Government agencies exposed their weakest capacity in implementing development programme as an unprecedented slowdown in public spending left over Tk 1.0 trillion unspent until penultimate month of last fiscal year, squeezing Bangladesh's economic growth, analysts say.

Although the government agencies recovered from bleak Annual Development Programme (ADP)-execution performance four years ago, their capacity kept plunging year on year ever since, they have noted.

Economists say the poor development-work performance in recent years has already hit Bangladesh's economic growth which declined to only around 4.0 per cent over the years.

The sharp drop in planned spending has not only dragged down overall economic momentum but also negatively impacts business activity, public-service delivery, and job creation, they add.

Planning Commission officials have said when the Annual Development Programme is prepared, almost all the ministries and agencies demand higher funds but after providing allocation, they cannot spend as much when the year ends.

"For example, we had allocated Tk 2.38 trillion in the last fiscal year (2025-26) for all the government ministries and agencies under the ADP, but we were forced to cut the outlay to Tk 2.09 trillion after eight months in February 2026," says one official.

Yet, he adds, the ministries and agencies had spent less than half (48 per cent) of the Tk 2.09-trillion allocation under the last year's ADP, keeping Tk 1.08 trillion or 52 per cent unspent in 11 months between July 2025 and May 2026.

Although the Implementation Monitoring and Evaluation Division (IMED) under the Planning Commission has yet to release the official final report for June, the execution trends show an average monthly expenditure of roughly Tk 80 billion.

Although the government ministries and agencies spent 92.74 per cent of the Tk 2.19-trillion ADP allocations in FY2022, the rate started declining to 85.17 per cent in FY2023, 80.63 per cent in FY2024 and 68.18 per cent in FY2025, IMED data showed.

According to the latest statistics from Bangladesh Bureau of Statistics (BBS), the gross domestic product (GDP) growth contracted for two consecutive quarters, dipping to 3.03 per cent in the second quarter (October-December) and further slowing to 2.22 per cent in the third quarter (January-March) at constant prices in the last FY.

Over the last three consecutive years, Bangladesh's economic growth was recorded at 4.22 per cent in FY2024, which declined further to 3.49 per cent in FY2025 and 4.14 per cent in FY2026, the BBS data showed.

The industrial sector hit a notable slump, recording a negative growth rate of 0.28 per cent that is not noticed in recent years, while agricultural growth eased to 1.74 per cent and the services sector slowed to 3.52 per cent.

Planning Commission and IMED officials have identified several reasons for growth deceleration that include lack of capacity and efficiency of the public agencies, government's austerity stance, massive inefficiency in public procurement, bureaucratic tangles or and startup delays, and amendment of the procurement law.

The amended Public Procurement Act (PPA) bill, passed parliament on April 9, transitioning procurement entirely to the electronic Government Procurement (e-GP) platform.

Besides, the national elections in February created operational inertia following subsequent political shifts like missing or fleeing of many Project Directors (PDs) which forced the authorities to appoint new leadership and delayed execution, the IMED and PC officials said.

The interim government paused, scrapped, or downsized allocations for numerous projects while adjusting development priorities.

"Persistent skills shortages and institutional inefficiencies" continued to hamper timely project completion, they added.

Policy Exchange Bangladesh Chairman Dr Masrur Reaz says leaving such huge development funds idle, it is not possible to develop a country as well as its economy.

"When a significant amount of ADP development funds remains unspent, it generates a multidimensional shock across the economy," the economist told The Financial Express.

Unexecuted projects fail to generate essential public services and infrastructure needed to spur private investment as well as employment, he added.

"The government should establish its own functional monitoring and evaluation cell to track project progress in real time," he has suggested.

The government has outlined an ambitious roadmap to generate nearly Tk 1.0 trillion in additional Value-Added Tax (VAT) revenue in the fiscal year 2026-27, with a strong focus on narrowing compliance gaps, curbing tax evasion, and leveraging economic growth.

According to official projections, the largest share of the additional revenue is expected to come from reducing the VAT compliance gap.

The National Board of Revenue (NBR) plans to bring around 10,000 high-risk businesses under intensified scrutiny, targeting an additional Tk 380 billion in VAT collection through enhanced compliance and enforcement measures.

The strategy was unveiled at an NBR meeting on Monday, attended by Prime Minister's Adviser Dr Rashid Al Mahmud Titumir as the chief guest.

NBR Chairman Ahsan Habib presided over the meeting, which was organised to present the VAT Wing's revenue mobilisation strategy for the current fiscal year.

NBR Member (VAT Implementation and IT) Syed Musfequr Rahman presented a detailed plan for achieving the VAT Wing's revenue target of Tk 2.57 trillion.

According to the plan, around 8,000 businesses identified as having significant compliance gaps or a high risk of VAT evasion will be brought under closer monitoring.

The NBR expects to recover an additional Tk 250 billion by detecting and preventing VAT evasion among these firms.

In a separate initiative, the VAT authority plans to scrutinise 2,000 large taxpayers that pay more than Tk 10 million in annual VAT.

This programme is expected to generate an additional Tk 100 billion beyond their regular VAT payments.

Together, the two enforcement drives are projected to yield Tk 350 billion in additional VAT revenue.

Other compliance measures are expected to contribute another Tk 30 billion, bringing the total additional VAT collection target from compliance efforts to Tk 380 billion.

According to NBR officials, the businesses will be selected from among VAT-registered entities with monthly transactions exceeding Tk 1 million.

The list is expected to include importers, real estate companies, manufacturers, firms engaged in local sales and supplies, e-commerce businesses, and other VAT-registered entities.

A senior NBR official who attended the meeting said a large number of VAT-registered businesses were found to have significant compliance gaps.

"We have analysed VAT-registered businesses and found that a large segment has substantial compliance deficiencies. If these gaps can be reduced, a significant amount of additional VAT can be collected," the official said, requesting anonymity.

The official identified the real estate sector as one of the key focus areas, noting that improved detection of discrepancies in property transactions could substantially boost VAT revenue.

He said the NBR had already detected around Tk 7.0 billion in unpaid VAT from a leading real estate company.

"We have already launched specialised enforcement activities. A dedicated team of officials has been assigned to detect VAT evasion in the real estate sector," he added.

The government's broader VAT revenue strategy includes several other major sources of additional revenue.

The tobacco sector is expected to contribute an extra Tk 120 billion from the bidi and cigarette industry.

The NBR also projects that a 10 per cent expansion in economic activity will automatically generate around Tk 200 billion in additional VAT revenue.

Another Tk 150 billion is expected to come from improved implementation of the Annual Development Programme (ADP) as higher public expenditure and development spending are anticipated to stimulate economic transactions and VAT collection.

To recover outstanding dues, the government has set a target of Tk 140 billion from arrears collection.

Of this amount, Tk 70 billion is expected to come from reducing interest calculation periods, while the remaining Tk 70 billion will be recovered from other outstanding VAT arrears.

Taken together, the measures are projected to generate nearly Tk 990 billion in additional VAT revenue, reflecting a multi-pronged strategy combining stronger tax administration, enhanced compliance enforcement, improved arrears recovery, and economic growth.

The government has set an ambitious revenue collection target of Tk 6.04 trillion for the NBR in FY27, about 47 per cent higher than the previous fiscal year's target, marking the largest annual increase since Bangladesh's independence.

Of the total, the VAT Wing has been assigned approximately 45 per cent higher than the previous year's target.

Industries that have already invested heavily and have been awaiting gas connections for some time to start production now take yet another blow: the government has frozen all new industrial gas approvals amid a worsening supply crunch.

With domestic gas output falling and LNG import infrastructure stretched to its limit, state distribution companies have been instructed to halt all fresh connections and load upgrades; the Energy and Mineral Resources Division (EMRD) formally communicated the decision to Petrobangla in a letter issued on 14 July.

Addressing Petrobangla's chairman, the EMRD said, "Due to the continued decline in production from domestic gas fields and the country's dependence on only two floating LNG import terminals (FSRUs), the government has decided not to approve any new gas connections at this moment for any company."

The letter said 1,857 applications for new gas connections remain pending with the country's gas distribution companies.

On 17 July, Petrobangla issued identical directives to Titas Gas, Bakhrabad Gas Distribution Company, Jalalabad Gas Transmission and Distribution System, Karnaphuli Gas Distribution Company, Paschimanchal Gas Company and Sundarban Gas Company, instructing them to suspend approval of new gas connections and load enhancements.

Pending applications in limbo
Monir Hossain Chowdhury, joint secretary (Operations) at the Energy Division, told The Business Standard that businesses continue to apply for new gas connections and load enhancements, but approvals are impossible under the current demand-supply situation.

