The government has asked all ministries and their subordinate offices to submit time-bound plans by 25 October to amend relevant laws, regulations and agreements, and make other changes needed to shift the country's fiscal year from July-June to April-March.

According to sources, the Cabinet Division recently sent letters to the Ministry of Public Administration and other ministries, seeking plans for the necessary changes.

The Ministry of Public Administration has since instructed its subordinate offices and agencies to submit their respective plans by the same deadline.

A letter signed by Public Administration Ministry Deputy Secretary Mosaddek Mehedi Imam said the review should cover relevant laws, rules, circulars, statutory regulatory orders (SROs), contracts and memorandums of understanding, as well as statistical and information technology systems.

The requested plans are intended to identify the amendments and revisions needed to implement the fiscal-year change, according to the letter.

How the fiscal year is changing

At a Cabinet meeting on 17 August, the government decided to shift Bangladesh's fiscal year from July-June to April-March.

To facilitate the transition, the government has set fiscal year 2027-28 as a nine-month transition period, running from July 2027 to March 2028.

The first full fiscal year under the new system will begin on 1 April 2028 and end on 31 March 2029.

The change will require adjustments to budget preparation by the Finance Division, tax collection by the National Board of Revenue, regulations governing public services, and financial and legal frameworks in the private sector.

Officials concerned said the Cabinet Division had sought time-bound plans to ensure the necessary changes are completed within the stipulated period.

Bangladesh's GDP per capita surpassed India's in FY26 and is projected to remain higher for the next two fiscal years, but the International Monetary Fund (IMF) expects India to regain the lead in FY29 and widen the gap through FY31.

In its latest World Economic Outlook database, released on Tuesday, the IMF puts Bangladesh's GDP per capita in current US dollar at $2,886 in FY26, compared with $2,750 for India—a difference of just $136.

Despite having an economy roughly eight times larger, India is projected to stay behind Bangladesh until FY28. The forecast shows India's GDP per capita rising to $3,662 in FY29, surpassing Bangladesh's $3,334.

By FY31, the gap is expected to widen to around $709, with India's figure projected to reach $4,389 and Bangladesh's $3,680.

Bangladesh had previously maintained a higher GDP per capita than India for seven consecutive years from 2018, before India overtook it in 2025.

GDP per capita is calculated by dividing a country's total economic output by its population. It is commonly used to compare average economic output per person, although it does not directly measure how income is distributed or the cost of living.

India retains a lead in purchasing power

The picture changes when differences in living costs are taken into account.

India remains ahead of Bangladesh in GDP per capita measured at purchasing power parity (PPP), which adjusts for differences in the prices of goods and services between countries.

According to the IMF database, India's GDP per capita in PPP terms is projected at $12,998 in FY26, compared with $10,884 for Bangladesh, giving India a 19.4% advantage.

India has remained ahead on this measure every year since 1994, and the IMF expects it to retain that position through 2031, with the gap widening to around 45%.

Moreover, despite Bangladesh's projected lead in GDP per capita at current prices, India is expected to remain South Asia's fastest-growing economy over the forecast period.

Its GDP is projected to rise from $4.06 trillion in FY26 to $6.74 trillion in FY31, with annual growth forecast at 7.02% in FY27 and 6.81% in FY31.

Bangladesh, by contrast, is projected to record the region's slowest economic growth. Its annual growth rate is forecast to fall to 2.21% in FY28 before recovering to 2.97% by FY31.

The projections also place Bangladesh's ambition of becoming a $1 trillion economy by 2034 well above the IMF's current estimates. The Fund puts the country's GDP at $506.4 billion in FY26 and projects it to reach $674.4 billion by FY31.

Maldives leads in South Asia

Bangladesh also remains behind several other South Asian economies in GDP per capita.

The Maldives is projected to have the region's highest figure in FY26, at $19,507, followed by Sri Lanka at $5,062 and Bhutan at $4,933.

Pakistan's GDP per capita is estimated at $1,836, while Nepal is projected to have the region's lowest figure, at $1,540.

Oil markets initially treated the Iran war as a brief bullish disruption in a long-term bearish trend.

But traders are now betting that oil prices will remain elevated through 2028, forcing a rethink of the global inflation outlook.

Eight months into the war, the buffers that helped absorb the initial energy shock – most notably onshore crude oil stockpiles – are wearing dangerously thin.

At the same time, the recovery in crude exports through the Strait of Hormuz remains fragile, global refining capacity has been eroded and credible diplomatic pathways to end the conflict appear narrower than ever.

Global benchmark Brent crude futures tell the story.

Contracts for delivery in December 2027 have climbed more than 13 percent since the start of September to $86 a barrel, the highest level for the contract, while December 2026 contracts have gained around 12 percent.

The Brent forward curve is not a price forecast, of course.

But it reflects the willingness of refiners, airlines, commodity traders and asset managers to lock in elevated prices months and even years into the future.

In effect, market participants are paying a premium against the possibility that today’s disruptions will become tomorrow’s normal.

This market positioning stands in stark contrast to widely held industry expectations of a recovery in global oil supplies next year.

