The European Union (EU) is moving ahead with plans to roll out its Global Green Bond Initiative (GGBI) in Bangladesh, a move expected to mobilise up to 20 billion euro in private capital and significantly strengthen the country's access to sustainable development finance, officials said.

In a recent letter addressed to Nazma Mobarek, secretary of the Financial Institutions Division (FID) under the Ministry of Finance, the EU proposed a strategic partnership with the Bangladesh government to implement the initiative and initiate discussions on deploying the large-scale public-private investment mechanism.Finance

Launched in April 2026 by the EU and a consortium of development finance institutions, the GGBI is designed to channel up to 20 billion euro in private investment into sustainable infrastructure projects in low- and middle-income countries, including Bangladesh.

The initiative comes at a critical time as Bangladesh approaches graduation from the Least Developed Country (LDC) category, a transition that is expected to reduce access to concessional financing and increase the need to attract private investment for climate resilience and infrastructure development.

Officials and experts say Bangladesh will require billions of dollars annually to implement its climate adaptation agenda, including the Climate Prosperity Plan and renewable energy transition targets.

Against this backdrop, the EU-backed initiative is expected to create significant financing opportunities across several strategic sectors.

Under the proposal, the GGBI will provide technical and regulatory assistance to the Bangladesh Securities and Exchange Commission (BSEC), Bangladesh Bank (BB) and the Dhaka Stock Exchange (DSE) to strengthen the country's green bond framework and broader sustainable finance ecosystem.

The initiative may also offer transaction and issuer support to banks, corporates, state-owned enterprises and, potentially, sovereign green bond issuances, enabling local institutions to tap international climate finance and green capital markets.

In addition, it plans to deploy blended finance instruments to reduce borrowing costs, extend financing tenures and attract a wider pool of foreign investors to Bangladesh's green finance sector.Economics

Sector-specific support is expected for areas facing substantial financing gaps, including renewable energy, climate-resilient infrastructure, water and waste management, and sustainable transport.

When contacted, a senior FID official said, "The EU Delegation has expressed interest in holding discussions with the government between June 27 and July 2, 2026, to explore possible pathways for implementing the initiative in Bangladesh and identify areas for continued cooperation."

According to the official, the proposed meetings will focus on identifying priority sectors and mechanisms for long-term collaboration. However, securing a substantial share of the potential 20-billion-euro investment will depend largely on Bangladesh's ability to develop a robust pipeline of bankable green projects and align its regulatory framework with internationally recognised green bond standards.

According to the European Union's Global Gateway programme, the GGBI Fund is one of the three pillars of the EU's Global Green Bond Initiative.

It invests primarily in primary-market green bonds, with priority given to first-time issuers, including governments, local authorities and businesses. At least 20 per cent of the fund's investments will be allocated to least developed countries, supporting both local currency and euro-denominated bonds.

The initiative also seeks to deepen local capital markets, promote the international use of the euro and encourage the adoption of high environmental standards through EU best practices.

The World Bank has approved a $250 million project to help Bangladesh strengthen key public institutions through digital transformation, improved governance and greater transparency.

Approved on 12 June 2025, the Strengthening Institutions for Transparency and Accountability (SITA) project will support reforms in five major government institutions to improve public financial management, domestic revenue mobilisation, procurement, data systems and auditing, according to a World Bank factsheet.

The project aims to modernise the Bangladesh Bureau of Statistics (BBS), the National Board of Revenue (NBR), the Planning Division, the Bangladesh Public Procurement Authority (BPPA) and the Office of the Comptroller and Auditor General (OCAG).

According to the World Bank, stronger public institutions are essential for sustaining Bangladesh's economic growth, creating jobs and achieving long-term development goals.

The project will support the BBS in developing an integrated national data ecosystem to improve the production and use of high-quality data for evidence-based policymaking.

For the NBR, the initiative will focus on modernising tax administration through automation, e-invoicing and integrated digital systems to improve tax compliance and boost domestic revenue collection.

The Planning Division will receive support to strengthen public investment management through digital platforms, artificial intelligence-enabled analytics and real-time monitoring tools.

Meanwhile, the BPPA will enhance its electronic government procurement system with advanced digital features to improve efficiency, transparency and value for money.

The project will also help digitise audit processes at the Office of the Comptroller and Auditor General, with the goal of reducing audit reporting time from 72 months to nine months.

State Minister for Finance and Planning Zonayed Saki said the government remains committed to strengthening public institutions and improving governance to better serve citizens.

"By modernising systems and enhancing transparency in procurement, data quality, domestic resource mobilisation, public financial management and project implementation, the project is expected to build a stronger foundation for effective service delivery," he said.

He added that the initiative would also help increase public trust in government institutions and improve accountability.

Jean Pesme, the World Bank's Divisional Director for Bangladesh and Bhutan, said Bangladesh's next phase of economic growth would depend on strong and transparent institutions.

"The SITA project will help modernise core government systems while strengthening data quality, so decisions are better informed, results are tracked more effectively and accountability is reinforced," he said.

Consumers will have to pay more for officially imported smartphones from 1 July, as a temporary import duty concession has not been extended in the proposed FY27 budget.

The government cut customs duty on imported mobile phones and equipment from 25% to 10% in January to narrow the price gap between officially imported and grey-market devices. The concession, valid until 30 June, reduced the effective tax burden on imported handsets to about 43.43% from over 64%.

As the National Board of Revenue (NBR) has not extended the measure, the effective tax burden will return to 64.25% from 1 July. Industry leaders estimate official smartphone prices could rise by 20-25%.

The Mobile Phone Industry Owners Association of Bangladesh (MIOB) warned the move would raise retail prices. "Our production costs are already rising as prices of memory chips, processors, motherboards and batteries continue to increase globally," said MIOB President Zakaria Shahid.
Infograph: TBS
Infograph: TBS

"If duties return to previous levels, smartphone prices will inevitably rise further, and many consumers may return to the grey market," he added.

An NBR customs official, requesting anonymity, said the concession was withdrawn because it failed to achieve its objectives. "The incentive was introduced to encourage legal imports and local manufacturing. But neither official imports nor domestic production increased as expected," the official said.