Asked about the 1,857 pending applications, Monir said the boards of the six gas distribution companies had approved them during the Sheikh Hasina administration without assessing actual gas availability.

"Investors were given hope without considering the supply situation. We have prioritised those applications so gas can be supplied once the country's supply improves," he said.

Petrobangla Chairman Md Abdul Mannan said the restriction applies to all businesses seeking new gas connections or additional gas load.

"Given the country's persistent gas crisis, it will not be possible to approve new applications for either new gas connections or load enhancement," he said.

Petrobangla currently supplies 2,500-2,600 million cubic feet per day (mmcfd) against demand of around 3,800 mmcfd. Of the total, 800-900 mmcfd comes from the country's two floating LNG terminals, depending on weather, with the remainder coming from domestic gas fields.

Factories wait, investment stalls
Business leaders say the decision has stranded billions of taka in industrial investment.

Mustafa Haider, director of TK Group, said two of the company's new factories remain idle because they have yet to receive gas connections.

He said entrepreneurs with billions of dollars tied up in factories awaiting gas are struggling to service bank loans while plants sit idle. Continued suspension of new connections, he warned, would discourage fresh investment and undermine the government's employment objectives.

Khondoker Ahadduzzaman, company secretary of Global Heavy Chemicals Ltd, said the gas crisis has forced the company to slash production of import-substitute products – including caustic soda, hydrochloric acid, bleaching powder, chlorine, sodium hypochlorite and chlorinated paraffin wax – by 85%.

"The limited production we are maintaining with electricity is not enough to cover operating costs, resulting in continuous financial losses," he said.

Bangladesh is facing major macroeconomic challenges after years of mismanagement. In many cases, these problems have reached a point where major reforms are needed to avert an economic meltdown. One such challenge is the energy sector, where long-standing mismanagement has been compounded by the ongoing US-Iran war. The problems in the energy sector now extend far beyond the sector itself. They have become a threat to macroeconomic stability and can no longer be treated as matters for the Ministry of Power, Energy and Mineral Resources alone. The Ministry of Finance and the Bangladesh Bank must integrate energy sector concerns into the broader macroeconomic framework and coordinate policymaking accordingly.

The spillover effects of the energy crisis on the wider economy are evident from several facts.

First, the energy import bill has risen over the past five years, increasing from $4.3 billion in FY2021 to $11.2 billion in FY2026 because of growing shortages in domestic energy supplies and higher global prices. This pace of growth is unsustainable and could trigger a balance of payments (BoP) crisis.

Second, the energy subsidy bill surged from Tk 142 billion, or 0.4 percent of GDP, in FY2021 to Tk 837 billion, or 1.5 percent of GDP, in FY2025. By comparison, the tax-to-GDP ratio stood at only 6.8 percent in FY2025, meaning energy subsidies alone absorbed around 22 percent of total tax revenue. Such a subsidy burden is clearly unsustainable. Although recent price adjustments have reduced subsidy requirements, rising global energy prices threaten to offset those gains.

Third, energy shortages and higher prices have weakened export competitiveness, disrupted manufacturing and transport services, and contributed to slower GDP growth, weaker export performance and lower private investment. The resulting economic slowdown has also been a major factor behind rising non-performing loans (NPLs) in the banking sector.

The factors behind the current state of the energy sector are numerous and long-standing. They include the dominant role of the public sector in energy production and distribution, poorly managed state-owned energy entities, weak pricing policies, the absence of a credible primary energy strategy, the lack of hard budget constraints, political interference and corruption in energy investment and procurement, particularly in awarding contracts to independent power producers (IPPs), and weak accountability.

Continuing with the crisis management and muddling-through approach of the past is not a sustainable policy option. Instead, the new government has an opportunity to undertake bold reforms that can restructure the energy sector for sustained progress. The challenge is to overhaul the sector rather than make marginal adjustments.

The core reforms should include: (i) deregulating the energy sector to encourage greater private sector participation across the value chain; (ii) corporatising all public energy entities; (iii) renegotiating IPP contracts; (iv) depoliticising energy pricing; (v) imposing hard budget constraints on all public enterprises, including energy entities; and (vi) developing a comprehensive and credible primary energy strategy.

Deregulate the energy sector

Since independence, the energy sector has remained heavily regulated, with the public sector dominating most stages of energy production and distribution. Although private participation has gradually expanded, particularly in electricity generation, the sector continues to be dominated by state-owned enterprises.

While this model may have served the country’s needs in the early years after independence, today’s economy is very different. Bangladesh now has a much stronger private sector operating in an increasingly sophisticated global economy. There is therefore an urgent need to open every stage of the energy value chain to private investment, from oil and gas exploration to imports, refining, distribution, electricity generation and power distribution.

Public sector dominance has reduced efficiency, raised costs, constrained investment and created opportunities for corruption. A vibrant private energy sector operating within a sound regulatory framework, as seen in many upper-middle-income and high-income countries, would improve efficiency, lower costs, attract investment and significantly reduce the need for energy subsidies. The government’s primary role should be to establish an effective regulatory framework while using taxation and subsidies to protect the public interest.

This is the single most important reform needed to put the energy sector on a sustainable footing.

Reform corporate governance in public energy entities

The transition from a state-dominated energy sector to one led mainly by private suppliers will take time. In the meantime, public energy enterprises need urgent governance reforms to improve accountability, efficiency and financial performance.

These reforms should include full corporatisation under professional management, operational independence from government, greater autonomy over procurement, investment, production, sales and employment decisions, and the introduction of hard budget constraints supported by a transparent subsidy policy based on clearly defined social objectives.

Separating government from day-to-day management and investment decisions is essential if corruption is to be reduced.

Renegotiate IPP contracts

Independent power producers have played a vital role in easing electricity shortages and supporting GDP and export growth. However, a combination of overly optimistic demand projections and political interference in contract awards has created severe financial pressures because of excess generation capacity and generous take-or-pay agreements.

The financial position of the power sector is no longer sustainable. IPP contracts should therefore be renegotiated on commercial terms, free from political influence.

Depoliticise energy pricing

Government control over energy pricing has contributed significantly to the weak financial position of energy entities, especially in the power sector, because prices have often been determined by political rather than commercial considerations.

Although Bangladesh has established regulatory commissions for electricity and primary energy, government influence over pricing remains substantial in practice.

A genuinely competitive private energy market will emerge only when pricing decisions are made by an independent regulator applying commercial principles, including production costs and a reasonable return on investment. Such reforms would also strengthen the finances of public energy enterprises. The government could still pursue social or political objectives through taxation and targeted subsidies.

Develop a comprehensive primary energy strategy

The absence of a coherent primary energy strategy has been a major weakness of the sector. In an increasingly interconnected global energy market, where Bangladesh depends heavily on imports, a flexible and forward-looking strategy is essential.

The current approach has been undermined by unreliable estimates of domestic gas reserves, weak policies to develop domestic energy sources, including renewables, inadequate trade policies for imported energy, and limited private investment in energy exploration. The result has been excessive dependence on expensive imported fossil fuels and growing vulnerability to disruptions in LNG supplies.

One of the government’s highest priorities should be to establish an expert group to prepare a comprehensive primary energy strategy. This should explore all potential domestic energy sources and the policies needed to develop them, formulate a trade strategy for energy imports built around strategic partnerships with exporting countries, examine opportunities for regional energy cooperation with a particular focus on hydropower, and identify ways to attract private investment, including joint ventures with foreign investors, in primary energy exploration.

The government is likely to announce the ninth national pay scale for government employees after concluding negotiations with the International Monetary Fund on a new loan programme in October although the decision will depend largely on the lender's approval, officials familiar with the matter said.

The IMF has already advised the government to defer implementing the new pay scale by at least two years, citing fiscal pressures and weak revenue mobilisation. Following the recommendation, the government has adopted a more cautious approach to this end.

On 26 July, Prime Minister Tarique Rahman met Finance Ministry officials to review revenue collection, public expenditure, the fiscal impact of the proposed pay scale and the overall macroeconomic outlook.

During the meeting, Finance Minister Amir Khosru Mahmud Chowdhury outlined the additional expenditure required to implement the salary structure. The premier instructed officials to conduct a more detailed review, particularly considering the risk of higher global energy prices, pressure on domestic gas supplies and broader economic uncertainty.

Officials said the government's final negotiations with the IMF are expected to take place on the sidelines of the World Bank-IMF Annual Meetings in Bangkok from 12 to 18 October.

According to officials, the IMF's position on increasing permanent non-development expenditure, particularly public sector salaries, will be a key factor in determining whether the pay scale moves forward.

