loans.

Then, the commission rejected its share issuance plan as it had not secured its shareholders' nod. Later in December 2025, the company secured shareholders' nod on share issuance decision.

At that time, too, the securities regulator turned down the plan, citing that the move would unfairly favour the group's controlling interests while diluting the holdings and earnings of ordinary investors.

Now, Daffodil Computers faced a second time rejection for a share issuance plan for repayment of loans.

Daffodil Computers, one of the early technology companies listed on the stock exchange, remains a key entity within the Daffodil Group, which has diverse interests in IT, education, and media.

According to its quarterly financial statements, in the first nine months of the current fiscal year, it had reported declining revenue and profitability slightly.

In the July to March period, its revenue declined to Tk28.79 crore and net profit after tax to Tk1.16 crore, which was Tk30.28 crore and Tk1.56 crore respectively.

Daffodil Computers' shares closed 4.24% higher at Tk142.50 each on the Dhaka Stock Exchange (DSE).

Earlier, the company decided not to pay any dividend to its shareholders for the fiscal year of 2024-25. During the fiscal year, its earnings per share dropped by 24% to Tk0.16, compared to the previous year.

BRAC Bank PLC has signed two refinancing agreements with Bangladesh Bank.

The aim is to improve access to affordable finance for cottage, micro, small, and medium enterprises (CMSMEs). This step shows BRAC Bank's commitment to entrepreneurship and financial inclusion.

The agreements allow BRAC Bank to provide financing to entrepreneurs in different clusters across the country. Through Bangladesh Bank's Financial Sector Fund for MSMEs, the bank can offer low-cost credit support.

Through the Tk3,000 crore Cluster Finance Refinance Scheme, BRAC Bank will provide term loans and working capital. These loans support entrepreneurs in various industrial clusters. Eligible businesses can access financing at concessional rates starting from 7 per cent. This support helps expand businesses, boost productivity, and create jobs.

The second agreement lets BRAC Bank use the Tk1,500 crore Financial Sector Fund for MSMEs. MSMEs in the manufacturing and service sectors can get financing at a 7 per cent interest rate. The facility offers loans of up to Tk1 crore for microenterprises and up to Tk5 crore for small and medium enterprises.

Tareq Refat Ullah Khan and Nawshad Mustafa exchanged agreement documents at a ceremony at the Bangladesh Bank on 18 May 2026. Deputy Governor Nurun Nahar was present.

Husne Ara Shikha, Executive Director of Bangladesh Bank, and Mahbubur Rahman, Head of Cottage, Micro and Small Business and Liability and Cash Management, SME Banking, BRAC Bank, also attended.

BRAC Bank, as the country's leading SME-focused bank, continues to pioneer the expansion of access to finance for grassroots entrepreneurs, leveraging Bangladesh Bank's refinancing schemes. The bank states that these initiatives will foster business growth, job creation, and sustainable economic development across Bangladesh.

The government is going to expand social safety net programmes in the upcoming budget to check growing poverty amid an economic slowdown made complicated by regional wars.

This is one of the priorities of the newly elected government led by the Bangladesh Nationalist Party to set the platform for a welfare economy, said finance division officials.

In its first budget of the current five-year tenure on the back of war in the oil-rich Middle East, about 41 lakh family cards will be distributed at a cost around Tk 12,373 crore in the next financial year of 2026–27.

Farmer Cards would also be provided to 42 lakh beneficiaries with a financial allocation of Tk 1,062 crore in FY27.

Finance and planning minister Amir Khosru Mahmud Chowdhury has already said they are committed to the Family Card project referring it a cornerstone of the government›s commitment to social welfare and inclusive development.

Economists say targeting needy and poor through the card programme was a good idea, but it has implementation challenges like politics on selection and wastes of money.

Family Card holders will receive cash assistance of Tk 2,500 per month, while Farmer Card holders will receive Tk 2,500 once a year.

Both cards have already been launched on an experimental basis in line with the BNP’s electoral pledges.

The government will also increase the number of old-age allowance beneficiaries by one lakh in FY27 with a recipient currently getting Tk 700 a month.

The allowance is one of the government’s 95 social safety net programmes for which around Tk 1.17 lakh crore was allocated in FY26 national budget.

In FY27 national budget, the amount will go up to Tk 1.30 lakh crore, said the finance ministry officials.

Through the new budget, the government will also implement a decision that beneficiaries enjoying the privileges of Family Cards would not qualify for any other benefits under the social safety net programmes.

Even the government employees, pensioners, savings certificate holders, Trading Corporation of Bangladesh cards or vehicles registered with the Bangladesh Road Transport Authority will not be eligible, said the finance ministry officials.

The finance and planning minister said the government was actively identifying and rectifying initial implementation errors to ensure a long-term success of the family cards.

Bangladesh Institute of Development Studies director general AK Enamul Haque has suggested that the government should made randomised controlled trial on piloting cards distribution.

Randomised controlled trial is a type of statistical experiment designed to evaluate the efficacy or safety of an intervention by minimising bias, he said.

Terming the overall card programme as a good step, the BIDS DG says more important was overcoming the implementation challenges like political selection, duplication and wastes of money.

Institute for Inclusive Finance and Development Executive Director Mustafa K Mujeri says the government needed to expand social safety net progrmme to check growing poverty.

A recent World Bank report titled ‘Bangladesh Development Update: Special Focus – A Business Environment that Delivers Jobs’ projected around 1.4 million more people falling into poverty in the country in 2025, the rate reaching 21.4 per cent, which was 20.5 per cent in 2024.

Economists attribute falling growth in gross domestic products below 4 per cent in 2024-25 from 7 per cent 2021-22 on the back of double-digit inflation for the growing poverty.

Post service benefits of the public employees shown in the social safety net programme to show a bigger allocation should be excluded for the benefit of poor and needy people, economists say.

Almost a quarter of the overall allocation under the social safety net prograame is included with pension fund, added the economists.

The recent decline in the non-performing loan (NPL) ratio, from 35.73 percent in September 2025 to 30.60 percent in December, may appear encouraging. However, the improvement largely reflects relaxed loan rescheduling policies rather than any meaningful improvement in asset quality. Allowing defaulted loans to be regularised with only a 2 percent down payment, now further staggered, merely delays recognition of the problem.

Even after this decline, Bangladesh still has one of the world’s highest NPL ratios. The comparison with neighbouring and crisis-hit economies is striking. Pakistan’s stands at 7.4 percent, India’s at 2.3 percent, while Sri Lanka, despite a severe sovereign debt crisis, maintains 12.6 percent. Ukraine, amid prolonged war, recorded 26.1 percent, and Lebanon, after years of economic collapse, 23.8 percent. Bangladesh’s banking distress therefore appears deeply structural.

The capital adequacy situation is even more concerning. Under Basel III guidelines, banks must maintain a Capital to Risk-Weighted Assets Ratio (CRAR) of 12.5 percent. Yet the industry’s position has deteriorated sharply. CRAR fell from 11.6 percent in 2020 to 10.64 percent in June 2023, then to 6.86 percent in September 2024 and 3.08 percent by December 2024. By December 2025, it had entered negative territory at minus 2.9 percent, the first such occurrence in Bangladesh’s history.

This exposed a reality long hidden by weak governance and underreported risk-weighted assets. For years, several banks projected an illusion of stability by understating the quality of their loan portfolios. Once disclosures became more transparent after the 2024 political changeover, the scale of impairment surfaced rapidly.

By September 2025, 23 banks had accumulated a capital shortfall of Tk 2.82 lakh crore. Five banks accounted for nearly 59 percent of the deficit. Some now carry NPL ratios exceeding 90 percent, raising serious questions about their viability under existing ownership and governance structures.

