India’s foreign exchange reserves fell to a more than one-year low of $681.4 ​billion in the week ended May 22, from $688.89 billion ‌a week earlier, the Reserve Bank of India (RBI) data showed on Friday.

The $7.5 billion decline was largely due to a $4.5 ​billion fall in the value of the ​central bank’s gold holdings, week-on-week.

The value of the RBI’s foreign currency assets also shrunk by ​nearly $3 billion to $543 billion.

Changes in foreign currency assets, expressed ​in dollar terms, include the effect of appreciation or depreciation of other currencies in the reserves.

The RBI has been selling ​dollars to defend the beleaguered rupee, which has ​declined 4 percent since the US-Iran war began, as surging energy ‌prices sparked capital outflows and clouded India’s macroeconomic outlook.

In the week to which the data pertains, the rupee slid to a record low of 96.96 per dollar ​before being shored ​up by firm RBI intervention over multiple trading sessions, including likely on Friday.

It ended the ​session at 95 per dollar, up ​0.7 percent week-on-week. Foreign exchange reserves include India’s Reserve Tranche position in the International Monetary Fund.

The banking sector on the Dhaka bourse yesterday experienced a mixed response from investors following the central bank's latest stringent directives on dividend distribution.

The Bangladesh Bank has directed that commercial banks must maintain a minimum paid-up capital of Tk2,000 crore to declare any cash dividends. The policy, aimed at strengthening the sector's capital base, is expected to significantly restrict cash payouts for most listed lenders.

Under the new framework, which is set to take effect from 31 December 2026, even banks meeting the capital threshold and other regulatory requirements will be allowed to pay a maximum of 50% of declared dividends in cash.Market data shows an immediate impact: out of 36 listed banks, 12 declined, 14 remained unchanged, and five advanced as investors assessed the implications of the new directive

Currently, the room for cash dividend distribution appears extremely limited. Only BRAC Bank meets the Tk2,000 crore paid-up capital requirement while also being in a position to offer cash returns. Although National Bank has adequate capital, its elevated non-performing loan burden continues to constrain dividend eligibility under the new rules.

A senior analyst of a brokerage firm noted that banks below the Tk2,000 crore threshold will need to raise equity—either through rights issues or repeat public offerings—if they aim to comply with the requirement by 2026.

The market reaction was reflected in price movements across key players. NCC Bank led the decliners with a 2.67% fall, followed by Dutch-Bangla Bank down 2.01% and Dhaka Bank slipping 1.77%.

Other notable losers included Eastern Bank, NRB Commercial Bank, and Southeast Bank, all declining more than 1%.

On the gainers' side, ICB Islamic Bank surged 3.85%, while One Bank and BRAC Bank rose 2.67% and 1.05% respectively.

Trading in five other listed banks remained suspended due to ongoing merger proceedings involving Sammilito Islami Bank.Commenting on the policy shift, Mashrur Arefin, managing director and CEO of City Bank, said the regulation may help prevent weaker banks from eroding capital through excessive cash payouts, but warned that a blanket approach could be counterproductive.

He argued that treating strong and weak banks alike could weaken investor confidence in well-managed institutions.Instead, Mashrur Arefin suggested using the Capital Adequacy Ratio (CAR) as a more effective benchmark, noting that banks maintaining CAR levels of 17–18%, well above the 12.5% regulatory minimum, should have greater flexibility in rewarding shareholders.Market analysts echoed similar concerns, suggesting that a more sophisticated approach would involve linking dividend approvals to a bank's broader financial health indicators rather than just a fixed capital amount.

While they acknowledged the move as a step toward long-term financial stability, they cautioned that restricting cash dividends from otherwise strong banks could reduce the sector's appeal to institutional investors.

The International Monetary Fund (IMF) has said that the Bangladesh government has requested a new IMF-supported programme as discussions continue over the country’s reform agenda and policy priorities.

In a statement, IMF Mission Chief for Bangladesh Ivo Krznar said the IMF staff are currently engaged in talks with the Bangladeshi authorities regarding the proposed programme.

“The Bangladeshi authorities have requested a new IMF-supported programme. IMF staff are in discussions with the authorities on their reform agenda and policy priorities,” he said.

Krznar said the IMF remains committed to supporting Bangladesh in maintaining macroeconomic and financial stability amid ongoing economic challenges.

“The IMF remains a committed partner to Bangladesh in its efforts to secure lasting macroeconomic and financial stability, strengthen resilience, and support strong, inclusive growth,” he added.

The development comes as Bangladesh continues efforts to stabilise its economy through fiscal, monetary and structural reforms while addressing pressure on foreign exchange reserves, inflation and the financial sector.

Bangladesh has been implementing various reform measures under its existing IMF loan programme approved in 2023.

Bangladesh is expected to play a significant role in a new US initiative aimed at boosting American cotton exports, as the Trump administration links potential tariff benefits for Bangladeshi apparel exports to the use of US cotton and textile inputs.
The United States Department of Agriculture (USDA) last week launched the Great American Cotton Plan to revitalise the cotton farm economy in the US.
“USDA and USTR secured commitments from Indonesia and Bangladesh that will support future US cotton purchases and textile production using American cotton,” the plan states.

Under the plan, Bangladesh could receive tariff reductions on apparel produced using US cotton and textile inputs, alongside other tariff-related concessions.
A Bangladesh-US reciprocal trade agreement signed on February 9 commits Washington to establishing a mechanism allowing certain Bangladeshi textile and apparel goods to enter the US at a zero reciprocal tariff rate.

However, the volume eligible for this benefit will be tied to Bangladesh’s imports of US-produced cotton and man-made fibre inputs. The US has yet to clarify the textile clause of the deal.Showkat Aziz Russell, president of Bangladesh Textile Mills Association (BTMA), said American cotton’s share of Bangladesh’s nearly $4.0 billion annual cotton import bill has been growing steadily, with local spinners, millers, and traders increasingly turning to US suppliers. He has already held talks with senior US officials on the bilateral cotton trade.
Russell flagged two key obstacles to scaling up US cotton use: the Rules of Origin (RoO) requirements and the long shipping distance between the two countries.He noted that while American cotton offers superior quality, greater clarity is needed on the tariff benefits available to Bangladeshi exporters.