Bangladesh has developed a sizeable phone assembly industry producing mainly entry-level and mid-range devices. However, premium smartphones from brands such as Apple, Google, Huawei, Motorola, Samsung and Xiaomi remain commercially unviable to assemble locally, leaving Bangladesh dependent on imports for flagship models.

Higher taxes may strengthen grey market

Bangladesh's smartphone market remains split between official and grey-market imports. The wide price gap has made unofficial devices attractive despite their lack of an official warranty and after-sales support.

Although the Bangladesh Telecommunication Regulatory Commission launched the National Equipment Identity Register (NEIR) earlier this year to identify and eventually block unregistered devices, grey-market phones remain widely available.

Technology entrepreneur Fahim Mashroor said higher smartphone prices would hurt consumers at a time when smartphones have become essential for education, employment, digital financial services and e-commerce.

"A smartphone is no longer a luxury. It is part of the country's digital infrastructure, and the tax burden should be reduced," he said.

Industry sources said several brands had already increased handset prices by Tk500-Tk5,000 before the January duty cut took effect, citing higher global component costs, while unofficial imports continued unabated.

With the effective tax burden returning to more than 64%, industry players fear the price gap between official and grey-market devices will widen further, discouraging legal imports and potentially reducing long-term government revenue.

The broad index of the Dhaka Stock Exchange (DSE) crossed the 5,700-point mark on Sunday for the first time in nearly 22 months, as investors poured in fresh capital ahead of the fiscal year-end to take advantage of tax benefits.

The market opened the day's session on a positive note and the DSE broad index DSEX continued its upward trend till closure as investors remained buoyant. At the end of the session, the DSEX closed at 5,719 points, 1.18 per cent or 66.94 points up from the previous session. The DSE rose for four consecutive sessions, adding 165 points to the broad index.

S M Galibur Rahman, head of research and strategic planning at Shanta Securities, said the number of sellers declined significantly as the majority of investors were taking fresh positions. Many of them wanted to avail themselves of tax rebates by investing in listed securities. As investments must be made by June 30 for tax rebates, the market has persistently witnessed high turnover - above Tk 10 billion in recent sessions.

"Investors' intention to get a tax waiver was the main driver of the recent market rally," said Mr Rahman.

The companies that played a significant role in pulling the broad index include BRAC Bank, Pubali Bank, Square Pharmaceuticals, Beximco Pharmaceuticals, and Grameenphone.

Of them, BRAC Bank alone added 6.8 points to the broad index.

Meanwhile, BEXIMCO on Sunday emerged as the top gainer while also topping the chart of turnover leaders.

The company posted a turnover of Tk 1.05 billion while its stock price advanced 9.86 per cent to close at Tk 31.20 per share.

Insiders said the resumption of trading of Beximco Pharmaceuticals shares on the London Stock Exchange played a supportive role in the robust performance of BEXIMCO on the trading floor of the DSE.

Of the 394 issues traded, 213 advanced, 133 declined and 48 were unchanged, and the DSE posted a turnover of Tk 13.71 billion, 23.43 per cent up from the previous session.

All of the blue-chip stocks included in the DS30 index closed in the green and the index advanced 1.47 per cent or 31.41 points to 2,162.56 points. Market operators said a positive macroeconomic outlook helped restore investor confidence, which was reflected in the vibrant equity market.

Mr Rahman said fuel prices had almost returned to the pre-Iran war level, which would benefit the economy. Treasury rates also declined gradually. Subsequently, interest rates would fall, allowing breathing space for consumers.

"These factors jointly supported the equity market."

Investor participation concentrated mainly on the banking sector, which witnessed transactions of shares worth Tk 2.23 billion, constituting 16.3 per cent of the market turnover.

Daffodil Computers was the worst loser on Sunday after declining 4.25 per cent to close at Tk 146.40 per share on the DSE.

Popular Life Insurance, a listed insurer, has recommended a 20% cash dividend for its shareholders for 2025.

Despite a 42% decline in its earnings per share (EPS) compared to the previous year, the company recommended the same dividend it had paid earlier, according to data published today (28 June) on the stock exchange's website.

Following the dividend declaration, its shares price declined by 1.12% to close at Tk61.60 each at the Dhaka Stock Exchange (DSE).

Calculating its outstanding shares with the EPS, Popular Life Insurance profit stood at Tk8.88 crore, a significantly down from Tk15.32 crore in 2024.

According to disclosure, the net asset value per share of Popular Life Insurance stood at Tk78.10 at the end of 2025, and its net operating cash flow per share stood at negative at Tk18.86.

In 2025, its net asset value declined while its net cash negative widened significantly, the disclosure showed.

At the end of 2024, its net asset value was Tk89.01, and cash flow was negative at Tk3.45.

To secure the shareholders nod on the recommended dividend, the insurer scheduled an annual general meeting on 22 September through the virtually digital platform.

To identify its shareholders, the record date has been fixed on 20 August.

On 21 May, the insurer informed its board that it had decided to construct a joint venture multi-storied building on the company's own land located in the capital's Badda area on 115.56 decimal land. Popular Life Insurance got listed on the bourse in 2005.

As of May, out of its total shares, sponsor-directors held 23.70% stake, while institutional investors 24.57% and general public held 51.73% stake.

Bangladesh Bank (BB) has formally launched a Tk 100 billion special refinancing scheme to boost agricultural production and ensure food security, while revising key provisions from its initial proposal.

The new directive replaces the plan to use foreign currency reserves with domestic bank surplus liquidity and reduces the scheme’s duration from five years to three.

Through an Agriculture Credit Department (ACD) circular, issued today (Sunday) and sent to the Managing Directors/Chief Executives Officers of all banks, the central bank provided a comprehensive set of revised operating guidelines for the scheme. This follow-up circular replaces critical parameters previously outlined in the June 8, 2026.

A fundamental shift in policy has occurred regarding the source of funding. According to today’s circular, the Tk 100 billion scheme is no longer dependent on using foreign currency reserves. Instead, it will be constituted from the surplus liquidity of scheduled banks operating under the management of Bangladesh Bank. This change ensures the program operates strictly with domestic funds, preserving external reserves.