A senior Finance Ministry official said an IMF delegation visiting Bangladesh from 12 to 16 July discussed salary and allowance budgeting with the Finance Division. IMF representatives reportedly said Bangladesh's current revenue base is not strong enough to support a significant increase in government salaries.

The lender also noted that government spending on social safety net programmes, including Family Cards, Farmer Cards and subsidies, is rising rapidly while revenue growth has lagged behind. Given persistent inflation and limited fiscal space, the IMF believes introducing the new pay scale now could create additional financial risks.

Officials, however, said the government has not abandoned the proposal.

A 10-member high-level committee led by Cabinet Secretary Nasimul Ghani has already prepared a revised framework for the pay scale after reviewing recommendations from the National Pay Commission 2025, the Bangladesh Judicial Service Pay Commission 2025 and the Armed Forces Pay Committee 2025.

The proposal, with some revisions, has been submitted to the Finance Ministry and presented to the prime minister.

A senior official, requesting anonymity, said the government is now considering phased implementation or alternative approaches to reduce the fiscal burden. The strategy is expected to be finalised before the October IMF meeting.

The process to revise the salaries began under the interim government, which formed the National Pay Commission 2025, led by former Finance Secretary Zakir Ahmed Khan. The commission submitted its report on 22 January this year, recommending salary and allowance increases of 100% to 140%.

It proposed raising the minimum basic salary from Tk8,250 to Tk20,000 and the maximum from Tk78,000 to Tk160,000, alongside increasing the Baishakhi allowance from 20% to 50%, revising transport allowances for grades 10 to 20 and restructuring other benefits.

The commission estimated the recommendations would require an additional Tk106,000 crore annually.

In the FY27 budget speech, the finance minister announced plans to implement the new pay structure in phases from July and allocated Tk54,572 crore more for the public administration sector than in the revised budget.

According to officials, around Tk44,000 crore of the additional allocation has been earmarked for the potential implementation of the new pay scale for government employees, MPO-listed teachers and pensioners.

Economists say a new pay scale is overdue, noting that government employees have not received a salary revision since 2015 while high inflation has significantly eroded their purchasing power.

However, they also warn that Bangladesh's tax-to-GDP ratio remains low and revenue mobilisation has yet to improve sufficiently.

Researchers at the Centre for Policy Dialogue have cautioned that implementing the new pay scale without strengthening revenue collection could force the government to rely more heavily on domestic and foreign borrowing, widening the budget deficit and adding pressure on the economy.

The US has rolled out a fresh 10 percent duty on all imports from Bangladesh under Section 301 of the Trade Act of 1974, replacing a temporary global tariff. The new 10 percent tariff will make the total duty on the country's garment shipments to the USA at 25.62 percent that includes the existing 15.62 percent Most-Favoured-Nation (MFN) tariff rate.

The rate is just replacement of previous universal rate at 10 percent to another name failure to impose prohibition on import of goods produced using the forced labour.
The tariff was announced by the Office of the United States Trade Representative (USTR) on July 23 and took effect on July 24.
Why forced labour?

Following the nullification of reciprocal tariffs by the US Supreme Court from the Agreement on Reciprocal Tariffs (ART), the Trump administration was looking for the opportunity to impose higher tariffs on the imported goods.

US again imposes 10% tariff on Bangladesh
Read more
US again imposes 10% tariff on Bangladesh

So in March, the USTR has launched an investigation on 60 economies including Bangladesh globally under Section 301 to determine whether they failed to block imports made with forced labour. Bangladesh was found to have a “partial enforcement framework”, placing it in the lower of two tariff bands ranging from 10 percent to 12.5 percent.
A shifting tariff landscape

This is the third tariff regime Bangladeshi exporters have faced only in two years. Exporters faced a 15.62 percent base rate before reciprocal tariffs were imposed under a national emergencies law in April 2025. After the US Supreme Court struck down that regime in February this year, a temporary 10 percent global tariff under Section 122 filled the gap until its 150-day legal limit expired on July 24, replaced immediately by the Section 301 tariff.
Official and exporter reactions

Government officials and trade leaders view the measure as a continuation. Commerce Minister Khandaker Abdul Muktadir said the measures would not create any new impact as the tariff rate remains unchanged.

Faisal Samad, director of Bangladesh Garment Manufacturers and Exporters Association, echoed the view, adding it will not impact exports.

US tariffs to have no fresh impact on Bangladesh: Commerce minister
Read more
US tariffs to have no fresh impact on Bangladesh: Commerce minister

Meanwhile, the Ministry of Foreign Affairs (MoFA) said Bangladesh retains its competitive standing as key apparel-exporting rivals face a higher 12.5 percent duty.

"This distinct differential reinforces Bangladesh's ongoing comparative advantage in the US market relative to its high-tariff competitors," MoFA said.

It added that the USTR is considering a three-year Tariff-Rate Quota (TRQ) for Bangladesh, Cambodia, Indonesia and Malaysia to waive Section 301 tariffs on goods made from US cotton and textile inputs.
The bilateral deal complication

The interim government signed a US-Bangladesh Agreement on Reciprocal Trade (ART) on February 9 this year, setting a 19 percent rate in exchange for market opening. Because ART rested on the struck-down emergency-powers structure, the government is seeking formal clarification on whether the 19 percent rate applies or is superseded by Section 301.
Where Bangladesh stands against rivals

Dhaka retains its competitive standing in apparel exports, being among 17 of 86 countries placed in the lower 10 percent tier. Competitors China, Vietnam, and Thailand face the maximum 12.5 percent rate, reinforcing Bangladesh's ongoing comparative advantage, the foreign ministry noted.

Bangladesh possesses the basics but needs some radical reforms to raise annual foreign direct investment (FDI) inflows to US$15 billion, investors and economists say and show the must-dos to that end.
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In a joint study conducted by the Foreign Investors' Chamber of Commerce and Industry (FICCI) and Policy Exchange Bangladesh, it pointed out that Bangladesh's traditional growth model -- driven largely by a trio of ready-made garment industry, remittances and agriculture -- is facing mounting pressure from weak private investment, limited export diversification, persistent trade imbalances and inadequate job creation.

As such, netting FDI is "indispensable" for sustaining the country's next phase of economic transformation.

The study notes that although Bangladesh possesses a large domestic market, a youthful workforce and a strategic geographic location, it continues to lag well behind regional competitors in attracting foreign investment for a gamut of disservices.

What stand in the way, as per the study findings, a regulatory uncertainty, infrastructure and logistics bottlenecks, financial-sector weaknesses, skills shortages, tax complexity, and a fragmented institutional coordination.

It has noted that Bangladesh attracted a net FDI inflow of only US$1.78 billion in 2025, while fresh foreign equity fell to around US$550 million.

At 0.29 per cent of GDP, Bangladesh's FDI-to-GDP ratio remains lowest among comparable regional economies and far below Vietnam's 4.23 per cent, with annual inflows stagnating between US$1.2 billion and US$1.7 billion after peaking at US$3.89 billion in FY2019.

According to the study, the spinoffs from greater FDI are that it can mobilise capital and technology, diversify products and export markets, integrate Bangladesh into global value chains, stimulate domestic private investment, generate quality employment, modernise infrastructure and strengthen macroeconomic stability.

The report bears an 11-point reform agenda, including establishing a high-level national FDI coordination council, introducing a dedicated government investment-reform team, adopting National Investment Policy and omnibus investment law, implementing a three-year FDI promotion strategy, strengthening global investment branding and guaranteeing long-term policy stability.

The report was presented at a FICCI event titled 'Driving Foreign Investment for Jobs and Prosperity in Bangladesh', where ministers, advisers, economists and business leaders discussed reforms required to improve the country's investment climate and accelerate private-sector-led growth.

The keynote presentation was delivered by Dr M Masrur Reaz, Chairman and Chief Executive Officer of Policy Exchange Bangladesh, while senior government policymakers participated in a ministerial panel outlining the government's investment agenda.

Economists, academicians, policymakers and foreign investors have also argued that Bangladesh stands at a critical moment as multinational companies diversify production networks away from concentrated supply chains, stressing that success will depend on coordinated implementation rather than isolated policy announcements.

An emphasis was on attracting "higher-quality investment into advanced manufacturing, electronics, pharmaceuticals, renewable energy, digital services, logistics, healthcare and technology-intensive industries as essential conditions for creating productive jobs and achieving the country's ambition of becoming a trillion-dollar economy".

Improving investor confidence through predictable policies, efficient institutions, better infrastructure and sustained public-private dialogue would determine whether Bangladesh can convert its economic potential into significantly higher investment inflows.