During discussions with US officials, Russell sought clarification on the RoO requirements governing the use of US cotton and man-made fibre in garments eligible for tariff concessions.Based on discussions with US officials, he said the reduced tariff facility may apply only to a specified quota rather than all exports.Russell also stressed the need for warehouse facilities in Bangladesh to store and market US cotton. Imports from neighbouring countries require much shorter lead times, while shipments from the US can take more than 45 days, potentially affecting exporters’ competitiveness.Faisal Samad, a director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said the association will meet officials from the US Embassy in Dhaka next week to discuss the RoO requirements for garments made from US cotton and man-made fibre.

BGMEA leaders had previously sought clarification on the issue during meetings with visiting US Trade Representative (USTR) officials, but were told that work on the framework was still underway.

The US currently accounts for nearly 9 percent of Bangladesh’s annual cotton imports, which are valued at nearly $4.0 billion.US goods trade with Bangladesh totalled an estimated $11.8 billion in 2025.

American imports from Bangladesh reached $9.5 billion -- up 13.3 percent from 2024 -- while US exports to Bangladesh were $2.3 billion.The resulting trade deficit stood at $7.1 billion, a 17.9 percent increase from the previous year. Garments account for 86 percent of Bangladesh’s exports to the US.

Sri Lanka raised fuel prices by up to six percent on Sunday, in line with IMF plans to recover energy costs and phase out subsidies to stabilise the economy.

Petrol was raised to 434 rupees ($1.33), up from 410, while diesel increased to 407 rupees a litre from 392, the state-run Ceylon Petroleum Corporation said.

The price hike came days after the International Monetary Fund released a $695 million instalment of a $2.9 billion bailout loan, agreed in early 2023 to stabilise the cash-strapped South Asian nation.

The IMF wants Sri Lanka to ensure cost recovery for both fuel and electricity tariffs, which have been subsidised by the government since the start of the conflict in the Middle East in February.

President Anura Kumara Dissanayake, in a letter to the IMF made public by the Washington-based international lender, said fuel subsidies will be phased out by September.

Since the United States and Israel began attacking Iran on February 28, triggering a global energy crisis, Sri Lanka has raised petrol and diesel prices by about 48 percent. Electricity has increased by a third.

The Strait of Hormuz, a key waterway through which about 20 percent of global oil exports pass in peacetime, has been effectively closed by Iran.

Sri Lanka imports all its oil and also buys coal for electricity generation.

Colombo has warned that the fighting in the Middle East, and any prolonged conflict, could seriously undermine its efforts to emerge from the economic meltdown of 2022.

Sri Lanka defaulted on its $46 billion foreign debt in 2022 after running out of foreign exchange. Since then, Colombo has been drawing down the IMF bailout loan to stabilise the country.

Trading and official activities on the country’s two stock exchanges—the Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE)—will resume tomorrow (Monday) after a week-long Eid-ul-Azha holiday.

The bourses remained closed from May 25 to May 31, including weekly holidays, on the occasion of Eid-ul-Azha, one of the largest religious festivals for Muslims.

Trading hours will return to the regular schedule, beginning at 10:00 am and continuing until 2:30 pm, including a 10-minute post-closing session, according to DSE officials.

Before the Eid break, the market ended slightly higher on May 24 as bargain hunters picked up undervalued blue-chip stocks, although overall investor sentiment remained cautious.

The benchmark DSEX index gained 7.5 points, or 0.14 per cent, to close at 5,336.

The DSE30 Index, comprising blue-chip stocks, edged up 0.54 points to 2,030, while the DSE Shariah Index (DSES) advanced 5 points to 1,082.

The Chittagong Stock Exchange also closed in positive territory on the final trading day before the holiday. The CSE All Share Price Index (CASPI) rose 71 points to 14,909, while the Selective Categories Index (CSCX) gained 38 points to finish at 9,169.

Bangladesh Finance made a significant turnaround by securing a profit of Tk 225 million in 2025 from one of the highest losses - Tk 7.83 billion - in the country's non-bank financial institution (NBFI) sector a year earlier.

The achievement was mainly driven by strong recoveries from stressed loans, said Md. Kyser Hamid, managing director and CEO of the company.

The company recovered around Tk 1.77 billion in 2025 from stressed loans, he said, adding that loan rescheduling and lower provisions also contributed to the latest financial performance.

A year ago, Bangladesh Finance set aside money to maintain full provisions against defaulted loans and even stressed loans.

"Usually, provision is kept only for non-performing loans, but we allocated additional interest suspense and provisions against stressed loans in the past two years."

If any client fails to pay loan instalments for more than three consecutive months, their account gets suspended and the pending interest is not shown as income.

Bangladesh Finance kept provisions against investments of Tk 1.66 billion in 2023 and Tk 8.36 billion in 2024.

The CEO said the management had set aside more than what was necessary as interest suspense and kept higher provisions than required in 2023 and 2024, considering that the company might have to bear further financial shocks in the future.

These measures were taken to mitigate unforeseen credit risks, address potential losses early, prevent further deterioration and defaults, ensure adequate reserves, and safeguard overall financial health, he said.

With such precautionary measures already in place, aggressive efforts in 2025 to recover and reschedule defaulted loans enabled the company to reverse a substantial amount of provisions previously maintained.

Echoing Mr Hamid, Md. Sajjadur Rahman Bhuiyan, group chief financial officer, explained that after facing heavy provisioning in FY24, the company strategically focused on recovery in FY25.

"By deploying management to accelerate settlements and rescheduling major corporate loans, we successfully released substantial provisions, ultimately driving the company back to profitability."

Bangladesh Finance booked a provision write-back of Tk 2.13 billion, a dramatic reversal from the Tk 7.85 billion provision recorded in 2024, according to its auditor's opinion published on Sunday.Regional business directory

"The write-back significantly boosted the company's bottom line and marked a major improvement in asset quality management," said the auditor.

Mr Hamid said continued recovery initiatives, disciplined risk management and supportive regulatory policies were expected to further improve the company's financial health and support sustainable long-term growth.

However, the auditor warned that Bangladesh Finance still faces serious financial vulnerabilities.

It pointed out that the company continued to operate with negative consolidated equity of Tk 5.47 billion as of December 2025.

The auditor noted that the financial statements had nevertheless been prepared on a going concern basis after the management provided justification that the company would be able to continue operations in the foreseeable future.

Bangladesh Finance said its management conducted a detailed assessment in line with Bangladesh Bank guidelines and International Accounting Standard (IAS) 1 to evaluate whether the company could continue as a going concern.

The assessment considered financial performance, liquidity conditions, asset quality and capital structure.

According to the company, its board believes the institution has adequate resources and recovery plans in place to continue operations despite the negative capital position.Wealth management advice

The company also highlighted a sharp improvement in its provision coverage ratio, which rose to 496.96 per cent at the end of 2025, indicating a strong cushion against potential future credit losses.