The duration of the scheme has also been adjusted. The central bank specified that the new refinancing tenor is now fixed at three (3) years from the date of the new circular issuance, down from the original five-year proposal.

All other instructions and provisions of the June 8, 2026, circular that were not specifically amended remain unchanged. Bangladesh Bank stated that these new guidelines are effective immediately.

This revised approach by the central bank appears intended to streamline the refinancing process by leveraging domestic banking liquidity while supporting the crucial agriculture sector—responsible for rural employment and national food security—in a sustainable and less reserve-dependent manner.

Few phrases have dominated public discourse in Bangladesh over the past several years as much as these two words. They have haunted households and policymakers alike.

The impact is felt daily. Travelling a short distance by rickshaw in Dhaka for Tk 10 is a thing of the past. A bundle of leafy vegetables for Tk 10 requires hard bargaining with the floating vendor in neighbourhood alleys. Prices have risen so much that Tk 100 vanishes into a vegetable bag soon after it comes out of the wallet.

For a four-member family, keeping weekly bills for vegetables, eggs and other essentials within Tk 500 has become nearly impossible. That note now buys far less than it did two years ago. And there is no sign of prices cooling.

The Bangladesh Bank (BB) has maintained a contractionary monetary policy stance since the first half of fiscal year 2023-24 to make money more expensive and tame excess demand to curb inflation. It started raising the policy rate, or repo rate – at which it lends to commercial banks – in May 2022 and hiked it to 10 percent in October 2024. The rate is yet to come down.

Yet inflation – a measure of the increase in the prices of a basket of goods and services purchased by an average consumer – remains stubborn.

Month-on-month inflation stood at 9.42 percent at the end of May, with the 12-month average above 8.6 percent, indicating that overall inflation is likely to hover well above the BB’s target of 7 percent at the end of June this year.

This would be at least the sixth consecutive year inflation has exceeded the central bank’s targets. In FY25, average inflation hit 10 percent, more than 2 percentage points above target. The year before, it was 9.73 percent in June 2024, 2.23 percentage points above the BB’s goal.

Similarly, actual private-sector credit growth fell short of its targets set in the successive monetary policies.

In April 2026, it expanded by only 4.75 percent year-on-year, against a BB target of 8.5 percent by end-June. In April 2025, private-sector credit growth was 7.50 percent.

Public-sector credit growth, by contrast, exceeded its projected level.

The question is, why? What’s wrong with monetary policy that has failed to contain spiralling prices meaningfully, reverse sluggish demand and accelerate economic activity?

In its recent monetary policy statements, the BB attributed persistently high inflation to a combination of factors – the Russia-Ukraine war and conflicts in the Middle East, a more than 40 percent depreciation of the taka against the US dollar, and volatility in global commodity prices.

Domestically, years of a lending rate cap at 9 percent kept real interest rates negative for a while, repeated fuel and energy price hikes led to higher production and transportation costs, and government continued to borrow heavily to finance budget deficits.

This coincided with domestic production and supply disruptions caused by recurrent floods and rising inflation expectations, causing prices to trend upward.

FISCAL AND MONETARY FAILURES

Birupaksha Paul, professor of economics at the State University of New York at Cortland and a former chief economist at the BB, argues inflation has remained high “because of both fiscal and monetary failures.”

“The government has increased its borrowings to one of the highest levels, which is inflationary. On the other hand, the central bank’s liquidity support to cash-hungry banks is also inflationary. These two channels are thwarting monetary tightening with high policy rates,” he said.

The BB has so far provided Tk 75,903 crore in emergency liquidity assistance to banks facing cash shortages as of June 6, Finance Minister Amir Khosru Mahmud Chowdhury told parliament last week.

Meanwhile, the government’s net borrowing from the banking system surged more than threefold to Tk 1,04,410 crore during July–April of FY26, from Tk 30,405 crore a year earlier.

Birupaksha said high interest rates have also contributed to limited credit growth, while its weakness also stems from institutional failures such as non-inclusive politics, extortion by political thugs, and the poor law and order situation.

“The government failed to stimulate business confidence by adequately supporting the closed or vandalised mills and factories. It’s a new type of fiscal-monetary trap that adds fuel to inflation and delivers a damper to private credit growth,” he said.

INFLATION IS NOT DEMAND-DRIVEN

Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD), has a different reading.

She argues monetary policy has had limited success in achieving its key objectives for several reasons, primarily because inflation has not been driven by demand.

“Supply-side disruptions, exchange rate depreciation, higher import costs, and inefficiencies in domestic markets have all played a major role. Monetary policy, on its own, cannot easily solve this,” said Fahmida, also a director on the BB’s board.

For private-sector credit, she said high borrowing costs are only a part of the story. Weak investor confidence, energy shortages and policy uncertainty are also responsible.

“That is why we have seen earlier that when companies are reluctant to invest due to the lack of an enabling environment, simply adjusting interest rates is unlikely to generate the desired increase in private credit,” she said.

According to her, monetary policy should be supported by prudent fiscal policy and broader structural reforms that improve the investment climate, ease supply constraints, and strengthen market competition. “Without such policy coordination, bringing inflation under control while also stimulating investment and growth will remain a difficult balancing act.”

UNFAVOURABLE CIRCUMSTANCES

Deen Islam, professor of economics at Dhaka University, said the latest monetary policies of the BB failed to achieve their objectives not only due to the inadequacy of the policy rate but also owing to unfavourable circumstances.

“It should be noted that the rise in prices was caused mostly by supply-side factors, higher import prices, exchange rate effects, and market rigidity, whereas the banking sector was too weak to transmit policy signals effectively,” he said.

At the same time, private credit remained subdued because both banks and borrowers became cautious.

“Therefore, the next monetary policy should not only announce a rate stance; it should explain the transmission strategy: how BB will anchor inflation expectations, restore credit discipline, support productive lending, coordinate with fiscal policy, and rebuild confidence in the banking system,” he added.

The Dhaka Stock Exchange (DSE) closed the week on a mixed note today (25 June), with the benchmark DSEX index posting a net decline of 9 points over five trading sessions.