A banking system cannot survive indefinitely on regulatory forbearance. Capital is the final shield against financial instability. Without adequate buffers, banks lose credibility at home and abroad. Cross-border trade finance becomes more difficult as foreign correspondent banks place significant emphasis on capital strength before advising, confirming or funding letters of credit. Weak capitalisation also affects risk ratings, constrains deposit mobilisation and limits lending.

In this context, aggressive recapitalisation has become unavoidable.

One possible route is the issuance of rights shares. However, this may prove ineffective for distressed banks where sponsors are financially weakened or face allegations of insider lending, governance failures or siphoning money abroad. Rights issues are therefore likely to remain undersubscribed, leaving banks trapped in chronic undercapitalisation.

Bangladesh needs a more pragmatic ownership restructuring framework. The regulation restricting any individual, family or group from holding more than 10 percent equity in a financial institution may require temporary relaxation for selected distressed banks. A time-bound policy window of three to five years could allow financially capable sponsors to inject fresh capital beyond the ownership ceiling. During this period, banks could stabilise operations, improve governance, rebuild compliance standards and restore profitability. Once financial health is restored, excess ownership could gradually be diluted through partnerships with strategic investors. The central bank’s recent stipulation allowing only banks with more than Tk 20 billion in equity to declare cash dividends is a step in the right direction.

Several Asian economies have used similar restructuring approaches during periods of banking stress. Their experience shows that temporary flexibility, backed by strong oversight and governance reforms, can prevent systemic collapse and restore market discipline. Bangladesh’s banking sector requires more than liquidity support or loan rescheduling facilities. It needs credible capital, competent ownership and institutional accountability. Without them, financial stability will remain fragile, and the sector’s ability to support economic growth will continue to weaken.

The economic shock from ​the Iran war hit European factories last month, suppressing demand for their goods and pushing up raw ‌material costs at the fastest rate in four years, although their Asian peers saw activity expand due to stockpiling, surveys showed on Monday.

The US-Israeli conflict with Iran, which began in late February, has upended trade, rattled financial markets and raised concerns over global energy supplies, particularly through the ​Strait of Hormuz, a key route for oil and gas shipments.

Monday’s surveys came after the heads of the International ​Energy Agency, International Monetary Fund, World Bank and World Trade Organization warned the war was straining global energy supplies.

S&P Global’s Eurozone Manufacturing PMI fell to 51.6 in May from April’s near four-year high of 52.2, but ahead of ​a preliminary estimate of 51.4.

A reading above 50.0 indicates growth.

“Although euro area manufacturers reported an expansion for a fourth successive month ​in May, the sector is showing signs of struggling under the weight of rising prices and supply disruptions emanating from the war in the Middle East,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.

In Germany, Europe’s largest economy, the manufacturing sector stalled while French factories saw a contraction for the first time since November.

The European Central Bank will hike its deposit rate this month and at least once more ​this year to try to stop higher energy prices feeding into core inflation, according to a majority of economists polled by Reuters in ‌May.

Official data due on Tuesday is expected to show inflation rose further above the ECB’s 2 percent target last month. British factories raised their prices at the fastest rate since June 2022 last month in response to a big increase in costs.

ASIAN BUFFERS

Still, factory activity expanded in most Asian economies.

China’s private sector gauge grew for a sixth straight month and South Korea’s hit the fastest pace in ​five years, highlighting a region-wide push ​to build buffers against potential conflict-led disruptions.

And the S&P 500 and Nasdaq each ticking up about two-tenths of a percent.

The RatingDog China General Manufacturing PMI, compiled by S&P Global, fell to 51.8 in May from 52.2 in April, but was slightly better than analysts’ forecast of 51.6.

That outcome contrasted ​with an official survey showing factory activity in the world’s second-largest economy stalled last month as ​new orders contracted and input costs kept rising.

Japan’s factory activity also expanded with the PMI at 54.5 in May, slowing from April’s more than four-year high of 55.1, though firms there reported the sharpest rise in input costs since September 2022 due to higher raw material prices.

South Korea’s PMI ​rose to its highest since March 2021 at 54.8 in May, up ​from 53.6, again underlining firms’ drive to lock in supplies.

In Vietnam, the factory PMI gauge rose to 52.8 from 50.5, while Taiwan’s rose to 56.1 from 55.3, ​surveys showed. The index for the Philippines jumped to 50.8 from 48.3.

The Russian government has banned aviation fuel exports until ​November 30, it said on ​Monday, as Ukrainian strikes on Russia’s refineries and other energy infrastructure continue.

Russia ​exports jet fuel mainly by rail to ​Central Asia, including Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan.“The aim of this decision is to ​ensure stability in the domestic fuel ​market,” the government’s statement said.Russia has already restricted ‌gasoline exports but has yet to action on diesel, though the Interfax news agency reported last week that measures were ​being considered.

Diesel ​production in Russia fell by about 10 percent in May, adding ​to a 10 percent monthly drop ​in April as Ukrainian drone attacks on refineries forced them to reduce or halt output, ​Reuters data showed on ​Friday, while exports of the fuel rose.

Guyana was already the world's fastest-growing economy before the US-Israeli war on Iran drove up oil prices. Now, the tiny Caribbean nation of nearly 1 million people will reap an even bigger bonanza as the conflict reshapes global energy markets.

The war that caused one of the largest energy disruptions in history highlights the growing importance of countries including Guyana that offer political stability and geographically unrestricted access to their estimated 11 billion barrels of oil reserves. This growing windfall from crude brings pressure from business owners and locals on the government to use its billions of dollars to boost other parts of the economy.

"The world has seen too many energy booms that left behind ghost towns, depleted forests and bitter populations. Guyana will not be that story," President Irfaan Ali said in an address at Rice University's Baker Institute this month.

Rapid development by an Exxon Mobil-led oil consortium, which controls all of Guyana's oil production, grew output to more than 900,000 barrels per day in just seven years, a pace without recent precedent as offshore projects can typically take twice as long just to produce the first drop of oil. Guyana's GDP more than quadrupled to $27.5 billion between the time the taps started flowing in 2019 and 2024, according to World Bank data.

Guyana was previously one of the poorest countries in South America and oil-fuelled growth can be seen across the capital of Georgetown, where construction is taking place on new modern office buildings, upscale hotels and rows of single-family homes that resemble those that could be found in US suburbs. Exxon billboards and adverts for other petroleum companies play on the radio, serving as reminders of the industry that helped enable the growth.

More money, more problems?

The government's long-term challenge is to fortify the country against an implicit pitfall – the economic cycle of boom and bust oil prices. Guyana needs to look no further than its neighbour Venezuela for an example of how political dysfunction and overreliance on oil money can cripple an economy despite having one of the largest estimated oil reserves in the world. One of Guyana's strategies is its 2019 sovereign wealth fund holding all oil revenue, which allows the government to draw funds for development projects at a steady rate.

Crude prices, up 30% since the start of the Iran war in late February, could further swell Guyana's oil revenue. Assuming an oil price of $100 per barrel through the rest of the year at current production volumes, Guyana's share of oil revenue could be worth roughly $4.3 billion, 67% higher than last year, according to Reuters calculations.

More importantly, Guyana is poised to start receiving a significantly larger share of oil production earlier than expected. The Exxon consortium currently takes 75% of the oil to recoup its initial exploration and development costs. And now, the consortium could recover the costs this year, Exxon has said. When that happens, the country's share of the profit oil will climb from 12.5% to 50%.

Ali cautioned that expectations needed to be managed, as any windfall due to higher oil prices would be offset by higher import costs for nearly all goods including fuel and fertiliser.

"This is the complexity of the messaging when people wake up every morning and see the headlines that you're flush with money, it drives a certain expectation," he said in his Baker Institute address.