The International Energy Agency projects global supply will rise to 108.3 million barrels per day (bpd) in 2027 from 100.7 million bpd this year as Middle Eastern exports recover.

Demand, meanwhile, is forecast to increase from 102.4 million bpd to 104.4 million bpd next year, still slightly below 2025 consumption.

This recovery is expected to be concentrated in petrochemical feedstocks rather than transportation fuels like diesel.

Regardless, the agency’s projected balances imply a sizeable supply surplus next year that would normally weigh on prices.

Yet the steady rise in long-dated futures suggests investors are increasingly sceptical that this recovery will fully materialise or, if it does, that it will endure.

The standoff between Washington and Tehran remains centred on control of the Strait of Hormuz.

While oil flows through the strategic waterway have rebounded to near pre-war levels in recent weeks thanks partly to US naval support, Iran has intensified attacks on vessels in the past week and threatened further disruption.

The conflict has also expanded beyond the Gulf.

Yemen’s Iran-aligned Houthis have recently stepped up missile and drone attacks on Saudi Arabia, including strikes this week on the headquarters of Saudi Arabia’s state-owned oil giant Aramco (2222.SE) in Dhahran.

Given this backdrop, every barrel leaving the Gulf now carries a widening security premium.

Complex logistics, elevated freight rates, high insurance costs and military protection now account for nearly a third of the cost of moving a barrel of oil out of the region, compared with 3 percent before the war. Absent a durable settlement over Hormuz, much of that cost is likely to remain entrenched in prices for the foreseeable future.

The strain is even more visible in diesel markets.

Benchmark European diesel futures hit a record $1,480 per metric ton, equivalent to around $210 per barrel, in mid-September amid an acute shortage of supplies caused by disruptions in the Middle East and Russia.

Since Russia’s 2022 invasion of Ukraine, drone attacks by Kyiv have crippled Russian refineries, forcing Moscow to ban diesel exports earlier this year.

US President Donald Trump on Friday announced an agreement with Russian President Vladimir Putin to allow Moscow to resume some diesel exports and later proclaimed another “energy ceasefire” between Russia and Ukraine.

But the additional Russian exports cited by Trump are minuscule – equivalent to roughly 12 hours of global supply – and no one, including the two parties involved, is giving much credence to the purported ceasefire.

Instead, traders are focused on the dramatic loss of fuel production capacity this year, with diesel futures signalling continued tightness ahead.

Contracts for delivery in December 2027 climbed above $1,000 a ton for the first time this week, compared with a pre-war level of $644.

The fuel repricing may ultimately prove more important than the rise in crude itself.

Diesel powers the trucks, ships, factories and farms that underpin global commerce.

Sustained diesel inflation has historically seeped into the wider economy through higher transportation, manufacturing and food costs.

With headline US inflation running at 3.7 percent in September – almost twice the Federal Reserve’s targeted 2 percent rate – and core inflation creeping up, persistently high diesel prices remain a major concern for US and global policymakers.

A NEW REALITY

For much of this year, energy markets operated on the assumption that the Iran war would resemble past geopolitical crises: a sharp but temporary disruption followed by a quick return to normality.

Increasingly, investors are concluding otherwise.

The issue is no longer simply how much oil can move through Hormuz.

Markets need to know whether the global energy system can quickly rebuild the inventories, refinery capacity and supply chains damaged by months of conflict.

Until then, the world risks becoming trapped in an era of structurally higher energy costs that lasts long after the shooting stops.

US consumer inflation was hotter than anticipated in September, government data showed Wednesday, as Washington’s continued war with Tehran pushed energy costs higher, deepening strains on American households ahead of next month’s midterm elections.

The uptick underscores voter worries over high costs of living, and comes as President Donald Trump is campaigning in US states to shore up support for his Republican Party as it tries to retain control of Congress.

The consumer price index (CPI) rose 3.7 percent year-on-year in September, the Department of Labor said, more than the 3.6 percent forecasted by analysts according to MarketWatch.

This was a notable acceleration from 3.4 percent in August, in one of the last major economic reports before the November 3 vote.

Inflation picked up pace on a month-on-month basis too, accelerating from 0.4 percent in August to 0.6 percent last month.

Gasoline costs accounted for more than half of the monthly CPI jump, surging 9.1 percent in September.

The higher-than-expected inflation reading has raised the odds of a second straight interest rate hike at the US central bank’s October 27-28 policy meeting, although many expect the Federal Reserve to proceed cautiously.

Economist James Knightley at ING noted that Fed officials John Williams, Philip Jefferson and Christopher Waller have suggested “that we don’t need to see back-to-back interest rate increases,” instead leaning towards “a slow and steady” approach.

He expects the Fed will want to be “careful and cautious in terms of its policy tightening.”

Traders see a 37.1 percent chance that the Fed will raise rates by another 25 basis points in October, according to CME Group’s FedWatch tool. The probability was around 22 percent a day prior.

“We expect at least two more rate hikes by early 2027, starting in December,” said KPMG chief economist Diane Swonk. “September gave the Fed more reason to hike, even if officials hold in October.”