The market gained ground in three of the five sessions, accumulating 98.62 points, but losses of 107.19 points in the remaining two days proved heavier, dragging the index into negative territory for the week.

Stocks extended their rally into a third consecutive session yesterday, with the DSEX rising 36 points as turnover climbed 18% to Tk1,110.74 crore.

Trading opened on a positive note at 10am, with the benchmark indices advancing from the outset as a majority of stocks gained in value. The upward momentum held throughout the session, sustaining gains until the market closed at 2pm. Of the 395 issues traded, 273 advanced, 68 declined, and 54 remained unchanged.

Pragati Insurance led the gainers, with its share price rising 9.90% to Tk83.2. Sonargaon Textile followed with a 9.58% gain to Tk96, while Green Delta Mutual Fund added 8.57% to close at Tk3.8.

On the losing side, Beximco Ltd topped the decliners, shedding 9.84% to Tk28.4. International Leasing and Premier Leasing both fell 8.33%, closing at Tk1.1 and Tk1.2 respectively.

EBL Securities, in its daily market commentary, said the benchmark index ended the week marginally lower despite a late recovery, as early-week profit-taking following the post-budget rally outweighed a subsequent rebound driven by bargain hunting in undervalued stocks.

The brokerage noted that the market opened on a subdued note, with investors locking in gains from recently appreciated stocks amid uncertainty over near-term policy direction.

Momentum returned from midweek, however, as bargain hunters moved in to accumulate equities, a trend supported by the Finance Minister's reaffirmation of the government's commitment to long-term capital market development.

The recovery extended through the latter part of the week, aided by easing concerns over the Strait of Hormuz and expectations of market-friendly policy developments, allowing the index to claw back most of its earlier losses. The appeal of tax rebate benefits also encouraged fresh investor exposure to the capital market, the brokerage added.

A tax relief measure on mobile phone imports is set to expire next week with no extension in the proposed budget, stoking fears of further grey market expansion as the National Equipment Identity Register (NEIR) remains unimplemented.

Grey market handsets already account for more than 60 percent of Bangladesh’s smartphone market, according to the Mobile Phone Industry Owners’ Association of Bangladesh, depriving the government of tax revenue and undercutting legitimate importers and local assemblers.
Industry insiders fear the withdrawal of the tax break without implementing NEIR could undermine efforts to curb illegal handset imports.The tax relief was introduced on January 13 after protests by mobile phone importers against the government’s plan to roll out NEIR. During the unrest, roads were blocked, and installations at the Bangladesh Telecommunication Regulatory Commission (BTRC) office were vandalised.To ease tensions, customs duty on imported finished handsets was cut to 10 percent from 25 percent, bringing total tax incidence down to 43.43 percent from 61.80 percent. Duty on components and raw materials for local assemblers was also lowered, to 5 percent from 10 percent.“The tax reduction was introduced to support the transition toward NEIR implementation,” an official of the National Board of Revenue told The Daily Star, requesting anonymity. “If NEIR is implemented, the tax cut may be reconsidered.”NEIR identifies and blocks stolen, cloned or unauthorised devices using each handset’s unique 15-digit IMEI code. It remained stalled under the interim government and has made no progress under the BNP-led administration, which took office in February.

BTRC Chairman Md Emdad ul Bari said the regulator plans to raise the tax issue with the government, as lower taxation remains important for controlling the grey market.

On the stalled rollout, he said implementation must be gradual, given the technical complexity involved. “This is not something that can be enforced overnight. It requires technical readiness, market alignment, and consumer awareness.”

On whether prices would rise once the relief expires, Bari said the impact may not be immediate, noting they did not fall significantly when taxes were cut in January.

“The market depends on multiple factors, including imports, grey market activity, local manufacturing, and assembly. So the discontinuation of the tax reduction may not immediately affect retail prices,” he said.

The NEIR project has been delayed for years. BTRC signed an agreement with Synesis-Radisson-Computer World for the system in November 2020 at a cost of Tk 29 crore, with a trial run beginning in July 2021.

During the trial, authorities found millions of phones in use were unauthorised and that hundreds of feature phones shared identical IMEI numbers -- complications that repeatedly pushed back full enforcement.

Mohammed Mesbah Uddin, chief marketing officer of Fair Group, which is preparing to resume Samsung handset production this year, said NEIR is now critical for local manufacturing.

“To protect investors, support local manufacturing, and curb illegal imports, NEIR implementation is no longer optional -- it is necessary,” he said.

Bangladesh’s apparel exports to European Union (EU) took a severe hit in the first four months of 2026, recording the steepest decline among major global suppliers amid a broader market contraction, according to the latest Eurostat data.

Bangladesh underperformed compared to its key competitors, suffering from a dual blow of eroding export volumes and falling unit prices, said Mohiuddin Rubel, Former Director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Additional Managing Director of Denim Expert Ltd.

According to data presented in the document “EU export document”, total EU apparel imports from across the globe dropped by 10.42 percent year-on-year during the January–April 2026 period, falling to €27.77 billion from €31.00 billion in the corresponding period of 2025.

During this timeframe, Bangladesh’s exports to the EU plummeted by 19.33 percent, dropping to €6.09 billion from €7.54 billion.

Industry experts pointed out that unlike other major competitors who managed to hold ground on either price or volume, Bangladesh lost on both fronts simultaneously. The country’s export volume fell by 9.91 percent to 435.97 million kg, while its average unit price slid sharply by 10.45 percent to €13.96 per kg.

The single-month data for April 2026 painted an even bleaker picture for the country, showing a sharp 19.53 percent year-on-year drop in value, alongside a 14.63 percent decline in volume and a 5.74 percent dip in unit prices.

Mixed Fortunes for Global Competitors

While the overall European market slowed down due to a 5.48 percent drop in global import volumes and a 5.22 percent decline in average unit prices, Bangladesh’s rival manufacturing hubs showed highly varied strategies and outcomes:

China: The top clothing supplier posted the mildest value decline of just 4.70 percent (€7.95 billion) and emerged as the only major exporter to increase its shipping volume, which grew 3.25 percent to 408.91 million kg. This was achieved through aggressive pricing, with its unit price dropping 7.70 percent to €19.44 per kg.