Some local infrastructure has not improved at the same pace that the oil industry has developed. Open sewage drains line the streets of Georgetown and electricity outages remain a common occurrence.

A changed world

Guyana sits at the centre of a region that includes the established oil and gas economies of Venezuela and Trinidad and Tobago, as well as Suriname, where the sector is emerging. The area benefits from direct, unrestricted access to the Atlantic, without maritime chokepoints vulnerable to blockades like the Strait of Hormuz.

Guyana's low break-even prices in the $25 to $35 per barrel range, and proximity to US markets that are supportive of fossil fuel development, further compound long-term advantages, said Tarron Khemraj, a professor of economics and international studies at the New College of Florida, who has studied Caribbean countries including Guyana.

Spot prices for Guyana's four crude grades – valued for their light to medium sweet quality – have surged over the past three months, with the Liza benchmark reaching a high of $120 per barrel from $68.98 on 27 February before the conflict in the Middle East began.

Even if traffic through the Strait of Hormuz resumes soon and oil prices return to pre-war levels, experts say Guyana's track record as a geopolitically stable source of oil will further solidify.

"The war may end next month, but it will be a changed world," Khemraj said.

Still, numbers that look like a boom may belie the full reality of the broader economy.

While Guyana has recorded double-digit percentage GDP growth each year since oil production began, most of that expansion has been concentrated in the petroleum sector, rather than broad-based activity. Oil and gas and support services accounted for more than 75% of the country's GDP last year, according to government data.

Sharing the wealth

As part of its effort to make sure more of the oil revenue trickles down, the government is also moving to expand its local content law, originally passed in 2021, that requires oil and gas firms to contract with Guyanese-owned suppliers and vendors in a number of specific areas, such as janitorial, food or transport.

The regulation requires petroleum companies to procure a certain percentage of services from Guyanese businesses, for example, 25% of medical services and 90% of catering services. The government is considering amendments to add more service areas and increase the percentage requirements for some existing ones, Michael Munroe, director of the local content secretariat, said in an interview.

Business owners say that expanding the requirements will help support more jobs and the development of skilled labour.

"We're able to provide all of the same medical services as an international company," said Ayesha Wilburg, founder and CEO of a Georgetown-based health clinic.

Rising oil activity has also led to a similar explosion in demand for private transport services in Georgetown, where residents often travel by cab.

Nazim Baksh, general manager of Sean's Transportation Services, said the company expanded from seven employees to about 20 and also upgraded its fleet from saloons to add more SUVs.

Challenges remain, however, including complaints from Guyanese business owners about so-called fronting. Panellists at the Guyana Energy Conference in February acknowledged the problem, where foreign companies use local entities but retain actual control of the business.

Vanita Ally, medical director and founder of Phoenix Clinicare, a Guyanese-owned medical centre, said that receiving a certificate to provide services to oil firms has not resulted in much additional revenue and inflation is also increasing her operating costs.

"International companies are benefiting a lot more than local people (from the oil industry)," Ally said.

Drivers are now paying more at the pump, like other countries, adding to cost-of-living concerns. Guyana lacks a refinery and must import petrol, diesel and other refined products.

"For Guyana, as a country that is now a net producer and exporter of energy, (higher oil prices) can mean positive things, but of course, that isn't necessarily what people see and feel every day because it means that energy prices are going up," said Alistair Routledge, president of Exxon's Guyana operations at a press conference in March.

"We recognise this is a mixed blessing for people in Guyana."

From Europe to Japan and Switzerland, huge bond issues by Big Tech companies are proving that smaller markets, often overshadowed by the US, can punch above their weight in the $40 trillion world of corporate debt.

Google-parent Alphabet is already one of the biggest outstanding borrowers in the sterling and Swiss franc corporate bond markets, while Amazon raised 14.5 billion euros ($16.88 billion) in March from an eight-part deal, the largest ever in the euro corporate bond market, according to LSEG.

Debt issues by so-called "hyperscalers" - or Big Tech companies - outside the United States are part of a push to diversify their funding early on, bankers said, as they look to finance trillions of dollars of investment in AI infrastructure, especially data centres, in the years ahead.

Raising debt in foreign currencies can also help the companies hedge the currency risk from their global assets, while taking advantage of relatively lower borrowing costs in places like Europe.

Alphabet smashed records across markets, with its yen, Canadian dollar, Swiss franc and sterling deals all setting borrowing records in those currencies.

"If you look at the pace of investment of these companies and if you fast forward 12 months, some of these companies are already going to become among the biggest issuers globally in any currency," said Giulio Baratta, co-head of investment-grade finance at BNP Paribas.

In Europe, Alphabet and Amazon have helped push up borrowing by non-financial US firms to over 60 billion euros ($69.85 billion) this year, another record.

Record debt sales

Morgan Stanley expects around 50 billion euros of total borrowing from the hyperscalers in euro debt this year, which could help lead the US to overtake France as the euro zone's biggest source of overall corporate debt.

"A lot of these markets, including euro, have evolved and now offer a lot more depth and opportunity for larger capital raising than was historically the case," said John Servidea, global co-head of investment grade finance at JPMorgan, which led recent deals for the two hyperscalers.

With the hyperscaler deals, internationally placed non-financial corporate bond sales tracked by LSEG have surged in markets like the Swiss franc and yen this year.

The ability to raise significant amounts of money in such markets has not gone unnoticed by US companies beyond the hyperscalers, Servidea said.

"They're definitely looking at other markets more seriously than they would have previously."

More broadly, borrowing has also surged in currencies like the Australian and Hong Kong dollars as international companies diversify their funding sources.

Investors, meanwhile, have shifted focus to diversifying away from the US dollar given geopolitical tensions and policy uncertainty.

Building exposure to AI

Hyperscalers have seen their non-dollar issuance double to 30% of their total bond funding this year, according to Bank of America.

Raising money abroad also means Big Tech can leave longer periods between tapping the US market, JPMorgan's Servidea said, while borrowing at rates that are in some cases cheaper than the US dollar market, or at least similar.

Heavy borrowing can weigh on a borrower's bonds, and analysts see signs that hyperscalers are underperforming the US corporate bond market. Visiting it less often may help limit the hit.

Baratta at BNP Paribas, which also led deals for Alphabet and Amazon, said these companies were mainly keeping the funds in the currency they are raising rather than swapping them back to dollars.

As for investors, they're keen to build exposure to the AI theme in international bond markets, where technology names previously had a limited presence.

Nicolas Forest, chief investment officer at Candriam, for example, is buying into the euro deals from hyperscalers to build exposure to the tech sector in the European bond market.

By the end of April, Alphabet had already become the fourth-largest borrower in ICE BofA's sterling corporate bond index after just one round of issuance, and the sixth-largest in Swiss francs.

As tech issuance grows, corporate bond markets outside the US will become more exposed to tech sector developments, in good and bad times.

"If there are any problems with (AI), it will probably create more volatility," said David Zahn, head of European fixed income at Franklin Templeton.

Bangladesh is lagging behind neighbouring countries in buffalo milk production due to low productivity, poor breeding practices, and limited investment in the dairy sector.

Buffalo milk accounts for 65 percent of total milk production in Pakistan, 43 percent in India, 57 percent in Nepal, and only 5 percent in Bangladesh, according to data from the Department of Livestock Services (DLS).

Pakistan produces 60.01 million tonnes of milk, of which 39.80 million tonnes come from buffalo. In India, total milk production stands at 239.03 million tonnes, with 104 million tonnes from buffalo. Nepal produces 2.90 million tonnes, including 1.65 million tonnes from buffalo.