Industries sensitive to interest rates, including housing, are already under pressure from steeper borrowing costs.

Yields on US government bonds spiked after the inflation report. The 10-year Treasury yield, which influences rates on mortgage and auto loans, rose to 5.3 percent from 5.2 percent. But it has since moderated.

“Energy lit the match; sticky services, shelter and goods prices kept the fire burning,” said KPMG’s Swonk of the inflation report.

Energy prices have soared since the United States and Israel attacked Iran in late February, prompting Tehran to block off the Strait of Hormuz, a vital route for oil and gas shipments.

Average prices at US gasoline pumps have surged more than 45 percent since the start of the Middle East war to $4.33 per gallon, according to AAA motor club data.

Diesel prices have soared even more, by 67.7 percent, boosting the cost of transporting goods and threatening further spillovers to consumers.

“Again, the Iran-US conflict has led to higher motor fuel costs that everyone is experiencing,” ING’s Knightley told AFP.

“The US is also seeing substantial increases in airline fares,” he said, adding that this will likely contribute to additional price pressures.

Core CPI, which excludes volatile food and energy prices, was up 2.6 percent from a year ago.

Although high gasoline and diesel prices drove about half of the September spike in inflation, “it’s starting to spill into other areas,” warned Heather Long, chief economist at the Navy Federal Credit Union.

“Airfares, used cars and recreation all had big price jumps,” she added. “Americans are seeing their pay totally wiped out by inflation. That’s been the case for half a year now.”

With the underlying US economy remaining strong as massive spending linked to the artificial intelligence buildout boosts demand for chips and labor, economists also caution that higher costs could continue filtering through to households.

Two listed companies of BSRM Group, Bangladesh Steel Re-Rolling Mills Limited and BSRM Steels Limited, jointly posted record revenue of Tk23,943 crore in the fiscal year ended 30 June 2026, up 20% from the previous fiscal year.

The two steelmakers also reported a combined net profit of Tk1,418 crore in FY26, a 25% increase from Tk1,132 crore in FY25, driven by strong market demand and higher sales volumes.

Company officials said both revenue and net profit reached all-time highs in the group's corporate history during the year.

According to price-sensitive disclosures issued after their respective board meetings today (14 October), Bangladesh Steel Re-Rolling Mills Limited (BSRM Ltd) reported consolidated revenue of Tk10,995 crore in FY26, up from Tk9,664 crore in the previous fiscal year.

The company's net profit rose to Tk703 crore from the previous year, while earnings per share (EPS) increased to Tk23.54 from Tk20.57.

Its net asset value (NAV) per share stood at Tk186.06 as of 30 June 2026.

The board of BSRM Ltd recommended a 55% cash dividend for shareholders for FY26.

Meanwhile, BSRM Steels Limited, the group's flagship re-rolling unit, recorded a revenue of Tk12,949 crore in FY26, up 25% from Tk10,367 crore logged in FY25.

The company's net profit after tax surged 38% to Tk715 crore, pushing its EPS up to Tk19.03 from Tk13.77. BSRM Steels' NAV per share reached Tk106.36, while its board recommended a 60% cash dividend for the fiscal year.

Shareholders of both entities will vote on the dividend approvals and financial statements at their respective Annual General Meetings scheduled for 17 December via digital platforms, with the record date for entitlement set for 15 November.

Far East Knitting and Dyeing Industries PLC incurred a net loss in the fiscal year ended 30 June 2026, prompting its board to halve the proposed cash dividend to 6% from 12% in the previous fiscal year.

According to a price-sensitive disclosure approved at a board meeting today (14 October), the textile manufacturer posted a net loss of Tk14.62 crore in FY26, against a net profit of Tk37.46 crore in FY25.

Consequently, earnings per share (EPS) fell to Tk0.67 negative in FY26. The company attributed the deterioration in EPS primarily to a decline in sales and other income during the period.

Despite the loss, the board recommended a 6% cash dividend, equivalent to Tk0.60 per ordinary share of Tk10 each, for FY26. The proposed payout is half the 12% cash dividend declared for FY25.

The company's cash flow metrics also suffered a severe contraction, with Net Operating Cash Flow per Share (NOCFPS) falling to Tk3.40 negative in FY26.

The decline was driven by reduced cash receipts from customers and other income, coupled with higher operating expenses.

Meanwhile, Net Asset Value (NAV) per share dropped to Tk19.27 as of 30 June 2026, down from Tk21.37 a year earlier.

The company will seek shareholder approval for the dividend and financial statements at its annual general meeting (AGM) scheduled for 23 December, via a digital platform. The record date for dividend entitlement has been set for 12 November.

Bangladesh Bank Governor Md. Mostaqur Rahman has stressed the need for strengthening the activities of the SAARCFINANCE Working Group and boosting bilateral trade and financial cooperation between Bangladesh and Bhutan.

He made the observations during a courtesy meeting with Yangchen Chhophel, Governor of the Royal Monetary Authority of Bhutan (RMA), held on Wednesday on the sidelines of the IMF-World Bank Group Annual Meetings 2026 in Bangkok, Thailand.