Presenting the keynote, Dr Masrur Reaz said Bangladesh's gradual economic liberalisation since the late 1970s had enabled significant private-sector-led growth, but FDI inflows remained relatively low and volatile despite the country's progress.

"Recent recovery in FDI had been driven more by reinvestment by existing investors than by new foreign entrants."

Drawing on international experience, he said FDI had transformed economies by converting capital into exports, high-quality employment and technology transfer.

He cited Vietnam's export-led industrialisation, Costa Rica's electronics cluster, Malaysia's semiconductor industry, Thailand's automobile sector and Indonesia's electric vehicle battery industry as examples of how strategic foreign investment reshaped national economies.

Dr Reaz argued that Bangladesh's existing growth model faced four structural constraints -- macroeconomic pressures, weakening private investment, a complex business environment and sluggish employment generation.

Private investment has fallen to 21.5 per cent of GDP, its lowest level in 12 years, while exports remain concentrated in ready-made garments for more than 13 years. Youth unemployment stands at 9.4 per cent and the country ranks 128th out of 132 economies in the Economic Complexity Index.

He said Bangladesh requires around an additional US$8 billion in annual FDI merely to increase GDP growth by one-percentage point and argued that the country must strategically position itself to benefit from changing global trade patterns.

The study also highlights Bangladesh's competitiveness gap, pointing to weaknesses in logistics, trade facilitation, regulatory quality, innovation capacity, skills development and sovereign credit ratings compared with competing investment destinations.

In his welcome address, FICCI President Tapan Chowdhury said Bangladesh's economy had expanded from about US$8.9 billion in 1970 to nearly half a trillion dollars today, while merchandise exports had grown to US$48 billion in FY2025-26, driven mainly by the garment industry.

He said the private sector now accounts for around 76 per cent of total investment in Bangladesh, while foreign investors have played a crucial role in industrialisation, employment generation, export expansion, technology transfer and management development.

According to him, FICCI's more than 200 member-companies from 35 countries operating across 22 sectors currently support around 2.2 million direct and indirect jobs and contribute approximately 30 per cent of Bangladesh's national tax revenue.

He said attracting investment into manufacturing, tradable services, digital industries and technology-intensive sectors would be critical for achieving the government's target of creating 10-million jobs.

He said the joint FICCI-Policy Exchange report aimed to provide an evidence-based reform roadmap with measurable performance indicators to raise annual FDI inflows from 0.36 per cent to 2.5 per cent of GDP.

Referring to an internal survey among member-companies, he said FICCI members plan to invest around US$4 billion over the next two to five years, while Berger alone intends to invest around Tk 12 billion by 2027-28.

However, he cautions that Bangladesh continues to attract substantially less FDI than comparable Asian economies because investors assess approval timelines, logistics efficiency, contract enforcement, profit repatriation and institutional coordination before making investment decisions.

During the ministerial-panel discussion, Commerce, Industries, Textiles and Jute Minister Khandaker Abdul Muktadir said the government was implementing major reforms to reduce the time required to establish new businesses.

He announced that investors would soon be able to open letter of credit for importing machinery within 15 days of submitting applications, replacing a process that previously required nearly a year.

He also reaffirmed government commitment to energy security, regulatory stability and predictable investment policies.

The minister said Bangladesh must sustain annual economic growth exceeding 8.0 per cent and significantly increase private investment to realise its ambition of becoming a trillion-dollar economy.

Finance and Planning Adviser Dr Rashed Al Mahmud Titumir said investors primarily seek predictability, stability, energy security and regulatory certainty, adding that the government is strengthening these foundations through long-term fiscal planning and institutional reforms.

He said the government would continue investing in education, healthcare, logistics and multimodal connectivity while introducing targeted fiscal incentives to improve competitiveness and productivity.

Posts, Telecommunications and Information Technology Adviser Rehan Asif Asad identified connectivity, artificial intelligence and cybersecurity as the three pillars of the Fourth Industrial Revolution.

He highlighted the enactment of the Personal Data Protection Law, National Data Governance Law, Cybersecurity Law and Telecom Act 2026, saying that these established a modern legal framework for digital investment.

The adviser also outlined plans to expand broadband connectivity, strengthen digital public infrastructure, introduce a unified digital identity and wallet ecosystem and improve telecommunications quality to attract investment in electronics manufacturing, artificial intelligence, cloud computing and advanced technologies.

BIDA and BEZA Executive Chairman Chowdhury Ashik Mahmud Bin Harun announced that the government would shortly operationalise Invest Bangladesh, a unified investment-promotion agency created to consolidate investment-facilitation services under a single institutional platform.

He said the new organisation would reduce bureaucratic complexity, strengthen institutional capacity and provide investors with a single point of contact while encouraging existing foreign investors to serve as ambassadors for Bangladesh.

Special Assistant to the Prime Minister on Investment and Capital Market Affairs Tanvir Ghani said Bangladesh must diversify its sources of finance by deepening domestic capital markets and improving access to international financial markets.

He said the government is working to mobilise private capital through bonds, equity offerings and other market-based instruments while creating an investment-friendly framework covering taxation, regulation and capital repatriation.

Moderating the discussions, Prime Minister's Office Adviser and Spokesperson Mahdi Amin said the government's overall objective is to reduce the cost of doing business, improve the ease of doing business, create employment and ensure inclusive economic growth through stronger coordination among ministries.

A slew of drags like persistent banking-sector weakness, fiscal constraints and mounting external risks made S&P Global Ratings revise Bangladesh's sovereign credit outlook to negative from a stable state.

The American agency's such ratings are prompted by the likelihood that these negatives could delay the country's economic recovery.

However, it affirmed the country's long- and short-term sovereign credit ratings at 'B+/B'.

In its report obtained Monday, the US ratings agency has said Bangladesh was entering a difficult period of economic rebalancing as financial-sector vulnerabilities coincided with uncertainty in global energy markets and international trade.

The agency said sustained strength in remittance inflows, a recovery in readymade-garment exports and continued support from multilateral lenders would be crucial to preserving external stability.

It says: "The negative outlook reflects the risk that Bangladesh's trend economic growth and external position could weaken further over the next 12 to 18 months citing the conflict in the Middle East, banking sector imbalances and energy market volatility."

The agency has alerted it could downgrade Bangladesh's sovereign rating if long-term economic growth weakened further or if the country's external position deteriorated significantly, including through a sustained increase in net external debt relative to current account receipts.

Conversely, the outlook could return to stable if economic growth strengthened materially over the next three to four years and the government achieved lasting improvements in fiscal and external indicators, including higher foreign-exchange reserves, stronger current-account receipts and slower debt accumulation.

The S&P has said Bangladesh's sovereign profile continued to be constrained by low per- capita income, limited fiscal flexibility, weak revenue mobilisation and institutional shortcomings.

However, these weaknesses were partly offset by the country's historically strong growth performance, a moderate public-debt burden and continued financial support from bilateral and multilateral development partners.

The agency expects Bangladesh's economy to grow by an average of about 4.5 per cent over the next three years that reflect continued weakness in the banking sector, uncertainty in global energy markets and subdued demand for garment exports.

Although the BNP-led government secured a strong mandate in the February 2026 election, providing an opportunity for more stable policymaking, S&P thinks meaningful structural reforms would take time because of institutional weaknesses, infrastructure bottlenecks and bureaucratic inefficiencies.

The report says Bangladesh's banking sector remained the principal domestic risk to the economy.

"Weak asset quality, particularly at state-owned and Islamic banks, continued to constrain credit growth and could weigh on the broader economic recovery."

The S&P report says Bangladesh's external position had improved over the past year as foreign-exchange reserves recovered to about US$32.9 billion, helped by stronger remittance inflows and tighter macroeconomic policies.

Nevertheless, it cautions that higher global energy prices and a widening current- account deficit could reverse part of those gains.

The agency expects the current-account deficit to widen modestly over the next three years as imports recover alongside domestic demand, while negotiations with the International Monetary Fund on a new lending programme could provide an important anchor for fiscal and banking-sector reforms.

It forecasts the fiscal deficit to edge up to around 4.7 per cent of GDP over the medium term, while public debt would continue to rise gradually because of weaker nominal GDP growth, higher borrowing needs and the depreciation of the Taka.

The agency also warns that Bangladesh's narrow tax base and high interest burden continued to limit the government's fiscal flexibility.

It has said reforms aimed at improving tax administration and broadening the revenue base could lift the tax-to-GDP ratio modestly above 9.0 per cent, but substantial progress would require sustained implementation.