In Bangladesh, total milk production is 16.20 million tonnes, against an annual demand of 16.23 million tonnes, but only 0.08 million tonnes comes from buffalo.

Md Bayezur Rahman, director for administration at the DLS, told The Daily Star that Bangladesh lags behind mainly due to a smaller buffalo population and the lack of targeted development in the sector.

He said that in those countries, buffalo populations have historically been higher due to natural conditions, while in Bangladesh research is underway and a buffalo development project has already been initiated.

DLS data shows buffalo numbers in the country have been rising steadily. In fiscal year 2024–25, the figure stood at 15.32 lakh, up from 15.24 lakh the previous year and 14.16 lakh in FY23.

Gautam Kumar Deb, principal scientific officer and head of a division at the Bangladesh Livestock Research Institute (BLRI), said the low contribution of buffalo milk is rooted in the historical use of buffaloes as draft animals rather than dairy producers.

Unlike in India, Pakistan, and Nepal -- where buffaloes have long been bred for milk -- buffaloes in Bangladesh were primarily used for ploughing fields and pulling carts in low-lying areas, resulting in native breeds with low milk-yielding capacity.

He said the buffalo population declined by around 50 percent after independence as their role in agriculture diminished, though numbers have since stabilised and are gradually rising.

Buffaloes are mainly raised in char and coastal areas, where most farmers rely on natural grazing. In remote char areas, transporting milk to markets is difficult, making calf rearing and meat production a more profitable option for many farmers.

Deb said buffalo farming in Bangladesh remains at a stage comparable to where cattle farming was in the 1980s. The BLRI, DLS, and Bangladesh Milk Producers’ Co-operative Union Limited have been working to introduce high-yielding Indian buffalo breeds, with research populations already established. Improved animals are expected to reach farmers within one to two years.

A buffalo development project launched in July 2020 is nearing completion, with both infrastructure and research components more than 95 percent complete.

Jahangir Alam Khan, former director general of the BLRI and an agricultural economist, said buffaloes have historically received little attention in Bangladesh, where livestock development efforts largely focused on cows. He said continued government support could lead to significant progress over the next 15 to 20 years, and that expanding buffalo farming could help meet domestic demand and reduce reliance on imported buffalo meat.

At an event in Dhaka yesterday marking World Milk Day 2026, State Minister for Fisheries and Livestock Sultan Salauddin Tuku said Bangladesh must increase milk production to reduce import dependence.

He said the government would take measures to expand production capacity with a view to building future export potential in the dairy sector.

Prime Minister's Office (PMO) Spokesperson Mahdi Amin yesterday (1 June) said the government has made a limited adjustment to fuel prices in line with global market trends.

"As we do not produce fuel internally, we are fully dependent on imports. So, any global price increase directly affects us. The adjustment has been made in line with international market conditions, and the increase is limited," he said while speaking at a press conference at the PMO.

The press conference was held at the Karobi Hall of the Prime Minister's Office to brief the media on various public-oriented initiatives and programmes taken on the orders of the prime minister for smooth celebrations of Eid-ul-Adha.

Responding to a question, Mahdi Amin said Bangladesh delayed raising fuel prices longer than many other countries despite growing international pressure.

"Oil prices have increased across the world since the outbreak of the Middle East conflict. Many countries have already raised prices, while Bangladesh is among those that adjusted them relatively late," he said.

The PMO spokesperson said fuel prices in Bangladesh still remain lower compared to many neighbouring countries, helping the government keep inflation under control.

"Overall, as global oil supply and prices are changing, Bangladesh has made a limited price adjustment in line with international trends," he said.

Mahdi Amin said the latest adjustment was made considering global fuel supply conditions and rising international prices.

Replying to another question, Mahdi Amin said the government, under the leadership of Prime Minister Tarique Rahman, has been making every possible effort over the past three months to deliver what a truly accountable government can achieve.

Asked whether remarks made by State Minister for Primary and Mass Education Bobby Hajjaj regarding Dhaka University embarrassed the government following strong reactions from university teachers and students, he highlighted the historic role of Dhaka University and other public universities in the country's major democratic and political movements.

"The contribution of Dhaka University and other public universities is deeply embedded in Bangladesh's history – from the Language Movement and the 1969 Mass Uprising to the Liberation War, the anti-autocracy movement of 1990 and the July mass uprising," the PMO spokesperson said.

He said many individuals currently serving in important state positions emerged from Dhaka University and other public universities on the basis of merit and competence.

Mahdi Amin also noted that the country's private university sector began its journey during the government of former Prime Minister Khaleda Zia in 1992 and has made significant progress over the years.

He said private universities also played an important role during the July movement, standing alongside public universities and people from all walks of life.

"We do not see Dhaka University, North South University or any other university separately. We believe all educational institutions complement one another rather than compete with each other," he said.

The PMO spokesperson said students frequently move between public and private universities for undergraduate and postgraduate studies, reflecting a shared national education system that helps produce skilled, capable and responsible citizens.

"As an elected government, we believe that what matters is not which university someone attended but their honesty, competence and merit," he said.

Mahdi Amin said the government wants to build a discrimination-free Bangladesh where talent and qualifications are properly recognised and where all universities receive policy support from the state.

Responding to a question regarding the buffalo named after US President Donald Trump, now kept at the National Zoo, he said the government's foremost responsibility is to maintain stability, law and order, and social harmony.

The PMO spokesperson said authorities wanted to avoid any situation that could trigger unnecessary controversy or create discomfort at home or abroad.

"A responsible and accountable government always seeks to move the country forward in a positive and festive environment where everyone can participate with goodwill and sincerity," he said.

Mahdi Amin described the handling of the matter as a prudent decision taken through government channels and later implemented as part of a state decision.

The National Board of Revenue is considering raising the specific tax – a form of value-added tax (VAT) – on mild steel (MS) products and related items by around 10% at the production stage, according to sources at the Ministry of Finance.

The proposed change may be included in the Finance Bill accompanying the upcoming national budget. A similar increase in the specific tax on these products was introduced in the previous budget as well.

Industry stakeholders have warned that any further tax hike could dampen demand at a time when the steel sector is already struggling with weak market conditions. They said economic slowdown has reduced infrastructure and construction activities across government, private and individual projects, leading to a sharp fall in demand for steel rods.

Infograph: TBS
Infograph: TBS

According to sources at the NBR, the specific tax on MS products manufactured from re-rollable scrap currently stands at Tk1,700 per tonne, which may be increased by Tk170.

The specific tax on billets and ingots produced from meltable scrap may rise by Tk150 from the current Tk1,500 per tonne. For MS products manufactured from billets or ingots, the tax may increase by Tk160 per tonne. In the case of ingots or billets produced from meltable scrap and MS products manufactured from those ingots or billets, the increase may be Tk220 per tonne.

A senior NBR official, speaking to The Business Standard on condition of anonymity, said the specific tax at the local production stage for MS rods should be higher than the current rate.

"After reviewing the matter, we are preparing a proposal for a reasonable increase in VAT," the official said.

However, Md Shahidullah, managing director of Metrocem Group, believes the current economic climate is not suitable for raising VAT.

Explaining his concerns, he said demand for steel and related construction materials had fallen sharply as infrastructure development activities slowed across the country. "In some cases, we are now forced to sell products below production cost just to stay in business."

"If additional VAT is imposed on these products in such a situation, demand may decline further, which will increase pressure on us," he said.

Industry insiders said steel rod prices were selling between Tk80,000 and Tk85,000 per tonne until March this year, but prices have risen since the outbreak of the conflict in the Middle East.

Shahidullah said rod prices currently range between Tk85,000 and Tk92,000 per tonne.

NBR officials, however, argued that an increase of Tk150 to Tk200 per tonne due to higher VAT would not significantly affect prices.