During the meeting, Governor Rahman highlighted the critical role of regional financial coordination and underscored how expanding trade ties between Bangladesh and Bhutan could foster mutual economic resilience across South Asia.

Both central bank chiefs discussed various aspects of SAARCFINANCE operations, bilateral trade mechanisms, and avenues for mutual cooperation, describing the high-level dialogue as constructive and highly fruitful.

According to a press release issued by Bangladesh Bank, the meeting was also attended by Bangladesh Bank Deputy Governor Dr. Md. Habibur Rahman and Royal Monetary Authority of Bhutan Deputy Governor Ugyen Choden.

The United States and China have signalled support for Bangladesh's economic recovery and energy security, with Beijing expressing interest in expanding investment in the country's power and energy sectors and Washington offering cooperation on debt management.

The assurances came during separate meetings between Bangladesh's delegation and officials from the US Treasury Department and the Export-Import Bank of China (China Exim Bank) on the sidelines of the IMF-World Bank annual meetings in Bangkok, Thailand, officials familiar with the discussions told The Business Standard today (14 October).

A member of the Bangladesh delegation said China Exim Bank had expressed interest in increasing investment in Bangladesh's energy and power sectors.

The bank also informed the delegation that its chairman would visit Dhaka next week, raising the prospect of further engagement on investment.

The US Treasury Department, meanwhile, assured Bangladesh of cooperation in several areas, including debt management and bilateral relations, officials said.

Bangladesh pledges faster project delivery to secure $10b in WB loans
Washington's support is seen as particularly important to Bangladesh's efforts to secure financing from the International Monetary Fund (IMF), given the United States' veto power over the institution's decisions.

After meeting US Treasury officials, Finance Minister Amir Khosru Mahmud Chowdhury said Bangladesh had received less support from the United States than it had expected in the past, but hoped closer bilateral ties would lead to greater assistance.

The discussions covered debt management, bilateral relations and other issues, he said, adding that the improvement in relations had raised the government's expectations of further US support.

Pointing to Bangladesh's purchases of aircraft from the US and imports of goods including soybeans, the finance minister said the country should receive greater American support in advancing its development and economic interests.

Government expects support in coming months

Prime Minister's Economic Adviser Dr Rashed Al Mahmud Titumir said the IMF, World Bank and US Treasury Department, among others, had acknowledged that the current government had inherited economic difficulties and high inflation.

The conflict in the Middle East had added to the pressure on the economy, he said.

They also said the current government was working sincerely to resolve the problems. As a result, the World Bank, IMF, US Treasury Department and other organisations have assured Bangladesh of their support.

According to Titumir, international financial institutions and US officials recognised the government's sincere efforts to address these challenges. As a result, the World Bank, IMF, US Treasury Department and other organisations had assured Bangladesh of their support, he said.

The government expects confirmation of the assistance within the next two to three months, he added.

DBH Finance PLC reported a 22% year-on-year decline in net profit for the July-September quarter of 2026, as a sharp drop in investment income from government securities offset a surge in net interest income.

According to a financial disclosure filed with the Dhaka Stock Exchange (DSE) today (14 October), the specialised housing finance institution posted a net profit of Tk25 crore in the third quarter ended 30 September 2026, down from the same period a year earlier.

Consequently, its quarterly earnings per share (EPS) fell to Tk1.24 from Tk1.60 in July-September 2025.

The decline in quarterly profit came despite a 91% surge in net interest income to Tk55.60 crore. However, income from investments in government securities plunged 76% to Tk8.38 crore during the three-month period, weighing on overall profitability.

Despite the third-quarter decline, the lender's cumulative performance for January-September 2026 remained positive. Net profit for the nine-month period rose 9% year-on-year to Tk80.76 crore, lifting EPS to Tk3.98 from Tk3.67 in the same period last year.

The company attributed the growth in cumulative earnings to a recovery in the capital market in 2026, which enabled it to reverse approximately Tk5.5 crore in provisions for investment impairment. Lower provisioning requirements against loans and advances compared with the same period last year also supported profitability.

Meanwhile, net operating cash flow per share turned negative at Tk4.51 in January-September 2026, compared with a positive Tk17.36 in the corresponding period of 2025, mainly due to a contraction in the deposit portfolio.

Net asset value per share rose to Tk52.03 as of 30 September 2026 from Tk49.55 on 31 December 2025.

Following the earnings announcement, DBH Finance shares fell 0.76% to close at Tk39.10 on the DSE today.

Chinese company KPST is set to expand its operations in Bangladesh by establishing a second factory at the BEPZA Economic Zone-1 in Mirsharai, Chattogram, with an investment of US$7.01 million.

The new factory is expected to create employment opportunities for around 200 Bangladeshis.

To this end, KPST New Material (BD) Company Limited signed a land lease agreement with the Bangladesh Export Processing Zones Authority (BEPZA) in Dhaka on Wednesday.

BEPZA Member (Investment Promotion) Md Tanvir Hossain and the company’s Director Zhang Youyu signed the agreement on behalf of their respective organisations.