Inflation is likely to remain elevated, particularly if global energy prices stayed high, while higher government borrowing from domestic banks risked "crowding out" private-sector credit and slowing investment.

The government is working on strengthening access to key markets ahead of Bangladesh's expected graduation from its status as one of the least-developed countries (as classified by the U.N.) later this year.

Efforts such as improving the domestic business environment and boosting competitiveness will, however, take time to implement, it mentioned.

The U.S. tariff policy to be applied to Bangladesh remains in flux. On July 24, 2026, the U.S. introduced new tariffs on a variety of economies, including Bangladesh, which will be subject to a 10 per cent tariff rate on most goods exports to the U.S.

Bangladesh's export profile is highly concentrated in the readymade-garments sector, which represents more than 85 per cent of merchandise exports.

From January to March 2026, 18 per cent of Bangladesh's exports were to the U.S., and about 86 per cent of these were readymade garments, excluding leather products and other textiles.

In the meantime, another global ratings agency, Fitch, also downgraded the country's ratings to negative recently.

Full-fledged Islamic banks and fourth-generation private commercial banks are facing mounting pressure from rising default loans and worsening liquidity shortages, making them the most vulnerable segments of the country’s banking sector, according to Bangladesh Bank.

The central bank’s latest Banking Sector Update shows that the non-performing loan (NPL) ratio of full-fledged Islamic banks surged to 58.4 percent in March 2026, up from 29.2 percent a year earlier.

Fourth-generation private commercial banks -- the nine banks established in 2013 -- recorded the second-highest NPL ratio at 52.2 percent, compared with 44.4 percent in March 2025.

The report said both groups are under severe liquidity pressure due to aggressive lending and elevated credit risk.

Full-fledged Islamic banks remained heavily exposed, with their Advances-to-Deposit Ratio (ADR) climbing to 120.3 percent in March 2026. The average ADR of fourth-generation banks stood at 101.6 percent, with several lenders posting ratios above 100 percent.

Bangladesh Bank said the elevated ADRs reflect aggressive lending by fourth-generation banks as they rapidly expanded their loan portfolios. The ADRs of both groups were well above the banking sector average of 82.7 percent, raising concerns over liquidity risk.

The report noted that Islamic banks have long struggled with structural weaknesses, including limited liquidity management tools and rapid credit expansion.

Last year, the government merged five troubled Islamic banks -- First Security, Global, Social Islami, Union and EXIM Bank -- to form Sammilito Islami Bank PLC after they suffered acute liquidity shortages and alleged loan irregularities linked to the S Alam Group and Nazrul Islam Mazumder.

According to the report, the sharp increase in bad loans at these banks points to weak credit discipline and possible governance failures.

While the overall banking sector reduced its ADR to strengthen liquidity, Islamic and fourth-generation banks remained highly exposed despite relatively slow deposit growth.

Other banking segments performed comparatively better.

Second-generation private commercial banks maintained an NPL ratio of 19.2 percent. Foreign commercial banks remained in a stronger position, with an NPL ratio of 6.3 percent and an ADR of 53.4 percent, enabling them to maintain comfortable liquidity buffers.

Bangladesh Bank warned that aggressive lending and rising default loans at Islamic and fourth-generation banks pose a significant risk to the stability of the banking sector.

It said urgent measures are needed to reduce NPLs and bring ADRs under control. Without corrective action, the existing weaknesses could evolve into broader systemic risks, threatening financial stability and economic growth.

Profits at China’s industrial firms grew at a solid, though slower, pace as resilient exports helped cushion sluggish domestic demand, highlighting the economy’s uneven recovery despite policymakers’ efforts to spur consumption.Exports and industrial production have done much of the heavy lifting for the world’s second-largest economy.Persistent weakness in consumption and the property sector, however, helped drag second-quarter growth to its slowest pace in more than three years, keeping calls alive for further policy support to address economic imbalances.Industrial profit growth eased to 15.1 percent in June from 21.1 percent in May, while first-half profits rose 18.7 percent from a year earlier, compared with an 18.8 percent increase in the January-to-May period, data from the National Bureau of Statistics (NBS) showed on Monday.“If this recovery can be sustained, it will be a good sign for the rest of the economy, as a return of profits growth could give companies room to resume wage growth,” said Lynn Song, chief economist of Greater China at ING.The figures add to evidence of a two-speed recovery in the world’s second-largest economy, where manufacturers have benefited from robust overseas demand, while sectors tied to domestic spending continue to struggle.

“The external environment remains complex and international commodity prices uncertain,” NBS statistician Yu Weining said.“Industrial firms also face weak demand and cash flow pressures.”

Underlining strains in the domestic market, automobile manufacturing profits fell 19.5 percent in the first half of the year, NBS data showed, as car sales declined for a ninth consecutive month in June.Market reaction was muted with Chinese stocks and the yuan slightly firmer following the data.Attention is now turning to the Communist Party’s Politburo meeting at the end of July, a key policy-setting gathering where investors will look for signals on additional support measures.Expectations for a broad-based stimulus package have been tempered, however, by resilient exports and Beijing’s preference for targeted easing.

Industrial profit figures cover firms with annual revenue of at least 20 million yuan ($2.95 million) from their main operations.

Linde Bangladesh PLC, a multinational company listed on the country's stock exchanges, reported a 3.67% year-on-year increase in net profit for the first half of 2026, supported by a higher gross margin despite weaker second-quarter earnings.

According to its financial statements approved by the board of directors today (27 July), the company's revenue rose 12% year-on-year to Tk121.87 crore in the January-June period, while net profit increased to Tk19.45 crore. Earnings per share (EPS) stood at Tk12.78, up from the corresponding period last year.

Explaining the changes in its financial performance, the company said the increase in EPS was driven by a higher gross margin, partly offset by one-off other income recognised in the same period last year.

Net asset value (NAV) per share rose to Tk213.09 as of 30 June 2026, from Tk201.66 a year earlier, while net operating cash flow per share climbed to Tk17.71 from Tk4.08.

The company attributed the increase in NAV to profits earned during the period, partially offset by dividend payments.

However, second-quarter performance was weaker. Although revenue rose 16.68% year-on-year to Tk62.67 crore in the April-June quarter from Tk53.71 crore a year earlier, net profit fell 21% to Tk8.46 crore.

Linde Bangladesh's shares closed 1.34% higher at Tk736 on the Dhaka Stock Exchange today.

More than 10,000 businesses deemed to pose a high risk of tax evasion are set to come under the National Board of Revenue's (NBR) scanner as part of a drive to collect an additional Tk38,000 crore in value-added tax (VAT) through enhanced enforcement.

According to NBR officials, the list will primarily include businesses with monthly transactions exceeding Tk10 lakh that are considered vulnerable to revenue leakage.

It will also cover relatively smaller firms suspected of underreporting VAT liabilities, although the main focus will be on medium-sized businesses and large VAT payers.

The targeted entities are expected to include importers, real estate companies accused of concealing purchase information, manufacturers, businesses engaged in domestic sales and supplies, e-commerce platforms, and other VAT-registered firms.

The NBR's VAT wing plans to identify around 8,000 high-risk businesses and recover an additional Tk25,000 crore by detecting VAT evasion during the current fiscal year.

Separately, the NBR is preparing a special drive targeting 2,000 large VAT-paying businesses that each pay more than Tk1 crore in VAT annually. It aims to collect an additional Tk10,000 crore from these taxpayers, over and above their regular VAT payments.

In total, the NBR expects to generate Tk35,000 crore in additional VAT by uncovering evasion among these 10,000 businesses. It also plans further compliance measures expected to raise another Tk3,000 crore, taking the overall additional VAT collection target to Tk38,000 crore.

The NBR presented the enforcement strategy to the Prime Minister's Economic Adviser Rashed Al Mahmud Titumir at a meeting held at the revenue board yesterday.

Nearly Tk1 lakh crore targeted through enforcement

Under the plan, the NBR aims to raise Tk99,000 crore – including the Tk38,000 crore from 10,000 firms – in additional VAT revenue from various sources in FY27.

The target also includes Tk12,000 crore from the tobacco sector, Tk14,000 crore through recovery of outstanding dues, Tk15,000 crore from higher implementation of the ADP, and Tk20,000 crore from an assumed 10% natural growth in VAT receipts.

The NBR has also stepped up efforts to detect income tax evasion. As part of the initiative, the revenue authority has announced plans to seize documents and computers from organisations responsible for deducting tax at source if they are found to have evaded their withholding tax obligations. The NBR recently disclosed the measures in a press release.

The move has already sparked concern among businesses. Several trade bodies have opposed the initiative, arguing that the proposed enforcement measures could create uncertainty and disrupt business operations.