According to the Bangladesh Steel Manufacturers Association (BSMA), there are around 200 steel mills operating in the country, including approximately 40 large industrial enterprises. The sector's total installed production capacity is about 120 lakh tonnes annually.

Under normal market conditions, annual demand for various steel products – including MS rods, sheets, beams, angles and plates – exceeds 60 lakh tonnes. MS rods, or rebars, account for the largest share of the market and are widely used in the construction sector.

Industry stakeholders said demand for steel rods has fallen by nearly one-third due to a slowdown in real estate and private construction activities, high interest rates and broader economic uncertainty.

In 2015, Bangladesh and Vietnam shared the same S&P sovereign credit rating: BB–. A decade on, Vietnam stands at BB+, one notch from investment grade. Bangladesh has fallen to B+, its banking sector near the bottom of global risk rankings, and Fitch issued a negative outlook just days ago. This is not a sudden crisis. It is the accumulated cost of a decade of governance failures that Bangladesh's policymakers refused to confront while headline growth numbers held up.

Rating record

The table below tracks S&P's sovereign rating trajectory for all five countries over the past decade.

The divergence is unambiguous. Vietnam earned two upgrades from the same starting point; Bangladesh suffered one downgrade. Uzbekistan, unrated until 2019, has already surpassed Bangladesh. Kyrgyzstan – smaller, poorer and landlocked – debuted at B+ in March 2025, level with Bangladesh today despite having no prior rating. Cambodia, which Bangladesh should outrank on every structural metric, sits on exactly the same shelf. Bangladesh and Vietnam were rated identically in 2015. Today they are four notches apart – and the gap is widening.

How a decade was squandered

Three structural failures drove the decline. Forex reserves collapsed from $48 billion in August 2021 to below $20 billion in 2024, compounded by the revelation that headline figures had been inflated for years through inclusion of illiquid instruments. The banking sector failure was deeper: S&P places Bangladesh in Group 9 out of 10 on its Banking Industry Country Risk Assessment.

When Fitch downgraded Bangladesh in May 2024, NPLs stood at 9%; by December 2025 they had reached 30.6% as regulatory forbearance unwound. This is not a banking sector with a problem – it is a banking sector whose problem has finally been measured. A fiscal system generating tax revenue of just 7-8% of GDP provided no cushion, and the interest-revenue ratio hit 29% by end-2025, more than double the B-rated peer median. The student-led uprising of mid-2024, the fall of the Hasina government, and political uncertainty over elections compounded every structural vulnerability.

What peers did differently

Vietnam held to one strategy: export-led industrialisation with consistent macroeconomic management. The China-plus-one manufacturing shift found Vietnam ready; S&P upgraded it twice in six years. Bangladesh had the same garment base and labour cost advantage – and let the window close. Uzbekistan debuted at BB– in 2019 and has since climbed to BB: it brought Franklin Templeton in to manage Uzbekistan National Investment Fund, listed the fund on the London Stock Exchange in May 2026, raised $604 million with four times oversubscription, and made state enterprise governance internationally legible. Kyrgyzstan – smaller and poorer than Bangladesh, unrated until 2025 – raised $700 million in a debut Eurobond with three times oversubscription months after receiving its first rating. Both countries demonstrated institutional credibility and immediately accessed international capital markets. Bangladesh cannot.

Fitch warning of May 2026

On May 13, 2026, Fitch revised Bangladesh's outlook from stable to negative, affirming B+. The proximate trigger is the Middle East conflict – nearly half of Bangladesh's remittances originate there, and crude oil accounts for 15% of imports. But the conflict is the match, not the fuel: limited reform progress is eroding Bangladesh's capacity to absorb shocks.

Revenue fell when the IMF programme required it to rise. Constitutional reform is stagnant. Reserves at $29.5 billion sit below the B-rated median. A negative outlook shifts the burden of proof – Bangladesh must now demonstrate improvement, not merely avoid further deterioration. The three most likely triggers for an unscheduled downgrade to B are a fracture in the IMF programme, reserves falling below three months of import cover, or a major bank failure. At B – Pakistan's cohort – most institutional mandates prohibit exposure to Bangladesh sovereign instruments.

Three scenarios

The base case without decisive action is a downgrade to B within 12 to 18 months. The second scenario – the negative outlook resolved without a downgrade – requires the conflict to de-escalate, reserves to hold above four months of cover, the IMF programme to stay on track, and NPLs to show credible improvement. Every condition must hold simultaneously. The upgrade path toward BB– is a 2028 to 2030 horizon at the earliest, requiring sustained reserve improvement, measurable NPL reduction, and tax revenue approaching 10% of GDP.

What a rating downgrade actually means

Rating downgrades are not abstract. Their consequences are concrete, immediate, and compound across every layer of the economy. Six transmission channels matter most for Bangladesh.

Borrowing costs rise system-wide. Treasury bill yields reached 12% by late 2024 – up from under 7% two years earlier – as investors demanded a higher premium to hold government paper. Higher yields feed the fiscal deficit, which feeds more borrowing, which feeds higher yields still: a self-reinforcing spiral that a further downgrade accelerates.

Trade finance becomes costlier and harder to access. Bangladesh's garment export economy runs on letters of credit. LC confirmation charges levied by foreign correspondent banks are directly linked to the sovereign rating. Exporters operating on 3 to 5% margins absorb those charges or lose orders to competitors whose banks carry no such premium. A move to B would make this materially worse.

FDI dries up. FDI fell 8.8% in FY2024; Standard Chartered Bank Bangladesh's CEO attributed the decline explicitly to rating downgrades reducing risk-adjusted returns. A B rating places Bangladesh alongside Pakistan – no multinational building a medium-term Asia investment case allocates to a B-rated country when BB-rated alternatives exist.

Portfolio capital exits in advance. Many institutional mandates prohibit exposure below BB–. Bangladesh crossed that threshold in 2024. Portfolio investment was already a $111 million net outflow in FY2024. The Fitch negative outlook will have triggered repositioning across mandated investors before any formal rating action occurs.

The sovereign-bank nexus tightens. Public sector credit growth surged to 24% by October 2025 against private sector growth of just 6%. As the sovereign's rating falls, state-owned banks' access to foreign credit lines weakens and their funding costs rise. A sovereign downgrade cascades through the entire banking system the government owns.

LDC graduation compounds the risk. Bangladesh is supposed to graduate from Least Developed Country status in November 2026, losing preferential tariff access that partly underpins its EU garment market. That graduation was designed for a Bangladesh growing at 6 to 7%. Fitch forecasts 3.7% for FY2026. The combination of LDC graduation and rating deterioration creates a double vulnerability with no coherent plan to manage both simultaneously.

A downgrade is not just a signal – it is a tax on every borrower in Bangladesh, from the government to the garment exporter to the bank issuing a Letter of Credit, eventually every individual in Bangladesh.

Conclusion

Bangladesh's rating decline is not irreversible – but it is accelerating. The economic fundamentals remain: a large remittance base, a competitive garment sector, a young labour force. What has been absent is the institutional commitment to make those fundamentals credible to external investors. The rating agencies are explicit about what recovery requires: reserves above the B-rated median, NPLs measurably reduced, tax revenue approaching 10 percent of GDP, and reform continuity through a post-election government. What is absent is not knowledge of what to do. The Fitch negative outlook of May 2026 is a final warning that the window is closing – and that the next action, if nothing changes, will not be an affirmation.

Ershad Hossain, director, Putnam Capital Advisory Pte Ltd, Singapore

This commentary is prepared for informational purposes only and does not constitute investment advice. Putnam Capital Advisory Pte Ltd is a Singapore-incorporated advisory firm active in Bangladesh's capital markets.