According to BEPZA, the factory will be built on 7,200 square metres of land. It will have an annual production capacity of 11 million pairs of footwear accessories, 24,000 cubic metres of foam, various bag and luggage components, 200,000 cutting boards and 250,000 cutting dies or moulds.

The products will be supplied to footwear manufacturers in India and Cambodia, as well as export-oriented footwear factories in Bangladesh.

Zhang Youyu said the company had decided to establish a second factory as demand for products and purchase orders from its first facility continued to rise. Considering the overall investment climate, the company had chosen BEPZA for its expansion, he added.

BEPZA Executive Chairman Major General Mohammad Moazzem Hossain welcomed the investment and thanked the company for expanding its operations in Bangladesh.

KPST Shoes (BD) Company Limited, which shares the same ownership, was the first company to begin exports from BEPZA Economic Zone-1. It started production in November 2023.

The new investment will further increase the group’s manufacturing capacity in the same economic zone.

According to BEPZA data, 14 companies were operational in BEPZA Economic Zone-1 as of September 2026, while 33 other projects were under implementation.

The zone has so far generated exports worth $68.29 million, with total investment reaching $98.83 million. The operational companies have created jobs for 4,428 Bangladeshis.

The BEPZA Economic Zone in Mirsharai has been divided into two separate zones, BEPZA Economic Zone-1 and BEPZA Economic Zone-2, to facilitate more efficient administrative and operational management.

Daily turnover on the Dhaka Stock Exchange (DSE) fell to a near seven-month low today (14 October) as cautious investors largely stayed on the sidelines, despite a modest recovery in benchmark indices following heavy losses in recent sessions.

Turnover on the country's premier bourse stood at Tk416 crore, reflecting persistent liquidity constraints amid macroeconomic concerns and earnings uncertainty.

The benchmark DSEX rose 0.38%, gaining 20 points to close at 5,429, while the blue-chip DS30 index edged up 0.15% to 2,092 points.

Market breadth favoured gainers, with 197 issues advancing, 137 declining and 51 remaining unchanged.

EBL Securities noted in its daily market commentary that selective bargain hunting in recently battered stocks provided modest support, helping the market recover after shedding nearly 70 points in the preceding sessions. However, investor sentiment remained subdued amid domestic economic headwinds, weak corporate earnings expectations and global geopolitical tensions.

Sheltech Brokerage reported that the session saw a volatile tug-of-war between opportunistic buyers and profit-taking sellers. The market opened on a firm note, led by selective large-cap and insurance stocks, pushing the DSEX to an intraday high of 5,439 points.

Mid-session selling pressure dragged the index down to 5,412 points before a late buying wave helped it recover towards the day's high.

Textiles accounted for 24% of total trading volume, followed by general insurance at 13.4% and pharmaceuticals at 8.8%.

General insurance led sectoral gains, rising 2%, followed by life insurance at 1% and engineering at 0.9%. In contrast, jute stocks suffered the steepest correction, falling 4%, while services and financial institutions declined 1% and 0.9%, respectively.

Evince Textile topped the turnover chart by trade value, followed by Sonali Aansh, Prime Finance First Mutual Fund, Paramount Textile and Apex Spinning.

Usmania Glass led the gainers with a 9.82% surge, followed by Prime Finance First Mutual Fund at 9.81%, Techno Drugs at 9.58%, BIFC at 9.09% and Rahima Food at 8.12%.

On the losing side, Nurani Dyeing fell 7.14%, followed by Sharp Industries, Sonali Aansh, EBL First Mutual Fund and Standard Bank.

The Chittagong Stock Exchange (CSE) moved in the opposite direction, with the CSCX falling five points to 8,912 and the CASPI shedding six points to close at 14,515.

The Bangladesh Securities and Exchange Commission (BSEC) has relaxed its blanket ban on capital market investments by board members of market intermediaries, allowing directors of stock exchanges, depositories and clearing houses to invest in securities subject to mandatory quarterly disclosures.

In a directive issued on 12 October and signed by BSEC Chairman Masud Khan, the regulator amended its earlier order of 1 September by removing "Directors" from the list of those barred from investing in the capital market.

Under the revised rules, directors of stock exchanges, Central Depository Bangladesh Ltd (CDBL) and Central Counterparty Bangladesh Ltd (CCBL) must submit quarterly disclosures of their personal and institutional investments in capital market securities to the commission within 10 days of the end of each quarter.

However, the investment ban remains in force for officers and employees of stock exchanges, CDBL, CCBL, the Bangladesh Institute of Capital Market (BICM) and the Bangladesh Academy for Securities Markets (BASM).

The regulatory change is expected to bring governance standards in line with market realities while allowing experienced business leaders to participate in the capital market, market insiders said.

Directors of stock exchanges and market intermediaries are often drawn from trading right entitlement certificate (TREC) holders, corporate leaders and industry experts. A blanket ban on their investments in equity securities could discourage experienced professionals from joining these boards, they said.

Replacing the outright ban with mandatory quarterly disclosures could improve transparency by enabling the Bangladesh Securities and Exchange Commission (BSEC) to monitor directors' investments while allowing them to participate in the market.