Capital adequacy indicators also improved during the year, although they remained below regulatory requirements.

The standalone capital adequacy ratio improved to negative 31.84 per cent from negative 33.81 per cent a year earlier, while the consolidated capital adequacy ratio stood at negative 24.29 per cent.

Meanwhile, net asset value per share also showed signs of recovery. Consolidated NAV per share improved to negative Tk 28.85 in 2025 from negative Tk 30.05 in the previous year.

To restore financial stability, the company has prepared a long-term capital management plan along with a seven-year financial projection and a liquidity management strategy aimed at rebuilding capital strength and improving liquidity conditions, said the auditor.

The management acknowledged that confidence in the financial sector remains weak but said ongoing restructuring initiatives and expected regulatory support would help stabilise the company further.

The auditor also confirmed that subsidiaries - Bangladesh Finance Securities and Bangladesh Finance Capital - received unmodified audit opinions for 2025.

Recovery continues in Q1, 2026

Bangladesh Finance sustained its recovery momentum in the first quarter of 2026, posting a 120 per cent year-on-year increase in consolidated profit to Tk 20.71 million.

The company said the performance in the January-March period resulted from capital gains from investments in securities and further reversal of provisions maintained against loans, leases and investments.

It has sustained its recovery at a time when the sector overall has been under pressure from rising non-performing loans, liquidity stress and weakening depositor confidence over the past several years.

Predictable policies, improving liquidity flows and rebuilding investor confidence dominates the upcoming national budget as Bangladesh navigates a challenging economic landscape marked by inflation, sluggish investment and financial-sector vulnerabilities.

Talking to The Financial Express, days before the new government's maiden budget lands in parliament, Dr Rashed Al Titumir also explains that the government's economic strategy is built around a five-year framework of "recovery, restoration and reconstruction for acceleration".

"The budget size remains relatively small compared to the size of our economy and the financing needs in health and education," he says, stressing the need to increase public spending to reduce high out-of-pocket healthcare expenditures and build a skilled workforce through the promotion of technical education.

Asked about amendments to the Bank Resolution Act and efforts to address the banking-sector crisis, Dr Titumir says the government has adopted a diversified approach and is seeking strategic international partners to strengthen financial institutions.

"Bangladesh must better integrate with international banking standards and explore opportunities in the global Islamic finance market to benefit depositors, trade financiers and the broader economy."Digital news subscription

The government is also focusing on improving liquidity flows within the financial system.

"We must ensure the flow of liquidity. This requires proper incentives to increase the velocity of money. Banks holding excess liquidity should play a greater role in supporting productive investment," he says.

While acknowledging the current stagflationary pressures, the professor of development economics emphasizes that the government is pursuing economic correction rather than financial repression.

"We do not want financial repression. Our objective is to correct distortions and ensure that investors have access to funds without facing excessive financing costs."

Dr Titumir stresses coordination between fiscal and monetary policies while maintaining the operational independence of the central bank, free from political intervention.

On relations with the IMF, he says Bangladesh would continue discussions with the Fund to ensure that future policy commitments reflect the country's economic realities.

Describing the previous Hasina administration as "debtholic," he argues that the government had accepted several IMF conditions under the bailout programme that may not fully align with Bangladesh's current economic context.Bangladesh investment guides

"We will continue negotiations based on our own policy priorities and development needs."

Emphasizing the urgency of restoring international confidence as a prime objective, he notes that Bangladesh's debt-risk rating by the IMF from low to medium was a "hemorrhage" for the country's ability to access concessional financing.

"Lower international ratings affect investment, financing costs and market access. Consistent policies, macroeconomic stability and stronger institutions are essential for rebuilding credibility."

The government is also seeking to position Bangladesh as a regional logistics and connectivity hub by attracting internationally reputed port and logistics operators.

"We want to build Bangladesh into a logistics hub and create a benchmark that attracts internationally reputed operators through an inclusive and competitive process."

He says the government has already initiated investment discussions with stakeholders from Singapore, Saudi Arabia, the UAE, Denmark and Japan, particularly regarding opportunities around the Chattogram Economic Corridor.

Projects may be implemented through public-private partnerships, although other investment models are also being explored to ensure trade and economic benefits for Bangladesh.Development strategy reports

Dr Titumir highlights the importance of multimodal transport systems and stronger regional connectivity with Nepal, Bhutan, China, Myanmar and ASEAN economies.

Regarding state-owned enterprises, he says public resources should be concentrated on essential public services such as education, healthcare and social protection.

The government is considering leasing closed factories under BJMC and BTMC through a transparent and competitive process, he adds.

The adviser strikes a note of optimism about restoring confidence in Bangladesh's capital market, noting that BNP-led governments had not experienced major stock- market scams.

"Investors have repeatedly suffered from market manipulation and weak enforcement. Restoring trust requires stronger governance and regulatory oversight," he says.

On evolving trade issues with the United States, Dr Titumir says Bangladesh remains committed to respecting international agreements while continuing consultations to protect its national interests.

"The US situation is evolving too as tariff issues go to Supreme Court."Currency exchange tools

There are issues that require consultation and dialogue.

Despite current challenges, Dr Titumir remains cautiously optimistic about Bangladesh's prospects.

"We are pursuing a strategy of recovery, restoration and reconstruction. With policy consistency, institutional reforms and renewed confidence, Bangladesh can unlock its growth potential and strengthen its position in the regional economy," he says.

Bangladesh's import policy in the making appears at odds with emerging trade requirements in the European Union and the United States as it proposes allowing apparel exporters to qualify for incentives with a minimum 30-percent local value addition.

Industry leaders say the EU's proposed Generalised Scheme of Preferences Plus (GSP+) framework will require "double transformation" for garment exports, which they estimate would translate into around 40-percent local value addition.Local trade insights

Similarly, exporters say recent US trade rules require at least 40-percent local value addition, failing which shipments could be treated as transshipments.

To qualify for the EU's proposed GSP+ framework, Bangladeshi garment exporters will need to comply with the double-transformation requirement, which industry leaders estimate would require around 40-percent local value addition - a level already achieved by many knitwear manufacturers, though.

However, woven-garment manufacturers, which typically have lower domestic value addition, may find it more difficult to retain duty-free access to the EU market following Bangladesh's graduation from least-developed-country (LDC) status in November 2026, according to trade economists and industry insiders.

The government, however, has also sought a deferral of the country's graduation process to leave the world's poor-country club.