Bangladesh generates a significant share of the world’s raw leather each year, yet earns only a fraction of what the material is worth due to compliance failures and decades of neglected infrastructure, according to industry leaders.

They point to shortcomings at the Savar Tannery Industrial Estate that have kept the country locked into low-value exports and shut out of premium global markets.

Bangladesh accounts for around four percent of the world’s rawhide and skin resources and produces an estimated 350-400 million square feet of hides and skins annually, according to Md Mizanur Rahman, professor and director of the Institute of Leather Engineering and Technology at the University of Dhaka.

“The country could generate up to $10-$12 billion in export earnings from its existing raw materials alone if the sector were fully utilised,” he said.

“We are sitting on a huge resource, but we are not using it properly,” Rahman added.

He estimates that nearly 30 percent of the country’s leather is wasted due to poor preservation, inadequate processing capacity and the lack of proper utilisation of tannery by-products.

According to the professor, the leather sector offers one of the highest value-addition opportunities in Bangladesh’s manufacturing industry, with up to 90 percent value addition possible as most raw materials are sourced locally.

He noted that foreign buyers, particularly Chinese firms, often purchase Bangladeshi leather for as little as 40-50 cents per square foot and later sell processed leather in international markets for around $2 per square foot.

Much of the profit from Bangladesh’s leather ends up overseas, while local traders and producers receive low prices for rawhides, he added.

According to Rahman, much of the potential lies in by-products that currently go unused.

He noted that tannery waste can be processed into collagen, gelatin, fertiliser and animal feed – industries that, if formalised, would create new demand for hides and push up their market value. “Nothing from leather should go to waste. Every part has economic value.”

The timing of supply adds another layer of difficulty. Some 40-45 percent of the country’s annual rawhide comes to market within three days of Eid-ul-Azha, placing enormous strain on processing capacity and making efficient handling critical to securing better prices.

The DU professor said the lack of internationally compliant environmental infrastructure at the Savar Tannery Industrial Estate has further limited the sector’s ability to move up the value chain.

Md Tipu Sultan, chairman of the Bangladesh Finished Leather, Leather Goods and Footwear Exporters Association (BFLLFEA), said the country’s leather sector continues to receive lower prices in international markets mainly because many factories have yet to meet globally recognised compliance standards.

“If we can move quickly on these issues, it will make a significant difference,” he said.

The compliance gap is the central obstacle for the sector’s growth, he noted, stating that only a handful of factories currently hold the internationally recognised certifications required by buyers in the United States and European markets.

“One or two compliant factories are not enough. If at least 50 out of around 150 factories can achieve those standards, more compliance-focused buyers will source products from Bangladesh,” Sultan said.

“If we can move quickly on these issues, it will make a significant difference,” he added.

If progress continues, he said, many of the recurring problems facing the leather sector could be resolved before the next Eid-ul-Azha season.

At the factory level, the frustration runs deeper. Md Salauddin Ahmed, managing director of New Kajol Tannery Ltd and treasurer of the BFLLFEA, traces the industry’s current predicament to the forced relocation of tanneries from Hazaribagh to Savar – a move the government promised would come with full infrastructure support.

“The government shifted us to Savar with the promise of providing all necessary facilities. But many factories moved before essential infrastructure was ready,” he said.

Even years after the relocation, several tanneries still face shortages of gas and other utilities, while the central effluent treatment plant (CETP) has yet to operate at the expected standard, he added.

These shortcomings have prevented the sector from obtaining internationally recognised certifications, including approval from the Leather Working Group (LWG), a key requirement for supplying many global brands.

“As a result, major European buyers are not coming to Bangladesh. We are largely dependent on Chinese buyers, who currently dictate prices,” Ahmed said.

That dependence shows in the margins. Processed leather is selling at $0.50–0.55 per square foot, barely enough to cover costs. With most chemicals imported and the dollar strengthening, even cheap raw hides offer little relief.

“We import most of our chemicals, and costs have risen sharply due to the stronger dollar. Even when we purchase raw hides at relatively low prices, we struggle to make a profit,” he said.

According to Ahmed, the lack of buyer diversification has weakened the industry’s bargaining power and contributed to the decline in hide prices.

“If we can ensure proper environmental compliance and secure LWG certification, European and other international buyers will return. Then we can sell leather at much better prices and pay higher prices for raw hides as well,” he said.

The world risks facing a deeper food security crisis in 2026 and 2027 unless governments act quickly to cushion the impact of disruptions in the Strait of Hormuz, the head of the Food and Agriculture Organization (FAO) has warned.

“The decisions we make now will determine whether this remains a manageable shock, or evolves into a deeper global food security crisis in 2026 and 2027, and beyond,” FAO Director-General Qu Dongyu said at a special event on the Middle East crisis during Rome Nutrition Week in Italy from May 25 to May 28.

Describing the situation as “a systemic shock to the global agrifood system”, he said the biggest impacts may emerge months from now as farmers cut back on planting and fertiliser use because of rising production costs and supply chain constraints.

According to the FAO, severe disruptions in the Strait of Hormuz have already affected the movement of oil, liquefied natural gas, sulfur and fertilisers, driving up agricultural input costs and putting upward pressure on seed prices because of their dependence on fertilisers. As energy prices rise, agrifood systems become more expensive across all regions.

Input import-dependent countries, in particular, are facing rising bills, while vulnerable households are losing purchasing power as inflation erodes incomes, the UN agency said.

For many countries, especially in Africa and parts of Asia, these impacts are not occurring in isolation. They are compounding existing pressures from debt distress, climate shocks, conflict and constrained public finances.

Bangladesh meets most of its fertiliser requirements through imports, and Gulf nations such as Saudi Arabia and the United Arab Emirates are major suppliers.

In the fiscal year 2023-24, the country’s demand for urea was 27 lakh tonnes, of which more than 17 lakh tonnes had to be imported, according to Bangladesh Chemical Industries Corporation data.

As global prices of fuel and fertiliser -- especially urea -- have risen, Bangladesh is already feeling the strain.

The FAO chief said the actions taken now will be critical in determining whether the world can manage the shock caused by the situation in the Strait of Hormuz or face a far more serious food security crisis in the years to come.

“We must act early before humanitarian and economic costs rise,” the director-general said.

The warning comes days after the FAO cautioned that the closure of the strategic waterway could trigger a severe global food price crisis within six to 12 months if preventive measures are not taken.

FAO Chief Economist Maximo Torero earlier said the situation should not be seen as a temporary shipping problem but as the beginning of a broader agrifood shock that could spread through global food systems via higher energy costs, fertiliser shortages, lower crop yields and food inflation.

The impact is already visible. The FAO Food Price Index, which tracks monthly changes in the international prices of a basket of globally traded food commodities, rose for a third consecutive month in April, driven by high energy costs and turmoil linked to the conflict in the Middle East.

To reduce the risks, the FAO urged countries to avoid export restrictions on fertilisers and agricultural inputs, support farmers through focused assistance and ensure timely financing for food production.

The UN agency also called for greater diversification of trade routes, stronger regional integration, strategic reserves and more resilient agrifood systems to reduce dependence on critical trade chokepoints.

The FAO has warned that the situation could become even more challenging if a strong El Niño event materialises, disrupting rainfall patterns and agricultural production in several regions.

“We have a window to act, but that window is narrowing,” Qu said.

The FAO said traditional emergency packages centred exclusively on fertiliser-intensive systems may no longer be viable under current conditions.

“Countries should support adaptive strategies such as intercropping, improving nitrogen efficiency and promoting crops that are less dependent on synthetic fertilisers.”

It suggested prioritised support, saying resources should be directed towards the most vulnerable populations through well-designed social protection systems and rural support mechanisms.