However, the revised framework could increase the regulator's monitoring burden. The requirement for self-declared quarterly disclosures means the BSEC will need to audit transactions and verify compliance to ensure the rules are properly enforced, market insiders said.

The change could also create potential conflicts of interest if directors trade on price-sensitive information before it becomes public, potentially undermining market fairness despite the disclosure requirements, an executive of an asset management company said.

Bangladesh expects to get financing commitments finalised with international development partners within two to three months as it strives for economic recovery, banking reform and managing mounting pressure from energy costs.

In another development at Bangkok talks, Bangladesh has proposed and the financiers signaled for synchronised government-World Bank project approval by a single stroke for rapid fund release and rapid returns on investment, including targeted job generation for millions in search.

The indications came from Finance Minister Amir Khosru Mahmud Chowdhury and Finance and Planning Adviser Rashed Al Mahmud Titumir on Wednesday.

Speaking to journalists on the sidelines of the IMF-World Bank annual meetings here, Prof Titumir said discussions with the International Monetary Fund (IMF), the World Bank, US Treasury and other development partners established a broad consensus on the country's economic challenges and the government recovery strategy.

"Negotiations are progressing, and we expect these financing commitments to be finalised within the next two to three months," he said.

The government is seeking to address a fragile economic situation while containing inflation, restoring confidence in the banking sector and protecting vulnerable households from rising living costs. The Middle East conflict has added to the pressure by pushing up energy prices and increasing transport costs, the adviser said.

He said international partners considered the government's reform agenda realistic and expressed confidence in its approach to economic recovery.

The government will move swiftly to separate revenue policy from revenue collection under a reform of the National Board of Revenue (NBR), Mr Titumir said.

A committee formed after the government took office has submitted its report, and the separation will be implemented by an executive order, he added.

The reform is intended to improve transparency, reduce harassment of taxpayers and raise the tax-to-GDP ratio. The government is also pursuing the digitisation of tax administration to strengthen compliance and revenue collection.

The IMF has previously identified revenue mobilisation as a central element of Bangladesh's fiscal reforms. Its January 2026 assessment noted that the country's Medium- and Long-Term Revenue Strategy aimed to raise the tax-to-GDP ratio to 10.5 per cent by fiscal year 2034-35. The Fund also referred to the separation of revenue policy and management functions under the revenue-reform framework.

On banking, Mr Titumir said the government has a clear plan to reduce non-performing loans, clean up bank balance sheets and restore financial discipline.

He said depositors in the consolidated Islamic banking institutions were now able to access their funds, helping rebuild confidence after the government moved away from proposed reductions in depositors' claims.

The adviser also referred to the damages accumulated in the banking sector, saying that Bangladesh Bank had previously estimated that about $40 billion would be needed to address the problems.

Responding to questions about central bank independence, Mr Titumir said Bangladesh Bank is exercising greater autonomy while monetary and fiscal policies were being coordinated to support economic recovery.

He cited a Tk 60-billion financing package carrying negative interest rates, intended to stimulate investment and help reopen closed factories.

The government wants to increase credit flows to the private sector while restoring stability in financial institutions.

Mr Titumir said the government has also developed a strategy to address poverty through targeted social protection, employment generation and support for farmers and vulnerable households.

He cited a World Bank assessment indicating that nearly eight million people had fallen below the poverty line amid prolonged inflation. The government expected its expanded safety-net programmes to help reverse that trend.

He said discussions with the International Islamic Trade Finance Corporation had taken place and that existing financing facilities remained operational. The World Bank, the Asian Development Bank and the Islamic Development Bank also provided support to the energy sector.

Mr Titumir said development partners backed the government's domestic reform agenda without imposing externally dictated measures, arguing that the political leadership has taken ownership of its reform programme.

The discussions in Bangkok have taken place as the IMF and World Bank hold their annual meetings on October 12-18 discussing economic stability, growth and financing challenges across the world.

The adviser said the government would continue negotiations with multilateral and bilateral partners to secure the resources needed to implement its recovery strategy.

Meanwhile, Bangladesh proposed synchronising government and World Bank approvals for projects and fund disbursements to reduce administrative delays and quicken implementation to generate targeted jobs.

Finance Minister Amir Khosru Mahmud Chowdhury made the proposal at 'Ministerial Roundtable on Accelerating Implementation for More and Better Jobs', organised by the World Bank at the Queen Sirikit National Convention Centre in the Thai capital on Wednesday.

He said delays between approvals by the government and the World Bank often slow project execution so it is necessary to align the two processes and ensure funds are disbursed without avoidable delays.

"In our conversation with Anna and the Bank Group, we have discussed to start with: the approval of the World Bank and this government should be synchronised so it happens at the same time, because the approval on both sides sometimes (causes delay), and I think the same should be followed with the disbursement for the projects," he said.

The minister mentioned that Bangladesh had set a target of creating 10 million jobs that makes timely project implementation essential to achieve the goal.