"We proposed lowering the threshold to 20 per cent," says BKMEA President Mohammad Hatem, in reference to the draft Import Policy Order 2026-2029.

He argues that high-value products, particularly those made from man-made fibres (MMF), would struggle to meet the proposed 30-percent threshold, as raw material costs for such products are significantly higher than those of cotton-based items.Capital market software

"If the government does not revise the provision, it will discourage local industrialisation and efforts to increase domestic value addition in export-oriented apparel production," he predicts.

Hatem also raises concern over a proposed restriction on knit fabrics import in the draft policy. Referring to Commerce Ministry Additional Secretary Abdur Rahim Khan, he says the ministry had indicated that the issue would be addressed in the final version of the policy.

A recent Ministry of Commerce document states that following Bangladesh's graduation from the LDC status, exports to key destinations such as the EU, the United Kingdom, the United States, Japan and other markets will no longer enjoy duty-free access.

To maintain export competitiveness and safeguard market share, the ministry, in collaboration with stakeholders, has already initiated negotiations on free-trade agreements (FTAs), comprehensive economic partnership agreements (CEPAs), bilateral and multilateral trade agreements, and other preferential trade arrangements with major trading partners.

According to the document, maintaining duty-free market access after graduation will require major export-oriented sectors to raise local value addition to above 40-50 per cent. In some cases, compliance with product-specific rules (PSRs), including double-transformation requirements, will be necessary.

The policy on the anvil further notes eligibility for GSP+ preferences may require a minimum value addition of 40 per cent. Exports to countries such as Australia and Canada, which currently enjoy duty-free access, are already required to meet a value-addition threshold of at least 50 per cent.

"In nearly all recent trade negotiations, the requirement for double transformation as a condition for granting duty-free access to Bangladeshi exports has been strongly emphasised," the document reads.Economic trend data

It also highlights that Bangladesh has offered commitments in ongoing negotiations under which garments produced using yarn and fabrics originating from importing countries would be eligible for preferential tariff treatment in proportion to the share of such inputs used in production.

"Accordingly, if Bangladesh's garment industry, particularly knitwear manufacturers, becomes increasingly dependent on imported yarn, securing duty-free market access in the future may become significantly more challenging," the document forewarns.

Seeking anonymity, an apparel-sector leader says the government may consider cash support only for new product categories with 20-percent value addition, which could help diversify export offerings.

"The new items could include sportswear, wedding wear and tech wear, which may require imported fabrics and accessories. Once we start producing such products, the local industry will gradually develop around them," the exporter says.

BKMEA Executive President Fazlee Shamim Ehsan mentions that a recent US court decision put the implementation of the reciprocal-tariff policy on hold, meaning it is currently not applicable to Bangladesh or other countries.Local trade insights

According to the draft Import Policy Order, RMG exporters will be required to maintain a 30-percent value-addition threshold for children's garments, up from the current 15 per cent.

Knitwear and woven garment exports will also be required to attain 30-percent value addition, compared to the existing requirement of 20 per cent.

Exporters of underwear and other specialised garments made from synthetic fibres may face a minimum 40-percent value-addition requirement. Footwear exports, including both leather and non-leather products, may be subject to 30-percent threshold, while ship exports could face 40 per cent, and wooden furniture exporters 50 per cent.

Under the proposed policy, exporters who fail to meet the prescribed value-addition requirements will not be eligible for cash incentives or duty benefits on imported raw materials.

The Ministry of Commerce held a stakeholder consultation on the draft policy on May 22, bringing together industry representatives ahead of its finalisation.

An incremental assistance package announced by the Asian Development Bank (ADB) would fetch Bangladesh US$5.0 billion over next five years and increase the subsequent annual aid by 20 per cent.

The announcement came Monday when ADB President Masato Kanda met Prime Minister Tarique Rahman in Dhaka discussing Bangladesh's development priorities.

Such a bounteous financing commitment comes while the release of remaining sums from an as-much IMF lending package for the country stalls under conditions the new government feels unpalatable in the current context. City & Local Guides

The Integrated Growth Network Development Initiative presented by Mr. Kanda during his visit is designed to expand investment, create jobs, improve connectivity, and promote more balanced regional growth.

"The five-year package is expected to amount to about $1.0 billion a year and will be strategically integrated into ADB's enhanced annual sovereign commitment envelope for Bangladesh," the ADB Dhaka office says in a statement.

And the Manila-based development financier plans to increase its annual sovereign commitments for Bangladesh by 20 per cent from about $2.0 billion to about $2.4 billion annually over the medium term.

The higher annual envelope is hoped to support Bangladesh's development priorities, including investment-led growth, job creation, economic diversification, stronger governance, and a smooth transition from least-developed country (LDC) status.

The ADB president says: "Bangladesh is entering a critical new phase. ADB will help the country protect hard-won stability, unlock new sources of growth, and build a more diversified and resilient economy that delivers better jobs and wider opportunity."Wealth management advice

Marking Masato Kanda's visit, the ADB signed about $1.4 billion in loans as part of the 2026 annual-commitment programme.

The Asian Bank support is scaled up by $250 million to help in financing gaps linked to the economic impact of the Middle East conflict, which is adding pressure to Bangladesh's economy by way of driving up the cost of fuels, liquefied natural gas, fertilisers, and shipping.

These strains come as inflation remains high and the banking sector remains under stress.

The ADB will work with the government and development partners to track the situation and bring in additional financing and private investment, and help Bangladesh build a more resilient economy through more diverse energy sources and exports, and stronger institutions.

Also will it provide $2.0 million in technical assistance to support the preparation and implementation of Bangladesh's medium-term development framework and align ADB's forthcoming country-partnership strategy with government priorities.

Mr. Kanda also met Finance and Planning Minister Amir Khosru Mahmud Chowdhury, with discussions focused on Bangladesh's reform agenda, macroeconomic pressures, external- financing needs, and ADB's support for government's growth and resilience priorities.Local trade insights

The ADB chief met with key private-sector leaders discussing the opportunities and constraints shaping investment.

Also, the Bank is working with the government to mobilise additional private capital by deepening capital markets, preparing bankable projects, and attracting cofinancing and private investment.

The ADB is a leading multilateral development bank supporting sustainable, inclusive, and resilient growth across Asia and the Pacific.

Working with its members and partners to solve complex challenges together, the Asian Bank harnesses innovative financial tools and strategic partnerships to transform lives, build quality infrastructure, and safeguard the planet.

India has scrapped customs duties on cotton imports for five months, the government said on Saturday, as it seeks to boost supplies of contamination-free natural fibre for textile exporters amid strong overseas demand for yarn.