Vietnam: Exhibited remarkable resilience, with its export value dipping a marginal 0.70 percent to €1.37 billion. Despite a 7.11 percent contraction in shipment volume, Vietnam managed to defend its market position through premium pricing, securing a 6.90 percent increase in unit prices to €29.43 per kg.

Turkey and India: Turkey saw a volume-led export value decline of 16.60 percent to €2.42 billion, even as its unit prices rose marginally by 1.49 percent. India registered a 12.10 percent contraction in value to €1.64 billion, hit by drops in both volume (-7.70 percent) and price (-4.76 percent).

Pakistan: Recorded an unusual market dynamic where its export volume actually rose by 5.86 percent (108.53 million kg), but its overall earnings plummeted by 17.94 percent to €1.09 billion due to a massive 22.49 percent collapse in unit prices—the steepest price drop among all monitored nations.

The Eurostat data highlighted that Bangladesh’s double-digit decline represents a distinct vulnerability in the European market. While China opted for volume growth via price cuts and Vietnam successfully prioritized value over volume, Bangladesh was uniquely caught in a downward spiral on both metrics.

Local industry insiders stressed that the dual erosion of price and volume on a comparable scale was not observed in any other major garment-exporting nation, signaling an urgent need for Bangladeshi exporters to re-evaluate pricing strategies, boost competitiveness, and diversify into higher-value apparel segments.

Despite 11 months having passed in the current fiscal year, ministries and divisions have failed to spend even half of the allocation under the Annual Development Programme (ADP), shows the latest data from the Implementation Monitoring and Evaluation Division (IMED).

Data published today (25 June) showed that only Tk1,00,763 crore was spent during the July-May period of FY2025-26, representing 48.23% of the revised ADP allocation.

The government had allocated Tk2,08,935.53 crore under the revised ADP for FY26, including funding from development partners and implementing agencies.

Also, the expenditure during the first 11 months of the fiscal year was Tk10,242 crore lower than the corresponding period of the previous fiscal year. In FY25, ADP implementation reached Tk1,11,005.73 crore (49%) during the July-May period.

The slowdown is even more pronounced compared to FY24, when development spending stood at Tk1,46,375.50 crore (57.54%) in the first 11 months of the fiscal year.

IMED officials said the previous fiscal year did not see a normal environment for development spending. Following the fall of the Awami League government in August 2024, administrative instability emerged, while many project directors and contractors left.

They said the situation continued into the current year. With the government focused on the election, its activities became largely polls-oriented, slowing the pace of development work.

After taking office, the new government began reviewing projects. A screening process was launched to identify projects that were not aligned with their election manifesto. Officials said the review of around 1,300 projects has also slowed implementation.

Mustafa K Mujeri, former director general of BIDS, said the low implementation rate this fiscal year was expected given the exceptional circumstances.

"Most of the government's attention was focused on the election and carrying out reforms. As a result, development projects could not receive the same level of priority," he said.

The economist said past practice showed attempts to boost spending at the end of the fiscal year often created risks of wasteful expenditure.

"Unnecessary or rushed spending may create further problems in the future. The focus should remain on proper planning and quality implementation," he added.

Spending by ministries, divisions

Data shows expenditure during July-May from government funds reached Tk59,789 crore, or 46.71% of the allocation. Spending from foreign loans and grants stood at Tk35,510 crore, or 49.32%, while agencies spent Tk5,465 crore from their own funds.

Only 15 of the 57 ministries and divisions managed to utilise at least half of their allocations. These 15 ministries and divisions accounted for 70.97% of the total ADP allocation, making their performance crucial to overall implementation.

Among the largest recipients, the Health Services Division posted the weakest performance, spending just 25.87% of its allocation. The Ministry of Primary and Mass Education utilised 35.18%, while the Ministry of Railways spent 42.46%.

The Technical and Madrasa Education Division implemented 44.42%, the Secondary and Higher Education Division 47.35%, and the Road Transport and Highways Division 46.23%. The Ministry of Housing and Public Works achieved a slightly better rate of 50.25%.

Bangladesh has secured about $3.11 billion in emergency budget support from four development partners, including the World Bank and the Asian Development Bank, this month to cushion the economic fallout from the US and Israel’s war on Iran.

Officials said the assistance, equivalent to about Tk 38,132 crore at the prevailing exchange rate, would help ease budgetary pressures, strengthen foreign exchange reserves and finance higher import costs stemming from the conflict.
The WB approved $450 million on June 24 to support banking sector reforms. Yesterday, it approved another $1.1 billion for food security and energy-related emergency financing, bringing its total budget support this month to $1.54 billion.Earlier, the ADB approved $1 billion, the Japan International Cooperation Agency (JICA) provided $314 million, and the Asian Infrastructure Investment Bank (AIIB) cleared $250 million.The war in the Middle East broke shortly after the current government assumed office in February, sending global prices of fuel, liquefied natural gas, fertiliser and other essential commodities sharply higher while disrupting supplies.International financial institutions, including the IMF, WB and ADB, warned that import-dependent economies such as Bangladesh would face mounting external pressures.In response, the government formed a committee in March to assess the likely economic impact of the conflict. Based on its findings, Bangladesh sought emergency budget support from development partners.

The finance ministry prepared a position paper in this regard, requesting an additional $3 billion in rapid-disbursing assistance to address urgent balance-of-payments needs and growing budgetary pressures during the final four months of FY2025-26.The paper described the Middle East conflict as an external and temporary terms-of-trade shock that had sharply increased the country’s import bills for fuel, LNG, fertiliser and food, while adding pressure on subsidies and social protection spending.The war created a “time-critical external financing need that cannot be met prudently through rapid reserve drawdown or disruptive import compression”, the paper said.It estimated that Bangladesh would require an additional Tk 385.42 billion (around $3.2 billion) in subsidies between March and June.The ministry also noted that foreign exchange reserves had fallen from $30.36 billion at the end of February to $29.39 billion by March 25 under the IMF’s balance of payments methodology, reflecting tighter external financing conditions.

According to the paper, the emergency financing would help preserve reserves while ensuring continued imports of fuel, LNG, fertiliser and food, create fiscal space for targeted and time-bound support, and reduce the risk of a disorderly adjustment.