As people return to the capital after the Eid holidays, the Dhaka-Mawa-Bhanga Expressway is greeting travellers not with its usual green surroundings and fresh earthy air, but with an unmistakable stench: rotting rawhides.

After sacrificing cattle on Eid day, many people have dumped hides along the highway this year as prices continued their long decline.

Images of discarded hides, hides buried in the ground, and rawhides thrown into rivers first made national headlines in 2017, when tanneries began relocating from Dhaka’s Hazaribagh area to the Savar Tannery Estate. Nearly a decade later, the same scenes continue to recur with little sign of improvement.

The relocation from Hazaribagh, on the banks of the Buriganga river, came after years of delays by tannery owners and repeated government deadlines. International buyers had increasingly raised concerns about the industry’s environmental record. At Savar, tanners were supposed to receive a fully functional central effluent treatment plant (CETP), but the facility remains underperforming almost a decade after the move.

The Eid-ul-Azha season provides around 50-60 percent of the rawhide local tanneries need for production throughout the year. Proceeds from the sale of sacrificial animal hides traditionally go to charities, madrasas and orphanages.

For years, the government has fixed prices at which small traders are meant to buy hides from the public. Yet those rates have done little to change the overall picture.

Apart from official prices largely remaining on paper and the CETP incomplete, at least half a dozen other factors help explain why rawhides continue to rot each year.

They include a surge of rawhide supply arriving within a few days of Eid-ul-Azha, weak demand, a tannery sector struggling with environmental compliance, softer global demand for leather, cash shortages across the supply chain, poor preservation practices that reduce quality, and allegations of price manipulation by a small group of tannery owners.

Md Shaheen Ahamed, chairman of the Bangladesh Tanners Association, said the leather sector has been in decline since the relocation of tanneries to Savar.

There are now more than 115 operational tanneries in Savar estate, but only five hold Leather Working Group (LWG) certification.

The LWG is a global body that sets environmental and compliance standards for the leather sector. Certification is required for access to markets in Europe, the United States and parts of developed Asia.

Most local tanneries do not have this certification, due mainly to compliance issues and the underperforming CETP.

Ahmed said the industry cannot grow while it fails to meet international environmental and quality standards.

With most tanneries lacking certification, rawhide demand remains weak this year as usual, according to small and medium traders.

Md Anwar Hossain, a rawhide trader in the Posta area of Dhaka, said demand from tanneries is currently low.

He said the prices traders can offer are dictated by what tanneries are willing to pay.

“That is just how the chain works. An official price does not change that,” Hossain said, adding that markets do not move simply because the government puts out a number.

Tipu Sultan, general secretary of the Bangladesh Hide and Skin Merchants’ Association, said rawhide collection this year is around 20 percent below expectations, and trading has not followed the government’s price announcement.

In his view, the core problem is cash.

He said businesses do not have sufficient working capital to buy at the government fixed rates during the peak collection period.

Mohammed Abu Eusuf, professor of development studies at Dhaka University, said Bangladesh’s leather sector is trapped in a cycle of low prices, weak demand and missed export potential.

He said the country stays in the loop because the compliance and governance problems have not been addressed.

Government price-setting has not been effectively enforced, he said, leaving seasonal traders to absorb losses. Unless the sector generates stronger demand and meets international environmental standards, conditions are unlikely to change.

He noted that tanneries with LWG certification are picking up solid export orders. However, much of the industry is excluded from such opportunities because the Savar Tannery Estate remains non-compliant, leaving most leather produced there tied to lower-priced markets, including China.

Md Mizanur Rahman, professor and director of the Institute of Leather Engineering and Technology at Dhaka University, traced the pressure on rawhide prices back to 2012, when international buyers began enforcing stricter environmental and compliance requirements.

Before that, Bangladeshi tanneries exported wet blue leather with fewer restrictions. As buyers in Europe and North America tightened standards, access to those markets increasingly depended on certification and environmental performance.

Rahman said the government moved tanneries from Hazaribagh to Savar to address environmental concerns, but the CETP has not delivered the level of compliance required by global buyers. As a result, many tanneries have shifted towards lower-priced markets, limiting what they can pay for rawhides.

The main driver of falling rawhide prices is weak tannery demand, not a cartel, Rahman said. “If there were strong demand, prices would naturally rise.”

Md Abdur Rahim Khan, additional secretary and head of the Export Wing at the Ministry of Commerce, said price issues in the rawhide market are mainly linked to quality, handling and coordination across the supply chain rather than administrative factors.

He said that during Eid-ul-Azha, large-scale slaughtering by unskilled butchers often leads to torn or damaged hides, reducing their value even when salt is applied.

He added that salt-treated hides generally receive government-fixed prices, but unsalted or poorly handled hides do not fetch expected rates.

Commerce Minister Khandakar Abdul Muktadir said the decline in rawhide prices in recent years is mainly due to structural problems within the industry.

He said the relocation of tanneries from Hazaribagh was the right decision, but the process was poorly managed, leaving many tanneries unable to restart operations properly.

He pointed out that the CETP at Savar, designed for a capacity of 25,000 cubic metres, is currently operating at only 14,000 to 17,000 cubic metres, around 60 percent of capacity.

According to the commerce minister, this shortfall, combined with limited processing and compliance infrastructure, has weakened overall efficiency in the sector.

Muktadir said compliance has become essential for accessing better international prices, measured through the LWG certification.

“Without this certification, factories are considered non-compliant and are excluded from reputable international buyers, including those purchasing finished leather goods and crust leather.”

He added that compared with the Hazaribagh period, there are now fewer processors and manufacturers. As a result, the sector cannot absorb the large volume of hides generated during Eid-ul-Azha, creating a supply and demand imbalance and pushing prices down.

He explained that while CETP capacity constraints prevent immediate full-scale processing, there is no major issue if leather is processed gradually over six to eight months.

The minister said an Italian company is studying the CETP to identify technical solutions for its underperformance. A report is expected in June or early July, after which corrective steps will be taken to restore full 25,000 cubic metre capacity.

Besides, individual effluent treatment plants will become mandatory for large tanneries, with government support through technical assistance and loans, said Muktadir.

The government has officially decided to opt out of the existing loan agreement signed between the International Monetary Fund (IMF) and the erstwhile Awami League administration, moving instead to negotiate a fresh $5 billion credit package under modified terms.

This major policy shift was confirmed during a high-profile virtual meeting held on 21 May, between a Bangladeshi delegation led by Finance and Planning Minister Amir Khosru Mahmud Chowdhury and an IMF team headed by its Deputy Managing Director Nigel Clarke.

According to an official press release issued today (25 May) by the Ministry of Finance, the digital session focused on Bangladesh's macroeconomic stability, the progress of ongoing IMF programmes, and future institutional cooperation.

During the discussions, the finance minister recalled the fruitful talks held during the latest IMF-World Bank Annual Meetings in Washington DC, noting that the government had since reviewed the reform packages internally.

While the minister reiterated that the current administration remains fully committed to macroeconomic stability and structural overhauls, he explicitly noted that the existing IMF programme had been formulated under a completely different economic and policy context.

He explained that subsequent domestic developments, political economy considerations, and global uncertainties have created severe implementation challenges for certain structural reforms.

The minister emphasised that the government does not want to retreat from economic reforms entirely. Instead, the administration aims to execute a realistic, well-sequenced reform agenda that aligns closely with the ground realities of the country, the release added.

In light of these points, the virtual meeting focused heavily on launching a brand-new IMF credit facility under the newly elected government. The alternative framework proposes a realistic three-year timeline incorporating attainable, priority reforms structured around practical sequencing.

IMF's Nigel Clarke welcomed Bangladesh's updated reform initiatives and its proposal for a new facility, expressing hope for a continued close and constructive engagement between the lender and the state.