Massive non-compliance in VAT

NBR officials said a significant compliance gap exists among VAT-registered businesses, creating substantial scope for additional revenue collection.

An NBR senior official who attended the meeting, said they have analysed the data and found that a large proportion of VAT-registered businesses have significant compliance gaps.

"If those gaps can be narrowed, it will be possible to collect a substantial amount of additional VAT," the official told The Business Standard, requesting anonymity.

He cited the real estate sector as an example, saying that better detection of discrepancies in property transactions could generate significant additional VAT revenue.

Referring to a leading real estate developer, he said the NBR had already uncovered around Tk450 crore in VAT evasion by the company.

"We have already launched specialised enforcement activities. Some officials have been assigned exclusively to detect VAT evasion in the real estate sector," he added.

Revenue target for FY27

The government has set an overall revenue collection target of nearly Tk6.04 lakh crore through the NBR for FY27, around 47% higher than the actual collection in FY26. It is the highest year-on-year revenue growth target since Bangladesh's independence.

Of the total, the VAT and supplementary duty wing has been assigned the largest target of Tk3.21 lakh crore, roughly 45% higher than the previous fiscal year's collection.

The government has prioritised revenue mobilisation from the beginning of the fiscal year to meet the ambitious target, although economic activity has yet to recover strongly enough to support such rapid growth.

Additional revenue possible

Tax experts, however, believe the additional revenue target from tackling evasion is achievable even without a significant acceleration in economic activity.

Former NBR chairman Muhammad Abdul Mazid told TBS, "Given the size of our economy, VAT collection could be at least double the current level if all eligible VAT were collected."

He said many businesses that should be paying VAT remain outside the tax net, while others pay only a fraction of what they owe. Some businesses also collect VAT from consumers but fail to deposit it with the government.

"If these leakages are addressed properly, collecting an additional Tk38,000 crore in VAT is achievable," he said.

Mazid added that automation and greater integration between the NBR and other government agencies would be the most effective way to curb evasion, reducing the need for intrusive field inspections or creating unnecessary fear among businesses.

According to NBR data, around 800,000 businesses are currently registered for VAT, of which roughly 500,000 submit monthly returns. A large number of those, however, file zero returns, reporting no VAT liability.

Officials also acknowledge longstanding allegations that many businesses evade VAT by colluding with field-level revenue officials.

Bangladesh yesterday formally launched construction of the long-awaited China Economic and Industrial Zone (CEIZ) in Chattogram’s Anwara.

Expected to attract around $1.3 billion in investment and create more than 100,000 jobs, the project is one of the country’s largest China-backed industrial initiatives.
The groundbreaking ceremony also saw the signing of several sub-lease agreements with investors, the inauguration of the CEIZ One Stop Service Centre, and the participation of around 70 Chinese business representatives.It came after nearly a decade of delays and bureaucratic hurdles after the initial deal in 2016.Finance Minister Amir Khasru Mahmud Chowdhury described investment as the government’s highest priority, saying it would drive economic growth and create jobs.

“Investment is the only thing that is going to drive development, create employment and lead Bangladesh to a trillion-dollar economy. Today’s development of the China Economic and Industrial Zone is a building block towards that ambition,” he said.

Developed on nearly 800 acres under a government-to-government initiative between Bangladesh and China, CEIZ is expected to become a major manufacturing and logistics hub for Chinese and other foreign investors.

The zone aims to attract export-oriented industries, including electric vehicles, batteries, medical equipment, electronics and other advanced manufacturing sectors.

Chinese Ambassador Yao Wen said the groundbreaking marked an important step in implementing the outcomes of Prime Minister Tarique Rahman’s visit to China and reflected the two countries’ commitment to expanding practical economic cooperation.

China Road and Bridge Corporation (CRBC), the project’s developer, said construction had entered a new phase.

“CRBC will work closely with all partners to build CEIZ into a key platform for bilateral industrial cooperation, a major destination for international investment and a model zone of mutual benefit,” said Li Changgui, vice-president of the company.

Beza Executive Chairman Ashik Chowdhury said investor confidence had strengthened significantly following the prime minister’s visit to China in June.

“More than 30 Chinese companies have already committed roughly half a billion dollars to a site that, as of this morning, is still open ground,” he said.

Home Minister Salahuddin Ahmed said the project represented more than the construction of an industrial park.

“Bangladesh is open for business, and we mean business. Today’s groundbreaking is not just the start of construction, but the foundation of a lasting economic bridge between Bangladesh and China,” he said.

The China Economic and Industrial Zone in Chattogram’s Anwara was first proposed in 2016 under a Bangladesh-China memorandum of understanding signed during Chinese President Xi Jinping’s visit to Dhaka.

Although Beza completed land acquisition in 2018, the project made little progress for years because of delays in appointing the developer, finalising the development agreement, securing Chinese financing and approving supporting infrastructure.

Yesterday’s launch came little more than a month after the Executive Committee of the National Economic Council (Ecnec) approved a Tk 41.89 billion supporting infrastructure project for the zone.

The project will be financed with Tk 17.22 billion in government funds and Tk 24.67 billion in preferential buyer’s credit from the Export-Import Bank of China.

It includes a multipurpose jetty, connecting roads, power substations, a gas transmission line, a water reservoir, a central effluent treatment plant, waste management facilities and other utilities needed to make the zone investment-ready.
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Implementation is scheduled from January 2027 to December 2031.

Earlier this month, the Cabinet Committee on Economic Affairs also approved the development and land lease agreements with Bangladesh CEIZ Company Ltd, the joint venture implementing the project. Under the arrangement, BEZA will hold a 30 percent stake, while CRBC will own the remaining 70 percent.

Located on the southern bank of the Karnaphuli River, close to Chattogram Port, the Karnaphuli Tunnel and Shah Amanat International Airport, the economic zone is expected to strengthen Bangladesh’s position in regional supply chains while supporting the government’s efforts to transform Chattogram into the country’s leading commercial and industrial hub.

Officials said the project would also increase industrial traffic through the Karnaphuli Tunnel and attract large-scale export-oriented investment, particularly from China.

More than three-quarters of bank lending in Bangladesh continues to flow to large corporate borrowers, leaving SMEs and other underserved businesses with limited access to finance, experts said at a roundtable yesterday.

“Bangladesh’s financial system remains heavily skewed towards large corporate borrowers, limiting access to finance for SMEs, rural entrepreneurs, and other underserved groups,” said Mohammed Nurul Amin, chairman of Bangladesh Krishi Bank.

He said that 75 to 80 percent of bank lending continues to flow to the corporate sector, creating a structural imbalance that has persisted for years.

He made the comment at the event on “Access to Finance in Bangladesh: Building a More Conducive Financial System for the Private Sector”, organised by Policy Exchange Bangladesh (PEB) and the Metropolitan Chamber of Commerce and Industry (MCCI) at the chamber’s Gulshan office in Dhaka.

While large businesses enjoy easier access to credit, many small entrepreneurs, traders and informal businesses struggle to enter the formal banking system, he said.

To improve financial inclusion, Amin urged banks to expand invoice financing, or factoring, allowing suppliers to obtain financing against confirmed purchase orders or invoices without relying on traditional collateral.

He also proposed establishing a national collateral registry to help banks verify pledged assets, reducing fraud and improving lending efficiency.

In addition, he called for greater use of movable assets as collateral and for extending the validity of trade licences to reduce administrative hurdles for small businesses.

Syed Abdul Momen, head of SME at BRAC Bank, said the banking sector’s long-standing focus on large corporates rather than SMEs lies at the root of many of its current problems.

Since independence, around 75 percent of bank financing has gone to corporates, leaving SMEs with limited access to credit, he said.

Momen argued that banks place excessive emphasis on collateral even though BRAC Bank’s experience suggests that it does not necessarily reduce risk.

Of the bank’s roughly Tk 1 lakh crore in assets, about half is in SME loans. Around Tk 40,000 crore of those loans carry little or no collateral and have a nonperforming loan (NPL) ratio of just 2 percent, compared with 7 percent for the Tk 10,000 crore collateral-backed SME portfolio.

“Collateral gives banks a sense of comfort, but it does not necessarily reduce risk,” he said, urging lenders to assess borrowers based on cash flow rather than pledged assets.

He added that expanding SME finance requires a stronger digital ecosystem, wider data sharing and a private credit bureau.

He also highlighted BRAC Bank’s fully digital loan product for bKash merchants, offering loans of up to Tk 50,000 with approvals in about a minute.

Shams Mahmud, managing director of Shasha Denims Ltd, said exporters are under growing pressure as production costs continue to rise while export prices remain largely stagnant because of intense global competition.