The government also pledged to use existing public financial management systems and ensure transparent reporting on the use of the funds and related emergency spending.

The paper said any price-smoothing measures and subsidies supported by the financing would be temporary, progressively better targeted, and implemented alongside continued reforms to strengthen revenue mobilisation, prioritise public spending and improve the foreign exchange market.

Bangladesh’s foreign exchange reserves stood at $31.53 billion under the IMF methodology on June 25.

Announcing the latest $1.1 billion package yesterday, the WB said in a statement that the financing would support two projects aimed at helping Bangladesh cope with fertiliser and fuel price volatility, strengthen food security and improve emergency response capacity.

The package includes $300 million for food security and $713 million under a contingent emergency response component to finance quick-disbursing expenditures during crises.

The emergency financing will support cash transfers and livelihood assistance for affected households and micro, small and medium-sized enterprises (MSMEs), helping stabilise incomes and protect jobs.

It will also finance fuel and energy supplies needed to maintain essential services, including food distribution, healthcare, electricity and water supply, the WB said.

The funds under the emergency response component are expected to be disbursed by June 30.

Jean Pesme, WB country director for Bangladesh and Bhutan, said in the statement that rising food, fertiliser and fuel prices, combined with tighter fiscal conditions, had hit small farmers and vulnerable households the hardest.

“The World Bank has stepped up with immediate support to help Bangladesh mitigate this impact, ensure fertiliser supply for rice production, protect households, jobs and livelihoods, and maintain essential services,” he said.

The $300 million food security project will finance imports of 6 lakh tonnes of fertiliser, including 5 lakh tonnes of urea, enough to support rice cultivation on about 1.4 million hectares during the Aman (July-October 2026) and Boro (October 2026-April 2027) seasons.

Bangladesh imports more than 85 percent of its fertiliser requirements.

Souleymane Coulibaly, WB lead economist and task team leader, said the Aman and Boro seasons account for about 90 percent of the country’s annual rice production.

“Any disruption in fertiliser supply would not only threaten food security, but it would also deepen poverty and cost jobs,” he said.

Lesley Jeanne Yu Cordero, WB lead disaster risk management specialist and task team leader, said the project would repurpose unutilised financing from existing projects to channel resources quickly to the areas of greatest need.

US President Donald Trump on Friday threatened to slap a 100 percent tariff on European countries that impose a digital services tax, adding that existing trade deals would be scrapped.

“Any Country that imposes such a Tax will immediately be met with a 100% TARIFF on any and all Goods sent to the United States of America,” Trump said in a post on his Truth Social platform.

He added that “this TARIFF will supersede Trade Deals made with the Country, whether implemented, signed, or not.”

The move comes just a day after EU countries gave the green light to a trade agreement negotiated last year with the United States, which caps taxes on European imports at 15 percent.

Reacting to Trump’s fresh threats, the European Union on Friday vowed to “respond swiftly and decisively to defend its rights and regulatory autonomy,” according to a European Commission spokesman.

Trump has repeatedly made it clear he wants to tackle so-called non-tariff barriers to trade -- and strict European regulations on technology and environment are in his crosshairs.

With most tech giants based in the United States, Trump views digital taxes as a hindrance to US exports.

Earlier this month, Trump threatened to impose a 100 percent tariff on French wine and champagne unless Paris removed its digital services tax on technology firms.

France imposed in 2019 a three-percent levy on the revenues earned by technology firms, including US giants Facebook, Amazon, Apple and Google’s parent Alphabet, within the country’s borders.

South Korea’s Samsung Electronics is expected to announce a record domestic investment plan next week, according to local media reports, in a massive bet on AI-driven semiconductor demand.

The 1,000 trillion won ($650 billion) package, to be announced by the chip giant and the government, is in line with President Lee Jae Myung’s agenda for development in regions outside of the capital Seoul.
Lee will host a “National Mega Project” briefing on Monday, where Samsung will unveil major long-term investment plans, the reports said.Rival chipmaker SK hynix is also expected to announce spending plans at the same event. Both companies are top producers of advanced memory chips used in the data centres that train and run artificial intelligence tools like chatbots and image generators.The AI boom has sent the firms’ profits and share prices skyrocketing, with Samsung recently agreeing a bonus deal with its workers’ union to avert a major strike.

The Samsung investment package is expected to include about 300 trillion won for a new semiconductor complex in southwest South Korea -- one of the regions that has fallen behind the capital in tech investment.

Some 60 trillion won would likely be earmarked for six chip manufacturing plants at Yongin in the south, and more than 350 trillion won for AI infrastructure including data centres, according to Maeil Business Newspaper.

The proposed 10-year spending package would be the largest investment commitment ever announced by a South Korean company.

Lee met Samsung chairman Lee Jae-yong in Seoul this week to discuss semiconductor investments, according to news reports.

The president also reportedly met SK Group Chairman Chey Tae-won last week.

Samsung Electronics last year posted an operating profit of 43.6 trillion won -- a 33 percent increase year-on-year.

The company is projected to achieve an operating profit in the mid-to-high 300 trillion won range this year, and 550 trillion won next year.

Kim Yong-beom, the presidential chief of staff for policy, said Wednesday that discussions on the planned semiconductor project in Yongin were in their final stages.

“Once everything is confirmed, we plan to bring together the companies and relevant ministries to explain the plan to the public at once,” Kim said.

Gold rose on Friday as the dollar weakened and expectations of US interest rate hikes eased slightly following inflation data, though prices were still on track for a fourth consecutive weekly decline.

Spot gold was up 1.3 percent at $4,077.64 per ounce by 1:35 p.m. EDT (1735 GMT).

US gold futures for August delivery settled 1.2 percent higher at $4,096.30 per ounce. The US dollar eased from recent highs after the release of the Fed’s preferred inflation gauge on Thursday.

The US Personal Consumption Expenditures Price Index surged 4.1 percent in the 12 months through May, matching economists’ forecasts in a Reuters poll. Traders are pricing in about a 59 percent chance of a US rate hike in September, lower than an earlier expectation of 64 percent, according to CME Group’s FedWatch Tool.