The easing of import restrictions by the world’s second-largest cotton producer is likely to lend support to global prices but is unlikely to trigger a surge in purchases as the rupee’s depreciation has made imported cotton slightly more expensive than domestic supplies.The current 11 percent import duty will be suspended until October 30, the government said in a statement.

India’s textile sector, like others, is under pressure from rising input costs as supply chains are disrupted by the Iran war.The measure is expected to support domestic producers, particularly small and medium-sized firms, by improving cotton availability, the government said.

However, industry officials said Indian cotton is currently the cheapest in the world and that ample supplies from this year’s crop are available domestically, which is likely to limit imports.

“At current price levels, imports are not economically attractive,” Vinay Kotak, president of the Cotton Association of India, told Reuters.“Export-oriented mills need contamination-free cotton and, to meet that requirement, around 600,000 bales could be imported during the duty-free import window.”

The cotton is likely to be sourced from Australia, Brazil, the United States and Africa, which have surpluses, industry officials said.India last year allowed duty-free cotton imports from mid-August through the end of December, helping drive imports to a record 4.7 million bales in the current marketing year, which began last October 1.Cotton is largely grown in rain-fed areas in India, and any disruption to monsoon rains from an El Nino weather pattern could reduce output from the new crop being planted from June and boost import demand, said a New-Delhi-based dealer with a global trade house. “In that scenario, the government could extend the duty-free import window beyond October, as it did last year,” he said.

Canada’s economy posted a surprise contraction in the first quarter versus the year before, making it two straight ‌quarters of annualised decline - which some economists call a technical recession - as the country struggles with US tariff uncertainty.

Gross domestic product declined at an annualised rate of 0.1 percent in the first quarter, Statistics Canada said on Friday, compared with a downwardly revised contraction of 1 percent in the fourth quarter of last year.

Analysts ​polled by Reuters and the Bank of Canada had predicted first-quarter growth of a robust 1.5 percent. On a quarterly basis, ​first-quarter GDP was unchanged against a decline in the fourth quarter of last year.

Canada’s economy has largely withstood trade uncertainty and tariff impacts for more than a year, but the knock-on effects of tariffs have sapped investments, hiring and ​expenditure, and driven up prices.

The upcoming review of the North American free trade deal and the crude price ​shock due to the Middle East war have added more layers of uncertainty.

The last two times Canada was in a technical recession were during the start of the pandemic in 2020 and during the oil shock in the beginning of 2015.

At that time there were two consecutive quarters of decline, both on ​an annualized basis and quarterly basis, StatsCan said. Economists were divided on whether Canada is in a recession or not.

“The trade-induced contraction in ​GDP last quarter meant the economy tipped into a technical recession at the start of the year,” said a note from Capital Economics, though rising ‌oil and gas activity mean the economy likely rebounded in April.

Randall Bartlett, deputy chief economist with Desjardins Group, said the group is not prepared to call the data a recession as the weakness in the Canadian economy was not widespread.

BANK OF CANADA SEES GROWTH OF 1.2% THIS YEAR

The BoC has said growth this year is likely to be at 1.2 percent, down from 1.7 percent last year. It will update its projections in ​July.

The first-quarter GDP was negatively ​impacted by a high level ⁠of imports into the country, but that was largely offset by a high accumulation of inventories, the statistics agency said.

Household spending grew, especially in financial services and food, but this was again mostly canceled ​out by a decline in business and government investments.

Business capital investment fell 0.7 percent, its fifth consecutive ​quarterly decline, StatsCan said.

On ⁠a monthly basis, GDP in March declined by 0.1 percent, against an estimate of flat growth.

An advance estimate from StatsCan showed that growth in April was likely to be 0.4 percent, highlighting a strong start to the second quarter.

Money markets are pricing in a rate hike of 25 basis ⁠points in ​December, even as most economists have called for no change in interest rates all ​through the year.

The Canadian dollar weakened after the GDP data and was trading down 0.28 percent to C$1.3819 to the US dollar, or 72.36 US cents. Yields on the ​two-year government bonds slipped further and were down 7.7 basis points at 2.430 percent.

Inflation in the euro zone’s four largest economies hovered ​above the European Central Bank’s 2 percent target for a third straight month in May, preliminary data showed ‌on Friday, as a rise in fuel costs triggered by the Iran war began to feed through to other prices.

Readings from France, Italy, Spain and Germany are likely to cement the case for a rate hike from the European Central Bank next month and stoke some worries about whether high inflation ​is beginning to take root in the euro zone.

Both Spain and Italy reported strong increases in the ​price of transport and entertainment activities, a likely sign of the knock-on effect of higher fuel costs. Measures of underlying inflation rose both in Italy, to 1.8 percent from 1.6 percent, and in Spain, to 2.9 percent ​from 2.8 percent. France saw a 4.1 percent jump in the cost of fresh food and a slight increase in services inflation.

“We ​are not at the peak yet,” said Nadia Gharbi, a senior economist at Pictet Wealth Management, who expects euro zone inflation to rise until August. “A lot will depend on the situation in the Middle East and we have as a baseline that the situation will ​normalise by the end of June.”

Hopes of a deal to end the war between the United States and Iran ​have pushed oil prices down substantially since the end of April, with a barrel of Brent crude selling for $92 versus $118 back then. Still, ‌prices remain well above the around $70 a barrel level seen just before the war.

A RELATIVELY MILD INFLATION WAVE

Headline inflation was more of a mixed bag. National gauges of price growth rose in France, to 2.8 percent from 2.5 percent, and in Italy, to 3.2 percent from 2.7 percent, but remained stable in Spain at 3.2 percent and fell to 2.6 percent from 2.9 percent in Germany, which implemented ​a fuel discount for May ​and June as part of a package to cushion the impact of higher petrol prices.

“Today’s inflation numbers should not be read as a sign that the inflation wave is already over before it actually started ​but rather as a confirmation that this is a relatively mild inflation wave,” said ​ING’s economist Carsten Brzeski.

All three indexes posted both weekly and monthly gains, with the S&P 500 recording its ninth straight weekly gain, it’s longest streak since December of 2023. Euro zone-wide data due on Tuesday is expected to put headline inflation at 3.3 percent in May, with a core gauge excluding energy, food, alcohol and tobacco at 2.4 percent.

“This information so far hints at a further rise in headline inflation, and some increase in ​core inflation,” JPMorgan economist Raphael Brun-Aguerre said in a note.