The doubling of gas prices on January 30, coupled with higher electricity tariffs, wages and taxes, has sharply increased production costs, he said.

“Our energy bill has almost doubled, and we have to bear an additional Tk 36 crore. Where will that money come from?” Mahmud said.

He also criticised policy misalignment and difficulties in obtaining bank guarantees and offshore financing, saying regulatory uncertainty and banking delays can disrupt business operations and push otherwise viable companies towards default.

Syed Mohammad Kamal, president of the American Chamber of Commerce in Bangladesh (AmCham), said SMEs lack the institutional support available to large firms, requiring coordinated action by the central bank, the judiciary and other stakeholders.

Andalib Mirza, head of multinational wholesale banking at HSBC Bangladesh, said limited digital data and weak financial verification remain major obstacles, particularly for non-garment companies without export records.

Delivering the keynote address, Shams Zaman, country managing partner of PricewaterhouseCoopers Bangladesh Pvt Ltd (PwC), said credible resolution of distressed assets is essential to restoring confidence and reviving credit growth.

He also stressed the need to develop long-term sources of capital beyond the banking sector, proposing that the Guarantee Window be transformed into an autonomous, professionally managed institution to help diversify the country’s financial system.

Moderating the discussion, M Masrur Reaz, chairman and CEO of Policy Exchange Bangladesh, said the Bangladesh Business Climate Index has consistently identified access to finance as the weakest aspect of the country’s business environment, prompting the roundtable to focus on practical reforms to improve financing for businesses.

Farooq Ahmed, secretary-general and CEO of MCCI, also addressed the event.

Bank loans tied up under court stay orders jumped more than eightfold over the three years to the end of 2025, reaching Tk 182,419 crore, according to a Bangladesh Bank (BB) report.

The amount rose by 80 percent from Tk 101,429 crore in 2024 to Tk 182,419 crore by the end of 2025, showing a sudden increase in borrowers seeking court protection.
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This upward trajectory began from a base of Tk 21,226 crore at the end of 2022. The growth shifted from steady to explosive during the 2023-2024 period, when the value of funds blocked by stay orders more than doubled in just twelve months.

This momentum peaked in 2025, with the final 80 percent surge completing an eightfold expansion of frozen capital over the full three-year window.

Meanwhile, the number of stay order cases rose nearly fourfold, from 226 in 2022 to 845 in 2025, as more borrowers turned to the courts.

The sharp rise in loans under stay orders comes as the country’s banking sector is already struggling with a record volume of bad loans, adding to pressure on an already fragile financial system.

The central bank said the steady rise in loans under stay orders is delaying recoveries and putting pressure on liquidity and earnings of banks.

“The persistent growth in loans under stay orders suggests considerable stress on the banking sector’s liquidity and earnings,” said the BB in its Financial Stability Report 2025.

It recommended faster disposal of banking cases and policy measures to remove legal bottlenecks, saying this would help strengthen financial stability.

At the end of 2025, defaulted loans stood at Tk 557,217 crore. Unclassified rescheduled loans totalled Tk 268,733 crore, while written-off loans reached Tk 83,479 crore. All three increased during the year.

Mati Ul Hasan, managing director of Mercantile Bank PLC, said banks are making a concerted effort to recover defaulted loans. Some borrowers are seeking stay orders to block those efforts.

“A stay order means that all our recovery proceedings come to a halt,” he said. “If we take steps to auction a property and a stay order is issued, we cannot proceed until it is vacated.”

“This is a major challenge to loan recovery. The overall effect is that our cash flow is affected, and funds remain blocked, reducing our capacity to extend new loans.”

Barrister Shamim Khaled Ahmed said many defaulters obtain stay orders from the High Court to stop banks from classifying them as defaulters. However, not all stay orders involve defaulting borrowers.

“In some cases, bank directors also seek stay orders,” he said.

“But the number of stay orders related to loans is growing because there are only two courts dealing with banking matters. We should increase the number of courts to speed up the settlement of these cases. The longer the delay, the more serious the damage to the banking sector,” he said.

Fahmida Khatun, executive director of local think tank Centre for Policy Dialogue (CPD), said the increase shows another weakness in the banking sector, which is already burdened by a high volume of non-performing loans.

“It looks like Bangladesh is dealing with several issues simultaneously, including officially recognised NPLs, major gaps in provisions, loans that have been written off but still have not been recovered, and a rapidly increasing number of loans under judicial stay orders,” she added.

Fahmida said the stay order issue is especially important from a governance perspective.

“Courts play a vital role in protecting honest borrowers’ rights, and not every borrower requesting a stay should be viewed as intentionally defaulting.”
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However, when such a large amount of bank credit is tied up under stay orders, the wider economic impact can be serious, she added.

“Lengthy legal proceedings can slow down recovery efforts, weaken the rights of creditors, and encourage strategic borrowers to use litigation as a way to delay repayment.”

The CPD executive director said capital is another concern. If banks cannot set aside enough provisions for deteriorating assets, their reported capital might not truly reflect the financial losses in their loan portfolios.

She said recognising these losses and setting aside enough reserves could reveal capital weaknesses in some banks. So, this issue goes beyond just loan recovery. It is really about maintaining financial stability.

Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank PLC, said the growing number of defaulters has also led to more borrowers seeking stay orders.

“While I understand that going to court is a fundamental right, there should be a provision requiring borrowers to make a down payment of a certain portion of the loan before obtaining a stay order. This would discourage many borrowers from going to court,” he added.

Mashrur Arefin, chairman of Association of Bankers, Bangladesh (ABB), said the growing use of writ petitions has shifted from protecting the constitutional rights of aggrieved parties to becoming an operational tool for serial defaulters.

He said the practice generally follows three stages.

First, borrowers obtain a High Court stay order on their Credit Information Bureau records, allowing them to maintain their reputation, continue banking activities and even secure fresh loans.

Second, when banks move to auction mortgaged properties to recover dues, borrowers seek another stay order, making it much harder for banks to convert collateral into cash.

Finally, banks become caught in lengthy legal proceedings between lower courts and the High Court, delaying recovery efforts for three to four years and allowing cases to pile up, he said.

“The ultimate victim is the financial ecosystem. With time being taken that way, the value of recovery reduces, legal costs go up, liquidity gets locked, and credit discipline suffers,” said Mashrur, who is also managing director and CEO of City Bank.

Nvidia is in talks to provide roughly $250 billion in financing guarantees for OpenAI as part of a massive data center project, the Wall Street Journal reported on Sunday.

The backstop from Nvidia would help the ChatGPT maker lease a 10-gigawatt project that SoftBank’s energy subsidiary is developing in southern Ohio, the newspaper said, citing people familiar with the matter.For OpenAI, a deal would be the first step toward controlling its own infrastructure instead of renting it from Microsoft, Amazon and Oracle, while for Nvidia, it would guarantee demand for its chips for years to come.The project is expected to cost more than $500 billion in total, including the chips inside the data center, according to the WSJ.The $250 billion guarantee covers the data center lease and debt financing, but would not cover the Nvidia chips inside the center, the WSJ said.The chipmaker was also discussing financing OpenAI’s chip purchases worth up to $350 billion.

Nvidia’s backing would support financing vehicles aimed at reassuring lenders about the project’s funding, the report added.The first phase of the project is expected to be finished in 2028, with around 800 megawatts of power, the Journal said.The power is controlled by the US government and funded separately by Japan under a recent trade deal, tied to Tokyo’s pledge to invest $33 billion in a natural gas plant.US Commerce Secretary Howard Lutnick is involved in deciding who gets access, according to the report.Reuters could not immediately verify the report.Nvidia, OpenAI and the US Commerce Department did not respond to requests for comment outside regular business hours.OpenAI, in advanced talks for several weeks to lease the site, is among the companies showing the strongest interest in the project, while Anthropic, Microsoft and Google have also spoken to Lutnick in recent weeks, the report said.

The deal underscores a broader shift as tech giants increasingly tap debt and equity markets to fund AI infrastructure, with spending set to top $700 billion this year.