Gold is seeing a modest rebound after coming under selling pressure earlier this week, said Jim Wyckoff, a market analyst at American Gold Exchange.

Higher interest rates and tighter monetary policy reduce the appeal of non-yielding bullion, as they tend to boost bond yields and increase returns on interest-bearing assets.

Spot gold hit more than a seven-month low earlier this week and prices were down 2.1 percent for the week. TD Securities said in a note that given gold’s inverse relationship with both higher oil prices and a stronger US dollar, sustained strength in energy markets could put further downward pressure on the precious metal in the months ahead.

Gold started trading at a premium in India this week for the first time in a month and a half, as a price correction lifted buying, while demand stayed subdued in China, the top consumer.

Bangladesh's gross foreign-exchange reserves crossed US$36-billion mark Wednesday with an aid dollop of nearly $320 million from Japan International Cooperation Agency (JICA).Bangladesh Market Analysis
FE

The country's gross forex reserves rose to $36.10 billion on the day from $35.80 billion of the previous day with disbursement of the funds by JICA, officials said.

JICA is a government agency responsible for delivering the bulk of Japan's Official Development Assistance (ODA).

As per the International Monetary Fund (IMF)'s Balance of Payments International Investment Poisson Manual-six edition, generally known as BMP6, the reserves in US dollar rose to $31.55 billion during the period under review from $31.24 billion, according to the central bank's latest data.

"Our gross forex reserves may touch $37 billion by the end of June if the government secures more funds from overseas sources," a top central banker told The Financial Express (FE) while replying to a query.

More foreign funds are expected to be included in the country's forex reserves shortly, the central banker hints.

Meanwhile, the World Bank has already approved $450 million worth of loan to help Bangladesh strengthen the foundations for a stronger banking sector for the revival of the economic growth and job creation.

Earlier, on June 14, the Asian Development Bank (ADB) disbursed more than $1.0 billion in budget support to Bangladesh.

Central bank officials, however, say stronger remittance inflows and lower import-payment obligations have also contributed to the improvement in the country's foreign-exchange-reserves position.

The purchasing of US dollars from commercial banks by the central bank has also helped push up the forex reserves recently, they add.

The central bank of Bangladesh has so far bought $6.42 billion from banks directly since July 13 last under the prevailing free-floating exchange-rate arrangement.

Bangladesh implemented just 48.23 percent of its Annual Development Programme (ADP) during the first 11 months of the outgoing fiscal year, marking the lowest execution rate in 16 years.

Data released on Thursday by the planning ministry’s Implementation Monitoring and Evaluation Division (IMED) showed that the Ministry of Science and Technology recorded the highest spending against its allocation between July and May of fiscal year 2025-26.

The Health Services Division posted the worst performance.

The interim government had initially targeted ADP spending of Tk 2.39 trillion for the fiscal year.

However, amid sluggish implementation, the National Economic Council (NEC) cut the programme by Tk 300 billion on Jan 12, reducing it to Tk 2.09 trillion.

The latest figures show total expenditure of Tk 1.08 trillion across all development projects during the first 11 months.

In the same period of fiscal year 2024-25, spending stood at Tk 1.11 trillion, with an implementation rate of 49.08 percent.

An analysis of IMED data suggests that the slowdown in ADP execution that followed the 2024 July Uprising, deteriorating law-and-order conditions and administrative reshuffles has yet to ease.

Government ministries and divisions spent Tk 142.48 billion in May alone, down from Tk 175.81 billion in May of the previous fiscal year.

The Awami League government had originally approved an ADP allocation of Tk 2.78 trillion for fiscal year 2024-25.

The interim government later reduced it to Tk 2.26 trillion, of which Tk 1.53 trillion was spent, yielding an implementation rate of 67.85 percent—the lowest in two decades.

After taking office following the student-led mass uprising that toppled the Awami League administration, the interim government prioritised selected projects and scaled back funding for many initiatives approved under the previous government, leaving numerous projects stalled.

ADP implementation rates during the first 11 months of the previous four fiscal years were 64.84 percent, 61.73 percent, 57.54 percent and 49.08 percent, respectively.

IMED records dating back to fiscal year 2010-11 show that this year’s performance is the weakest in 16 years.

Over the previous 15 years, implementation rates generally ranged between 65 percent and 70 percent.

Among the 15 ministries and divisions receiving the largest allocations, the average implementation rate was 59.09 percent. Together they accounted for 70.97 percent of the revised ADP.

Science and technology led with 83.33 percent, followed by energy and mineral resources at 79.48 percent and agriculture at 68.83 percent.

At the bottom was the Health Services Division, which spent only 22.15 percent of its allocation.

The government is likely to raise the tax-free income threshold to Tk 4 lakh over the next two fiscal years, FY2026-27 and FY2027-28, to ease the tax burden on lower-income earners.

The threshold could then increase to Tk 4.5 lakh in FY2028-29 and FY2029-30 before reaching Tk 5 lakh in FY2030-31, according to sources familiar with the matter.
The changes are expected to be incorporated into the Finance Bill 2026 before it is passed by parliament, a senior finance ministry official said.Finance Minister Amir Khosru Mahmud Chowdhury placed the bill in parliament on June 11 while presenting his first national budget for FY2026-27.The proposed budget set the tax-free income threshold at Tk 3.75 lakh for FY2026-27 and FY2027-28. At present, individuals can earn up to Tk 3.5 lakh a year without paying income tax.The official also said the government is likely to drop the proposed requirement for a Taxpayer Identification Number (TIN) to open a bank account.

The budget proposed making TIN mandatory for opening bank accounts, but the measure drew opposition from various stakeholders, who argued that it could discourage financial inclusion.

The advance income tax (AIT) on business-to-business (B2B) transactions, which was proposed to be at 0.2 percent in the budget, is likely to remain unchanged, the official said.The government is also planning to cut the capital gains tax on gold to 5 percent from the current 15 percent.In the proposed Finance Bill, profits from the sale or transfer of gold, silver, jewellery, precious stones, diamonds, coins, digital currencies, artworks, antiques and club memberships declared in a taxpayer return would be treated as capital gains and taxed at 15 percent.