France continued ​to see deflation in manufacturing prices, strengthening the view that the current inflation shock should be smaller than the one that followed the Covid pandemic ​and Russia’s invasion of Ukraine in 2022, according to Bersingeco economist Sylvain Bersinger.

Just four years after entering mobile phone manufacturing, RFL is now expanding into local production of telecom service-related equipment, including routers and vehicle tracking devices (VTDs), under its Proton brand.

PRAN-RFL Group, one of the country’s largest conglomerates, has received preliminary approval from the Bangladesh Telecommunication Regulatory Commission (BTRC) to locally manufacture and assemble the products under its electronics arm, RFL Electronics Limited.

According to official documents reviewed by The Daily Star, the regulator has also decided to conduct an on-site inspection of the company’s manufacturing facilities before issuing a temporary enlistment certificate for telecommunication service-related equipment.

On May 3, RFL Electronics presented its manufacturing roadmap to BTRC officials, who found the proposal “primarily satisfactory,” according to meeting documents.

RFL started manufacturing Proton mobile phones in late 2022.

Industry observers say the initiative highlights a transformation within Bangladesh’s industrial sector, where local companies traditionally focused on plastic goods and household appliances are increasingly investing in technology hardware and smart devices.

The telecom equipment segment is seen as particularly promising given rising domestic demand for internet connectivity, digital services and smart monitoring solutions.

Vehicle tracking devices are witnessing increasing demand amid the rapid expansion of logistics, ride-sharing, e-commerce delivery and fleet management services in Bangladesh.

Businesses are increasingly using tracking systems to improve operational efficiency and security.

Demand for routers is also growing steadily as broadband internet penetration expands across urban and semi-urban areas. Industry estimates suggest Bangladesh now has around 1.4 crore Wi-Fi users, creating a sizable market for networking devices.

Market analysts say Bangladesh’s router market is expected to continue growing through the end of the decade, driven by remote work, digitalisation and rising household internet usage.

The market currently includes more than 200 models across different price ranges and consumer segments.

International brands such as TP-Link, Xiaomi and Huawei dominate much of the consumer market, while brands like Tenda remain popular because of affordability and strong signal coverage.

Bangladesh’s public debt rose to around 41 percent of gross domestic product (GDP) in fiscal year 2024-25, with rising domestic borrowing and weak revenue mobilisation increasing fiscal pressure ahead of the country’s graduation from least developed country (LDC) status in 2026, the Asian Development Bank (ADB) said.

In a report titled Bangladesh at a Crossroads of Reforms, released earlier this month, the Manila-based lender said Bangladesh faces a moderate risk of both external and overall debt distress, with limited capacity to absorb shocks in the near term.
The ADB said the risks stem from structural weaknesses rather than a sharp deterioration in headline debt indicators.
Bangladesh’s tax-to-GDP ratio remains among the lowest among lower-middle-income economies, while persistent weaknesses in fiscal governance, public expenditure management and debt administration continue to undermine economic stability, the report said.
The lender warned that Bangladesh’s graduation from LDC status in November 2026 would gradually reduce access to concessional financing and trade support measures, increasing the need for stronger domestic revenue mobilisation and improved fiscal governance.

Domestic debt accounted for 55.6 percent of the country’s public and publicly guaranteed debt stock in FY25, increasing rollover and debt-servicing pressures amid weak revenue collection and a bank-dominated investor base. External debt made up the remaining 44.4 percent.

The report said external debt remained largely concessional and below solvency thresholds, although risks have increased following downward revisions to export data for FY2023 and FY2024.

Rising domestic borrowing is also increasing debt service-to-revenue pressures and strengthening sovereign-bank linkages, amplifying crowding-out risks for private sector credit and contingent liabilities, the ADB said.

Stress tests showed that disaster-related shocks pose the biggest long-term threat to Bangladesh’s debt sustainability.
Bangladesh’s tax-to-GDP ratio stood at 7.5 percent, constrained by weak compliance systems, fragmented administration and heavy reliance on manual processes.

Although reforms such as the Income Tax Act 2023 and expanded digital tax services have been introduced, the ADB said tax administration still relies heavily on manual systems and fragmented databases. Revenue collection often falls more than 15 percent short of targets because of unrealistic projections and institutional weaknesses.

The report also highlighted weaknesses in debt management systems and warned that state-owned enterprises are creating additional fiscal risks as liabilities and government guarantees continue to rise.

The lender said these vulnerabilities are increasing Bangladesh’s overall fiscal risk exposure at a critical stage of its economic transition.

The government yesterday (23 May) approved separate proposals for procuring three cargoes of liquefied natural gas (LNG) from the spot market and importing 70,000 metric tonnes of fertiliser to ensure uninterrupted energy and fertiliser supply across the country.

The approvals came at the 23rd meeting of the Cabinet Committee on Government Purchase for 2026 held at the Cabinet Division conference room at the Secretariat.

Finance Minister Amir Khosru Mahmud Chowdhury presided over the meeting.

The committee recommended approving a proposal from the Energy and Mineral Resources Division to purchase three LNG cargoes from the international spot market through international quotation collection under Rule 105(3) (Ka) of the Public Procurement Rules, 2025.

The LNG cargoes are scheduled to arrive on 15–16 June, 21–22 June and 25–26 June this year, corresponding to the 23rd, 24th and 25th consignments.

The total procurement cost, including Advance Income Tax (AIT), has been estimated at Tk2,330.82 crore.

Under the proposal, two cargoes will be procured from Posco International Corporation of South Korea and one cargo from TotalEnergies Gas & Power Ltd of the United Kingdom.

The committee also recommended approving a proposal from the Ministry of Industries to import 30,000 metric tonnes of bagged granular urea fertiliser under the 15th lot from Karnaphuli Fertiliser Company Limited during the 2025–26 fiscal year.

The total procurement cost for the urea fertiliser has been fixed at Tk254.52 crore, while the price per metric tonne was set at $688.375, including a Free on Board (FOB) price of $683.375 and a bagging charge of $5.

Officials said the fertiliser would be procured from KAFCO to maintain a stable fertiliser supply for the country's agricultural sector.

Meanwhile, the committee recommended another proposal from the Ministry of Agriculture to import 40,000 metric tonnes of DAP fertiliser under the 12th (optional fourth) lot from OCP Nutricrops of Morocco under a state-level agreement with Bangladesh Agricultural Development Corporation.

The proposed procurement cost for the DAP fertiliser import has been estimated at Tk434.66 crore, with the price set at $881.67 per metric tonne.