To strengthen oversight, the government plans to introduce a centralised digital dashboard from the beginning of project implementation, with daily monitoring of progress through indicators highlighting potential delays and implementation problems.

The Ministry of Finance, the Prime Minister's Office and the relevant line ministry will monitor the projects.

The government will also assess projects after completion to determine whether they have delivered their intended results.

Khosru said proposed projects would have to meet four criteria before receiving approval: value for money, returns on investment, job creation and environmental considerations.

The measures are intended to ensure that development financing translates into tangible economic benefits, particularly employment opportunities.

World Bank President Ajay Banga told the roundtable that faster project delivery is critical as developing countries face mounting pressure to create jobs for a growing working-age population.

"Development delayed is development denied," he said, urging governments and development institutions to spend less time discussing plans and more time delivering results on the ground.

Banga said the World Bank and borrowing countries should work together to reduce project-implementation timelines by one-third over the next three years.

He stressed that faster approvals by the Bank alone would not be sufficient unless governments also addressed domestic obstacles, including procurement delays, land acquisition and coordination among public agencies.

Govt wants to shift from Chinese loans to investment - Khosru saysBangladesh is pushing to move its financing partnership with China from loans to investment, Finance Minister Amir Khosru Mahmud Chowdhury said yesterday on the sidelines of the IMF-World Bank annual meetings in Bangkok.

“We are gradually moving away from the state-to-state model towards investment and partnership,” he said after meetings with the Chinese Exim Bank and the US Treasury.
“Future Chinese financing should shift from loans to investment, and we hope for a joint change in this regard,” he added.

Emphasising joint and direct investment, he said: “Our main economic policy focus is on investment. We are moving away from loans.”

He added that he had held long discussions with the Exim Bank.

He also met the US Treasury, where talks covered American assistance, debt management and Bangladesh-US relations. They also discussed grants from a US agency.

“We have not received much in the past,” he said.

Bangladesh had told the US side that the relationship had reached a stage where it was buying aircraft, oil, soybeans and other commodities from the United States, he said. The imports were also helping reduce the trade imbalance.

“The time has come for US support to flow. If not now, when?” he said. “They have agreed to support. Let’s see.”

Separately, Rashed Al Mahmud Titumir, the prime minister’s adviser on finance and planning, said development partners had expressed confidence in the government’s strategy to revive the economy.

Partners agreed the government was addressing a fragile economy transparently and trying to rein in inflation and ease the fuel burden despite the Middle East crisis, and welcomed safety net programmes such as the Family Card and Farmers Card.

He said the tax system would be digitised and harassment reduced without raising rates. The tax-GDP ratio (tax collection as a share of the economy), below 7 percent under the previous government, was showing signs of improvement.

The International Monetary Fund (IMF) this week cut its growth forecast for Bangladesh to 3.2 percent for the current fiscal year, close to its 3.4 percent projection for global growth in 2027. If realised, it would be the lowest GDP growth Bangladesh has recorded in 37 years.
The World Bank had earlier cut its forecast for fiscal year 2026-27 to 3.4 percent, and the Asian Development Bank (ADB) in September projected 4 percent growth. Both are well below the government target of 6.5 percent for FY27.

All three agencies expect inflation to stay high after four years of elevated prices. The IMF projects average inflation of 10.9 percent for the current fiscal year.

Economists said the downgrades should be taken seriously. They pointed to weak investment, persistent inflation, energy shortages and weaknesses in the banking sector.
They said high interest rates and rising production costs are holding back growth, while high non-performing loans hurt businesses and low revenue limits how much the government can spend on public investment.

Fahmida Khatun, distinguished fellow at the Centre for Policy Dialogue (CPD), a local think tank, said the estimates “point to a prolonged slowdown and a fragile recovery”.

Ashikur Rahman, principal economist at the Policy Research Institute of Bangladesh (PRI), said the revisions did not surprise him.
In the current situation, growth in FY27 will be low. Recovery will depend on how quickly energy supply improves, investment returns and inflation eases. The government should restore confidence with predictable policies and faster business approvals.
Fahmida Khatun Distinguished fellow at CPD
He put growth for FY27 at around 3-4 percent and average inflation at roughly 9-11 percent, calling them “judgement-based estimates”.
Ashikur saw little basis for expecting the 6.5 percent target to be met without a substantial improvement in investment and productive capacity.

Selim Raihan, executive director at the South Asian Network on Economic Modeling (SANEM), said the government’s growth target “now looks increasingly detached from economic realities”.

He expects growth of 3.5-4 percent and average inflation of about 9-10 percent, with upside risks from energy prices, exchange rates and domestic costs.

Kazi Iqbal, research director at the Bangladesh Institute of Development Studies (BIDS), said the economy is under stress and inflation is weighing more heavily on the poor.He said spending more under the Annual Development Programme (ADP) is the only short-term way to lift growth.

The weakness in growth is not the result of one temporary shock. Private investment has remained stagnant, private-sector credit growth is exceptionally weak, and high interest rates have raised the cost of doing business.
Selim Raihan Executive director of SANEM
‘RESTORE CONFIDENCE’

CPD Distinguished Fellow Fahmida said recovery in FY27 will depend on how quickly energy supply improves, investment returns and inflation comes under control.