Capital gains from securities would also be taxed at 15 percent, including treasury bills, bonds, savings instruments, debentures, sukuk and other shariah-based securities, as well as shares and stocks issued by companies and other entities.

The proposal to tax gains from gold and jewellery comes at a time when gold prices have risen sharply in recent years.

In another planned change, the corporate tax rate for private universities is likely to be cut to 5 percent from 10 percent.

The 10 percent rate currently applies to private universities, medical colleges, dental colleges, engineering colleges and institutions dedicated solely to ICT education.

No changes are being considered for real estate developers, the official added.

The National Board of Revenue (NBR) has set a target to raise the country's revenue-to-GDP ratio to 10.7% by the fiscal year (FY) 2028-29 to strengthen domestic resource mobilisation and sustain economic development, according to the government's Medium-Term Macroeconomic Policy Statement (2026-27 to 2028-29).

The policy statement identifies increasing the revenue-to-GDP ratio as a key prerequisite for maintaining development momentum and addressing structural weaknesses in the economy, noting that Bangladesh's revenue-to-GDP ratio remains among the lowest among comparable economies.

According to the document, the overall revenue-to-GDP ratio stood at 8.3% in FY 2023-24, before declining to 8.0% in FY 2024-25 due to structural weaknesses in tax administration, tax exemptions on essential commodities aimed at containing inflation, and lower import-related revenue amid global economic uncertainties.

The government projects the ratio to increase to 10.2% in FY 2026-27, 10.5% in FY 2027-28, and 10.7% in FY 2028-29.

NBR tax revenue, which accounted for 6.7% of GDP in FY 2024-25, is projected to rise to 8.8% in FY 2026-27, 9.1% in FY 2027-28, and 9.3% in FY 2028-29.

The policy statement notes that total revenue figures include foreign grants, while non-NBR tax revenue is expected to remain between 0.3% and 0.4% of GDP during the period.

In his budget speech for FY 2026-27, Finance and Planning Minister Amir Khosru Mahmud Chowdhury said the government's medium-term objective is to raise the country's tax-to-GDP ratio to 10%, with a long-term target of 15% by 2035.

He said the government aims to establish a fair, technology-based, universal and predictable tax system while creating a stronger economic cycle driven by investment, production, employment, consumption and improved revenue collection.

To achieve the targets, the NBR plans to implement wide-ranging reforms, including the full digitisation of tax administration, strengthening transparency and accountability to encourage voluntary compliance, broadening the tax base through increased economic activity, and establishing a more predictable revenue framework.

The policy statement says higher domestic revenue mobilisation will reduce dependence on deficit financing and bank borrowing, complement the government's contractionary monetary policy in controlling inflation, and strengthen the economy's resilience against domestic and external shocks.

Former Bangladesh Bank governor Mohammed Farashuddin today (25 June) criticised the size and implementation strategy of the national budget for fiscal 2026-27, calling for a major overhaul of the country's taxation and administrative framework to support economic requirements.

Speaking at a seminar titled "National Budget: Insights and Perspectives" at East West University, Farashuddin, also an economist, argued that the current fiscal blueprint falls short of what the economy needs.

Unless the politician-bureaucrat nexus can be broken – and I don't see any provision in the budget for that – I don't see any result.

Mohammed Farashuddin, former governor, Bangladesh Bank
He contended that the budget should have been at least Tk14 lakh crore – equivalent to 20% of gross domestic product (GDP) – instead of its current allocation, which stands at just 13.7% of GDP.

Bureaucratic inertia and waste

The former central bank governor strongly criticised the lack of progress in administrative reforms and automation, asserting that entrenched inefficiencies continue to hinder effective budget execution.

He noted that efforts to automate tax administration began as early as 1983, yet little meaningful progress has been achieved over the last four decades.

"The automation has remained where it was," Farashuddin said. "Unless the politician-bureaucrat nexus can be broken – and I don't see any provision in the budget for that – I don't see any result."

He also alleged that public resources continue to be wasted through prolonged project timelines and unnecessary administrative expenditures. Alongside these systemic inefficiencies, he expressed deep concern over widening wealth inequality despite the country's broader economic progress.

Pointing out that the Gini coefficient – a metric used to measure income inequality – has risen from 0.32 in 1972 to 0.5 at present, he remarked that the country is going the other way around from the founding ideals of the 1971 independence.

He stressed that economic growth alone is insufficient unless wealth distribution becomes more equitable.

Radical tax restructuring proposed

Farashuddin directed sharp criticism at the National Board of Revenue, accusing it of failing to broaden the tax base and instead placing additional burdens on existing taxpayers. Citing data from the Boston Consulting Group, he noted that around 25 lakh people in Bangladesh have annual per capita incomes exceeding $5,000, yet a large portion of this affluent population remains outside the tax net.

To encourage greater tax compliance, he proposed a revised, tiered tax structure with lower rates across different income slabs. Under his proposal, a 5% tax would apply to the first Tk5 lakh after the tax-exempt threshold, followed by 10% on the next Tk10 lakh, 15% on the following Tk15 lakh, and 20% on the next Tk20 lakh, with a maximum rate of 22% on all remaining income.

"All finance ministers I have spoken to believe higher tax rates bring higher revenue. This is completely wrong," he asserted, arguing that lower rates stimulate better compliance.

LDC graduation and competition

Turning to global trade, Farashuddin opposed any move to delay Bangladesh's graduation from Least Developed Country (LDC) status.

The economist argued that the country should embrace international competition rather than postpone the transition. "We should have gone for the graduation, faced the challenge, and opened the economy to competition."

The seminar also featured a keynote presentation by Professor Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD), and AK Enamul Haque, the director general of the Bangladesh Institute of Development Studies (BIDS).

Questioning the revenue assumptions underpinning the budget, Mustafizur said projected revenue growth appeared disconnected from actual collection trends.

He also warned that the government's plan to borrow Tk1.12 lakh crore from the banking system to finance the budget deficit could place additional pressure on an already stressed financial sector.

"We must stop relying solely on banks and instead look toward the equity market and securitisation of profitable infrastructure assets such as the Metro Rail or Padma Bridge," he said.