The role of the Bangladesh Securities and Exchange Commission (BSEC) and stock exchanges is set to become more prominent in mergers, acquisitions, demergers and other corporate restructuring activities involving listed companies under a new draft regulation.

The securities regulator today (23 May) published the draft "Bangladesh Securities and Exchange Commission (Corporate Restructuring) Rules, 2026" and invited opinions, suggestions and objections within two weeks of publication.

According to the draft rules, listed companies will have to submit merger or demerger schemes to the BSEC and stock exchanges for review before seeking court approval.

BSEC said listed companies frequently engage in mergers, demergers, amalgamations, acquisitions and other restructuring activities, which require proper valuation, adequate disclosures and greater market transparency, particularly to protect minority shareholders.

Speaking to The Business Standard, BSEC Director and Spokesperson Abul Kalam said companies would first need board approval for any restructuring proposal before approaching the court.

"The approved draft scheme must then be submitted to the BSEC and the stock exchanges. After incorporating the observations of the regulator and exchanges, companies will have to obtain shareholders' approval before going to court," he said.

He added that the proposed rules would not curtail the authority of companies or courts, as the BSEC and stock exchanges would act as observers in the process.

According to the draft, any listed company undertaking restructuring with another listed or non-listed entity must submit the draft scheme to the commission and relevant stock exchange within 30 days of board approval, along with prescribed documents.

Boards of directors will also be required to record opinions on the rationale for the restructuring, fairness of valuation, adequacy of disclosures, impact on minority shareholders, potential share dilution, related-party transactions and market integrity concerns.

The rules also require disclosure of independent directors' opinions and explanations regarding compliance with securities laws, regulations and listing conditions.

After receiving observations from the regulator and stock exchanges, companies will have to place the revised scheme before shareholders and creditors for approval through a special resolution. Companies must also disclose price-sensitive information and announce a record date.

The restructuring process will remain subject to court approval, although the BSEC may become a party to court proceedings if necessary.

The draft rules also prescribe extensive disclosure requirements for restructuring schemes, including transaction consideration in cash, shares, assets or securities; share swap ratios; transfer of liabilities; tax obligations; contingent liabilities; employee status; provident fund and gratuity arrangements; and measures to protect minority shareholders.

Companies must additionally disclose whether the restructuring could lead to a backdoor listing or reverse takeover, along with the benefits accruing to sponsors and controlling shareholders, the extent of dilution for public shareholders and the valuation methodologies used.

One of the most significant provisions relates to valuation requirements. Companies undertaking restructuring must appoint independent valuers from among audit firms enlisted with the commission or registered merchant bankers.

However, those firms or merchant bankers cannot act as statutory auditors or corporate advisers to the companies involved in the restructuring.

The valuer must certify that the valuation, exchange ratio or swap ratio is fair and reasonable and does not prejudice any class of shareholders or creditors. The valuation also cannot be determined solely on the basis of market price.

The draft rules make it mandatory to apply at least two absolute valuation methods and two relative valuation methods.

For absolute valuation, the rules mention methods such as Discounted Cash Flow (DCF), Dividend Discount Model (DDM), Residual Income Model (RIM) and Asset-Based Model.

For relative valuation, the draft includes Price-to-Earnings (P/E), Price-to-Book (P/B), Price-to-Sales (P/S) and EV/EBITDA-based methods.

The draft further states that the discount rate used in valuation cannot be lower than the yield on 10-year treasury bonds. Revenue growth assumptions also cannot exceed the company's average growth rate over the previous five years unless justified by capacity expansion under a Balancing, Modernisation, Rehabilitation and Expansion (BMRE) project.

Companies will also have to obtain no-objection certificates from banks, financial institutions, bondholders, secured creditors and holders of Islamic Shariah-based securities.

The draft rules include a detailed checklist of documents, including audited financial statements for the past five years, asset revaluation reports, physical inspection reports, land documents, loan papers, tax records, VAT returns, related-party transaction details, inventory statements, bank statements and due diligence certificates.

The rules also require approval of restructuring schemes by at least 75% of general shareholders, excluding sponsors, directors and shareholders holding 5% or more shares.

Bangladesh Bank has issued new directives for commercial banks regarding the declaration and distribution of cash dividends to shareholders, apparently to enhance the financial capacity of banks and reinforce the overall capital base of the banking sector.

Banks with a paid-up capital of less than Tk2,000 crore will not be allowed to declare any cash dividends, according to a circular issued by the central bank today (23 May).

Also, the banks that meet all statutory requirements and qualify to distribute profits can pay a maximum of 50% of their total declared dividends in cash.

The directives will come into effect from 31 December 2026.

The central bank clarified that while these new measures introduce stricter caps, all other existing instructions from previous relevant circulars, including the DOS circular issued on 13 March 2025, will remain fully effective.

No bank except BRAC Bank allowed to offer cash dividends

Under the new directives, only BRAC Bank will be allowed to declare cash dividends. Meanwhile, although National Bank has paid-up capital above the required target, it will not be able to provide dividends due to its high volume of non-performing loans.

A review of the data shows that among the currently well-performing banks in the capital market, none of the top-ranked banks in various indices, including The City Bank, Eastern Bank, Mutual Trust Bank, Prime Bank and Dutch-Bangla Bank, will be able to declare cash dividends.

Mashrur Arefin, managing director and CEO of City Bank, told TBS that the move has merit from a financial stability perspective, as some banks distributed high cash dividends despite weak capital positions.

He, however, expressed concern that the policy treats both strong and weak banks equally, which could negatively affect the stock market and investor confidence.

Mashrur said shareholders of well-managed banks deserve cash returns when banks perform consistently well, questioning why the Capital Adequacy Ratio (CAR) was not considered a key factor, arguing that banks with stronger CAR positions, such as 17-18% instead of the minimum 12.5%, should be allowed to provide cash dividends.

He also said he is waiting to see how tax regulations align with the new policy.

The move to strengthen banks' capital base is positive, as some weak banks previously paid excessive cash dividends despite poor financial conditions, said Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank.

A better approach would have been linking dividend approvals to the CAR, a practice followed in many countries, he said, notifying that Bangladesh's banking sector remains undercapitalised by global standards, while bank shares often fail to reflect actual performance.

Preventing well-capitalised banks from paying cash dividends could further weaken the stock market and reduce incentives for investors supporting financially stable institutions, added Syed Mahbubur.

Twenty-seven countries have moved since the Iran war started to put in place crisis instruments that could quickly access funding from existing World Bank programmes, according to an internal document viewed by Reuters.