যার ইতিবাচক প্রভাব পড়েছে জ্বালানি তেলের বাজারে। গতকাল আন্তর্জাতিক মানদণ্ড ব্রেন্ট ক্রুডের দাম ব্যারেলপ্রতি ৭ ডলার ৫৫ সেন্ট বা প্রায় ৭ দশমিক ৮ শতাংশ কমে ৮৯ ডলার ২৩ সেন্টে নেমেছে। একই সময়ে যুক্তরাষ্ট্রের বেঞ্চমার্ক ডব্লিউটিআইয়ের দাম ৬ ডলার ১ সেন্ট বা ৬ দশমিক ৭৩ শতাংশ কমে দাঁড়িয়েছে ব্যারেলপ্রতি ৮৩ ডলার ৩০ সেন্টে। উভয় বেঞ্চমার্কের দামই ২০ জুলাইয়ের পর সর্বনিম্ন পর্যায়ে রয়েছে।

ইরান সংঘাতের কারণে হরমুজ প্রণালি দিয়ে জ্বালানি তেল পরিবহন ব্যাপকভাবে কমে যাওয়ায় গত সপ্তাহে ব্রেন্টের দাম ব্যারেলপ্রতি ১০০ ডলার ছাড়িয়ে গিয়েছিল। সংঘাত লোহিত সাগরেও ছড়িয়ে পড়ায় সৌদি আরব থেকে বাব এল-মান্দেব প্রণালি হয়ে এশিয়ায় তেল রফতানি বাধাগ্রস্ত হয়। তবে হামলা বন্ধের ঘোষণার পর সরবরাহ পরিস্থিতি স্বাভাবিক হওয়ার সম্ভাবনায় বাজারে মূল্যচাপ কমতে শুরু করেছে।

জাতিসংঘে যুক্তরাষ্ট্রের রাষ্ট্রদূত মাইক ওয়াল্টজ জানিয়েছেন, কূটনৈতিক উদ্যোগের জন্য সময় দিতে প্রেসিডেন্ট ডোনাল্ড ট্রাম্প ইরানে যুক্তরাষ্ট্রের হামলা স্থগিতের সিদ্ধান্ত নিয়েছেন। টানা ১৩ রাত হামলার পর অভিযান বন্ধ করে ওয়াশিংটন। এর জবাবে ইরানও জানিয়েছে, যুক্তরাষ্ট্র হামলা বন্ধ রাখলে তারাও পাল্টা আক্রমণ স্থগিত রাখবে।

তবে বিশ্লেষকরা সতর্ক করে বলেছেন, এ বিরতি এখনো আনুষ্ঠানিক যুদ্ধবিরতি নয়। এসইবি রিসার্চের বাজার বিশ্লেষক ওলে হভালবাই বলেন, দুই পক্ষের মধ্যে কোনো স্বাক্ষরিত কাঠামো, যাচাই ব্যবস্থা কিংবা নির্দিষ্ট সময়সীমা নেই। পণ্য পরিবহনবিষয়ক তথ্য সরবরাহকারী প্রতিষ্ঠান কেপলারের হিসাবে, সপ্তাহান্তে প্রতিদিন ১০টিরও কম পণ্যবাহী জাহাজ হরমুজ প্রণালি অতিক্রম করেছে। যুদ্ধের আগে এ পথে প্রতিদিন প্রায় দুই কোটি ব্যারেল জ্বালানি তেল পরিবহন হতো। বর্তমানে প্রবাহ যুদ্ধপূর্ব সময়ের প্রায় ১৫ শতাংশে নেমে এসেছে।

এদিকে ইরান জানিয়েছে, তারা এখনো হরমুজ প্রণালির নিয়ন্ত্রণে রয়েছে এবং যুক্তরাষ্ট্রের সঙ্গে নতুন করে শান্তি আলোচনা চায়নি। দেশটির পররাষ্ট্র মন্ত্রণালয়ের মুখপাত্র ইসমাইল বাঘাই বলেছেন, মধ্যস্থতাকারীদের মাধ্যমে বার্তা আদান-প্রদান অব্যাহত থাকলেও আলোচনার জন্য ইরানের অনুরোধের খবর সঠিক নয়।

ইরানের রাষ্ট্রীয় গণমাধ্যম জানিয়েছে, অনুমতি ছাড়া হরমুজ অতিক্রমের চেষ্টা করায় গতকালও ছয়টি জাহাজকে ফিরিয়ে দেয়া হয়েছে। তেহরানের দাবি, জাহাজগুলোকে ইরান নির্ধারিত নৌপথ ব্যবহার করতে হবে। ফলে হামলা বন্ধ ও তেলের দাম কমলেও হরমুজ দিয়ে স্বাভাবিক নৌ-চলাচল কত দ্রুত ফিরবে, তা নিয়ে অনিশ্চয়তা রয়ে গেছে।

Only 11 of Bangladesh's 122 state-owned enterprises (SOEs) and autonomous bodies have been assessed as financially solvent, signifying the fragile financial condition of much of the country's public sector.

A recent assessment by the Finance Division found that the 11 organisations had cash and liquid assets exceeding their total debt, leaving them with negative net debt - a key indicator of financial strength.

The 11 entities are the Bangladesh Energy Regulatory Commission, Bangladesh Industrial Technical Assistance Centre, Eastern Lubricants Blenders, Hotels International, Jamuna Fertiliser Company, National Housing Authority, Nuclear Power Plant Company Bangladesh, Petroleum Transmission Company, Rajshahi WASA, SME Foundation, and TSP Complex.

The assessment formed part of a broader review by the SOE Wing of the Finance Division, which scrutinised the financial performance, debt exposure, contingent liabilities, and governance practices of 122 state-owned enterprises and autonomous bodies.

The report said these organisations play an important role in economic development by providing strategic goods and services and promoting fair competition in key sectors.

Mohammad Jahangir Hossain, general manager (Accounts and Fund Management, Research and Policy Advocacy, Communication and Branding) at SME Foundation, attributes his organisation's financial strength to prudent fund management.

About 90 per cent of the foundation's funds have been invested in government treasury securities that generate returns of around 12 per cent, he tells The Financial Express.

He also says the recovery rate on loans disbursed through banks and non-bank financial institutions is "nearly 100 per cent", reflecting strong credit discipline among beneficiaries.

Abu Mohammad Saifuddin, company secretary of Eastern Lubricants Blenders, says the company's financial position is supported by sound corporate governance, a strong customer base, and steady market demand.

He says the government-owned entity distributes its products through the marketing networks of Padma, Meghna, and Jamuna petroleum companies while competing with a small number of private-sector firms.

"As a listed company on the Dhaka Stock Exchange, we maintain good corporate governance and compete fairly in the market," he says.

The Finance Division's assessment comes as concerns grow over the financial sustainability of many state-owned enterprises, several of which continue to rely on government support because of mounting losses and debt burdens.

People's Insurance Company Limited posted a sharp increase in earnings for the second quarter of 2026, driven by higher interest income, rental income and other operating income.

According to a disclosure filed with the Dhaka Stock Exchange (DSE) yesterday (26 July), the listed non-life insurer reported earnings per share (EPS) of Tk1.64 for the April-June quarter, up from Tk0.86 in the same period last year, marking a year-on-year increase of about 91%.

For the January-June period, EPS rose to Tk2.93, compared with Tk1.49 in the same period last year, representing a 97% year-on-year increase.

The company said the improved earnings were driven by higher interest income, rental income and other operating income during the period.

Its net operating cash flow per share increased to Tk2.68 in the first six months of 2026 from Tk1.66 a year earlier.

Meanwhile, net asset value (NAV) per share rose to Tk40.88 as of 30 June 2026, from Tk36.30 a year earlier, indicating a stronger financial position.

Following the earnings announcement, People's Insurance shares gained 4.9% to close at Tk59.90 on the Dhaka Stock Exchange today (27 July).

The earnings growth comes as Bangladesh's insurance sector gradually recovers amid regulatory efforts to strengthen governance, improve claims settlement and restore investor confidence. While many insurers continue to grapple with weak underwriting margins and sluggish premium growth, stronger investment returns have helped boost the profitability of several companies.

Established in 1985, People's Insurance Company is one of Bangladesh's oldest private-sector non-life insurers. It offers a range of general insurance products, including fire, marine, motor, engineering and miscellaneous insurance, serving both corporate and individual clients.

The company operates through an extensive branch network across the country and relies on a combination of underwriting and investment income to support its profitability.

Bangladesh received US$2.437 billion in workers' remittances during the first 26 days of July, registering a 26.1 percent year-on-year growth, according to the latest data released by Bangladesh Bank.

The country had received US$1.933 billion in remittances during the corresponding period of July last year.

Expatriate Bangladeshis sent home US$138 million on July 26 alone, reflecting the continued strong pace of inward remittance flows.

The sustained growth in remittance earnings is expected to strengthen the country's foreign exchange reserves, support external sector stability, and help meet the rising demand for foreign currency to finance imports, BSS reports.

Remittance has remained one of Bangladesh's key sources of foreign exchange, alongside export earnings, playing a vital role in supporting the national economy and household consumption.