Both sides reached a consensus on the necessity of a realistic, implementation-focused loan package, agreeing to fast-track the preparatory activities.

Concurrently, high-level ministry sources revealed that the decision to exit the ongoing package stems from a prolonged gridlock over stringent conditionalities.

The global lender has been putting mounting pressure on Dhaka to implement a uniform 15% VAT rate, eliminate tax exemptions, and replace universal state subsidies on electricity and fertiliser with targeted cash transfers.

Furthermore, international development partners have expressed dissatisfaction with the new government's recent amendment to the bank resolution framework under the Bank Resolution Act, 2026, viewing it as a regressive step for transparency.

The finance minister has publicly asserted that as an elected government accountable to the public, the administration cannot comply with donor demands that run counter to public interest or the BNP government's election manifesto.

High-level financial bureaucrats maintain that an active IMF programme remains vital as an essential institutional seal of approval, which is critical to unlocking an estimated $3 billion to $4 billion in parallel annual budget assistance from the World Bank and the Asian Development Bank.

An IMF mission is expected to arrive in Dhaka this July or August to finalise the specific volume, timeline, and terms of the new alternative framework.

The government has raised the retail price of octane, petrol and kerosene prices by Tk5 per litre for June though diesel price remain unchanged.

The energy division said the June price was adjusted in line with the international oil market movements.

According to a notification issued by the Energy and Mineral Resources Division on sunday, the price of octane has been set at Tk145 per litre effective from 1 June, up from Tk140 per litre in the previous month.

Petrol prices have also been increased by Tk5 per litre to Tk140, while kerosene has risen by the same amount to Tk135 per litre.

However, the price of diesel, the country's most consumed fuel, has been retained at Tk115 per litre.

The government said the revised rates were determined in line with changes in global petroleum product prices.

Under the new pricing structure, octane remains the most expensive fuel in the domestic market, costing Tk5 more than petrol and Tk30 more than diesel.

The latest increase marks the first upward adjustment oil prices in recent months.

The revised fuel prices will come into effect from Monday (1 June).

The government's proposed 0.20% source tax on retail shopkeepers -- designed to net an additional Tk6,000 crore annually -- relies on a collection mechanism that experts and corporate leaders warn will directly inflate consumer prices through compounded supply chain costs.

Rather than targeting retailers directly, the National Board of Revenue (NBR) plans to shift the entire administrative and financial burden onto wholesale distributors and dealers, creating a compliance chain that might ultimately push up the retail prices of daily necessities.

The inflationary pressure begins at the point of distribution.

Under the proposed framework, green-lit by Finance Minister Amir Khosru Mahmud Chowdhury for the upcoming national budget, a consumer goods manufacturer does not pay this tax; instead, their network of local dealers must calculate and collect a levy of Tk2 for every Tk1,000 worth of product value at the exact moment goods are supplied to a retail shop, a senior revenue official told The Business Standard.

For a distributor managing a vast network -- such as Pran-RFL Group's 22,000 dealers or Nestlé Bangladesh's supply lines -- this would require an immediate overhaul of billing systems to calculate micro-levies across hundreds of thousands of daily item deliveries, severely driving up corporate operational and logistical costs.

The mechanism further compounds because the tax applies at each independent distribution point.

If a small, informal grocer sources fast-moving consumer goods, packaged foods, and pharmaceuticals from multiple corporate distributors, the 0.20% tax would be deducted transaction-by-transaction by every single supplying dealer.

These automated deductions would be processed via a digital application linked to the government's "A-Challan" system, which would route the money from the dealer straight to the state treasury, tracking the small shopkeeper via their mobile number and sending them quarterly SMS updates.

The primary catalyst for consumer price hikes lies in the informal nature of Bangladesh's retail sector.

Business representatives point out that the vast majority of the country's estimated one crore small shopkeepers operate completely without Tax Identification Numbers (TIN) or formal accounting software.

Because these micro-traders cannot easily navigate the formal tax system to claim year-end refunds from the NBR -- which is only permissible if they register a formal TIN and file comprehensive tax returns -- they will view the Tk2 deduction per Tk1,000 as a direct, unrecoverable cut to their profit margins.

To insulate themselves from this multi-layered revenue deduction, small shopkeepers are highly likely to treat the source tax as an immediate overhead expense, say experts.

To cover the cost, retailers may adjust the final shelf prices of everyday goods upward.

Consequently, ordinary shoppers will absorb the final financial impact at the counter through pricier fast-moving consumer goods, food items, furniture, steel, cement, and essential medicines.

The revenue board plans to aggressively roll out this system in its first phase to target 50 lakh retailers, aiming to formalise an economy where currently only 15 lakh individuals effectively pay taxes out of 1.3 crore TIN holders.

Oil futures fell more than 2 percent on Friday, closing out their steepest ​weekly decline since early April as traders awaited word that the US, Israel and Iran had reached agreement on a ceasefire.

Brent crude ‌futures for July, which expired on Friday, settled at $92.05 a barrel, down $1.66, or 1.8 percent. WTI US oil futures finished at $87.36 a barrel, down $1.54 or 1.7 percent.

“Obviously, the market thinks the ceasefire will be all easy-peasy and is done and dusted,” said John Kilduff, partner with Again Capital.

The three-month war between the US and Iran has been marked ​by frequent chatter of an impending end to the conflict that would open the crucial Strait of Hormuz, used to ​transit one-fifth of the world’s oil and gas supply. Even with both sides suggesting an agreement was forthcoming, their characterisations of the deal were still somewhat different.

Iran’s Fars news agency said the agreement - which it has not decided yet to approve - ​required Iran to open the strait without restrictions but the Islamic Republic would reopen the waterway “according to its own pre-determined arrangements.”

Iran has said ​after the conflict that it would regulate traffic through the strait, charging fees to transit.

US President Donald Trump has said called again on Iran to immediately re-open the strait. The closure of the waterway has driven energy prices sharply higher worldwide. Recent sessions have been volatile, with swings by as much as $6 for both ​benchmarks on conflicting signals over a potential reopening of the strait.

“The questions are when are we going to open the strait? I wonder ​when are we going to hit the bottoms of the tanks,” Kilduff said. “I’m surprised prices aren’t higher.”

Brent has plunged by about 11 percent this week, its steepest ‌weekly decline ⁠in seven weeks. WTI has dropped by more than 9 percent for its biggest weekly loss in six. Both benchmarks hit their lowest price since mid-April.

“While oil flows through the Strait of Hormuz remain restricted and oil inventories keep falling, the market focus remains on the possibility of a deal between the US and Iran,” said UBS analyst Giovanni Staunovo.

President Trump has long treated the stock market like his personal scoreboard, but his latest financial disclosure suggests something far more active.

“The price drop could be forcing some market players to close ​their long positions.”

The US and Iran reached ​a tentative agreement on Thursday ⁠to extend a ceasefire and lift restrictions on shipping through the Strait of Hormuz, sources told Reuters.

Traffic through the maritime chokepoint remains a small fraction of levels before the conflict. Analysts at ING said a reopening ​of the waterway would offer some immediate relief to the oil market, but a recovery is ​still uncertain.

Japan, which relies ⁠heavily on oil from the Middle East, last month registered a 66 percentdop in crude oil imports compared with April last year.

Commerzbank raised its Brent forecasts to $90 a barrel by the end of September and $85 by the end of the year, based on a scenario in which the ⁠strait remains ​closed to normal shipping for another two months.

US crude, gasoline and distillate stockpiles fell ​last week, the Energy Information Administration said on Thursday, as demand from refiners and consumers rose, while exports fell by 1.16 million barrels per day to 4.4 million ​bpd.