The World Bank document did not name the countries or the total amount of funds potentially being sought. The World Bank declined to comment.

The document showed that three countries had approved new instruments since the Middle East conflict began on 28 February while the others were still completing the process.

The war and resulting disruption of global energy markets have hit global supply chains and prevented vital fertiliser shipments from reaching developing countries.

Officials in Kenya and Iraq have confirmed they are seeking rapid financial support from the World Bank to deal with the war's fallout, such as surging fuel prices hitting the African nation and a massive drop in oil revenue for Iraq.

The 27 countries are among 101 that had access to some form of pre-arranged financing instrument that they could tap in a crisis, including 54 that signed up to the Rapid Response Option, which allows countries to use up to 10% of their undisbursed financing.

World Bank President Ajay Banga last month said the bank's crisis toolkit would allow countries to draw on pre-arranged contingent financing, existing project balances and fast-disbursing instruments to access an estimated $20 billion to $25 billion.

He said the bank could also reorient parts of its portfolio to bring the total to $60 billion over six months, with further longer-term changes possible to bring the total to around $100 billion.

At the time, the head of the International Monetary Fund, Kristalina Georgieva, said she expected up to a dozen countries to seek $20 billion to $50 billion in near-term assistance from the global lender. But few requests have been logged, according to three sources familiar with the matter.

"Countries are definitely in wait-and-see mode," said one of the sources, who spoke on condition of anonymity.

Kevin Gallagher, director of the Global Development Policy Centre at Boston University, said countries were more willing to seek World Bank funds than negotiate with the IMF because IMF programmes generally require austerity measures that could compound the social unrest already seen in countries like Kenya.

Amid economic stress triggered by the Middle East war, the government had set a target of securing at least $3.2 billion in budget support from development partners, but the response has so far reached only about half of expectations.

As an alternative, authorities have begun repurposing the remaining funds through loans from ongoing development projects that are not immediately required.

Officials at the Economic Relations Division (ERD) said repurposing could unlock more funds than traditional budget support, allowing flexibility for critical spending for energy and food.

A letter sent by the Finance Division on 12 April asked the ERD to take steps to secure the $3.2 billion. However, the government has so far received assurances of $1.665 billion, ERD officials said.

This includes $1 billion from Asian Development Bank (ADB), $315 million from Japan, $250 million from the Asian Infrastructure Investment Bank (AIIB), and $100 million from Opec.

The government is also working on repurposing around $1.6 billion from development projects, officials said, adding the process is ongoing and the figure is likely to get higher.

An ERD senior official told The Business Standard that low-impact and slow-moving projects are being reviewed for repurposing, in consultation with development partners.

The reallocated funds will be channelled into short-term, one-year interventions in energy, food security and social protection. This, officials said, will help address immediate pressures while improving disbursement efficiency and ensuring more effective use of external loans.

ADB providing $1 billion support

ERD officials said the government had sought the full $1 billion in budget support from the ADB for the current fiscal year, which is now being received. Officials added that two budget support agreements are set to be signed on Monday in the presence of the ADB president.

Under the Second Strengthening Social Resilience Program, the ADB will provide $250 million as budget support. Under the Strengthening Economic Management and Governance, the ADB will extend a further $750 million.

ERD officials also said that $250 million will be reallocated from projects that have long remained stalled in implementation and disbursement.

WB prioritising repurposing

Amid shifting priorities in external financing, the World Bank is leaning more towards loan reallocation rather than fresh budget support for Bangladesh in the current fiscal year.

According to ERD sources, the government had formally sought at least $500 million from the lender under the Green and Climate Resilience Development Policy Credit. However, no final decision on budget support has been received so far.

A senior ERD official said Bangladesh is unlikely to receive budget support this fiscal year. Instead, the focus has shifted to repurposing unused pipeline loans.

A review of ongoing World Bank-financed projects shows that around $1.835 billion could potentially be mobilised through faster disbursement and reallocation for urgent needs.

Of this, a $785 million contingency fund has already been created under the Rapid Response Option (RRO) and Contingent Emergency Response Project (CERP) framework by reallocating funds from eight projects.

These include $239 million from the Gas Sector Efficiency Improvement and Carbon Abatement Project, $30 million from the Jamuna River Sustainable Management Project-1, $60 million from the Learning Acceleration in Secondary Education Operation, $15 million from the Road Safety Project, $95 million from the Resilient Urban and Territorial Development Project, $140 million from the Chattogram Water Supply Improvement Project, $74.4 million from the Regional Waterway Transport Project-1, and $134.6 million from the Environmental Sustainability and Transformation Project.

Officials said the government has decided to use this money under the CERP mechanism, which allows rapid deployment of funds for emergency imports of food, fuel and medicines.

The facility remains valid for up to six years, with individual activities limited to one year. Necessary omnibus amendments will be made to existing financing agreements, while the Finance Division will prepare the implementation framework.

The CERP mechanism allows unused funds from ongoing projects to be quickly redirected during sudden crises, without requiring lengthy new project approvals.

Separately, the government is set to introduce for the first time a $250 million emergency Investment Project Financing (IPF) facility, designed for rapid use similar to the RRO-CERP.

ERD sources said the $250 million IPF is not new borrowing, but a consolidation of cancelled or unused allocations from World Bank projects scheduled to close in FY26.

AIIB to provide $250m against $750m request

The government had sought $750 million in budget support from the AIIB. However, the lender has agreed to provide $250 million under the "Strengthening Economic Management and Governance" programme.

An additional $350 million is set to be reallocated from an ongoing AIIB-financed project. The funds will be diverted from the "Sylhet–Tamabil Road to a 4-Lane Highway" project.

ERD officials said disbursement under the road project has remained stalled for a long time due to complications in land acquisition. As a result, the government has decided to restructure the loan and repurpose the unused funds.

Japan trims support to $315m from $500m

The Japan International Cooperation Agency (Jica) initially agreed to provide $500 million in budget support in the current fiscal. The amount has since been reduced to $315 million.

Finance officials said the loan will be used in line with IMF recommendations. The support is expected to help increase social protection spending, strengthen revenue management.

Meanwhile, the government is set to receive $100 million in budget support from the Opec Fund (OFID) to help meet urgent financial pressures. However, requests for $200 million from France and $150 million from Germany remain uncertain, according to ERD sources.

ERD data show Bangladesh received a record $3.44 billion in budget support in FY25 from development partners. This compares with $2.03 billion in FY24, $1.767 billion in FY23, $2.597 billion in FY22 and $1.09 billion in FY21.