She said, “The government should restore confidence with predictable policies and faster, simpler business approvals.”

The economist added that the government should strengthen banks through transparent loan classification and recovery or resolution of insolvent lenders, while preserving sound borrowers’ access to credit.

“Reliable energy requires better planning, domestic exploration, efficiency and transmission investment. Public funds should support well-prepared projects with clear returns,” said Fahmida.

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According to her, revenue reforms can fund productive investment and targeted aid for low-income households.

“These measures will not produce an immediate rebound. But without progress, lower investment, weak job creation, and high inflation may continue to reinforce one another,” she commented.

‘FREE UP CREDIT FOR BUSINESS’

Selim said the broad message of the forecasts is that Bangladesh is experiencing unusually weak growth, made worse by persistently high inflation. If realised, the IMF projection of 10.9 percent inflation would mean another year of serious erosion in household purchasing power.

“Bangladesh is therefore facing an uncomfortable combination: businesses are struggling with weak demand, high financing and energy costs, while households continue to face rising living costs,” he said.

“The weakness in growth is not the result of one temporary shock. Private investment has remained stagnant, private-sector credit growth is exceptionally weak, and high interest rates have raised the cost of doing business,” he said.

“The energy shortage has become a binding constraint for many industries, while uncertainty over gas and electricity supply makes firms reluctant to undertake new investment.”

Selim, also an economics professor at Dhaka University, said weak banks have further damaged lending, while low revenue is forcing the government to borrow heavily from banks, potentially squeezing private-sector credit.

“Political uncertainty, concerns over law and order, and policy unpredictability are also affecting business confidence.”

We are confronting more than a temporary slowdown: Banking distress, energy shortages and weak fiscal capacity are constraining investment, while high inflation continues to erode household purchasing power. The WB assessment reinforces this diagnosis.
Ashikur Rahman Principal economist of PRI
“These problems reinforce each other. Weak investment reduces growth and employment; weaker growth constrains revenue; low revenue increases government borrowing; and greater government borrowing can further restrict financing for private investment.”

Selim said the slowdown should not be treated as a cyclical downturn, because it reflects structural and institutional weaknesses built up over many years.

According to him, reviving growth will take more than new credit schemes or investment incentives.

The immediate task, he said, is to win back the confidence of private investors. Businesses need predictable energy supply, greater certainty over taxes and tariffs, better access to finance, improved law and order, and assurance that economic policies will not change abruptly.

He said domestic gas exploration should be accelerated, energy imports diversified and taxes and duties on fuel imports reviewed, so that energy prices can be kept at a tolerable level without creating unsustainable subsidies.

“Revenue reform is equally urgent, but additional revenue should come from broadening the tax base, reducing unjustified exemptions and improving tax administration rather than repeatedly increasing the burden on compliant taxpayers,” added the economist.

‘SEEK SUPPORT OF DEVELOPMENT PARTNER’

PRI Principal Economist Ashikur said his team saw this coming. “Our team warned of the stagflationary risks facing Bangladesh eleven months ago.”

“My assessment is that we are confronting more than a temporary slowdown: banking distress, energy shortages and weak fiscal capacity are constraining investment and production, while persistent inflation continues to erode household purchasing power. The World Bank’s latest assessment reinforces this diagnosis.”

He said weak banks are impairing credit and investor confidence, while energy shortages and high production costs deter investment and inflation squeezes consumption.

Ashikur said global uncertainty is making matters worse but is not the sole cause. The inflation outlook is particularly uncertain because of energy costs and supply pressures, and further external shocks would weaken growth while raising prices.

High interest rates and low investment, both public and private, are likely to bring economic growth down. But it is hard to tell the extent. Inflation is weighing more on the poor. The only way to push the growth rate is to boost public investment in the short run.
Kazi Iqbal Research director of BIDS
The central difficulty, he said, is that the banking sector needs financial support on a scale the state is not currently equipped to provide.

“Restoring bank capital, protecting small depositors and restructuring distressed institutions require resources, yet the government already faces severe competing demands on a narrow revenue base. In my assessment, financing the banking-sector clean-up entirely from domestic public resources would risk undermining other essential spending.”

He said emergency lending can help manage immediate funding pressures but cannot replace capital lost through bad loans. “Prolonged central-bank support to weak banks risks adding to inflation and exchange-rate instability. We must therefore distinguish between keeping banks temporarily liquid and restoring their long-term financial viability.”

Bangladesh needs stronger, coordinated support from the IMF, World Bank, ADB and bilateral partners, he said.

“The government should seek concessional budget and balance-of-payments financing, alongside technical assistance for bank restructuring.”

“Such support should create room to repair the financial sector while preserving essential public investment and targeted assistance to vulnerable households, not finance an unconditional bailout of bank owners,” added Ashikur.

He said, “Without strong development-partner support and decisive fiscal and financial-sector reforms, I do not see a credible route out of the stagflationary trap. External financing can give us the resources and time to manage the adjustment; reforms must ensure that we do not return to the same crisis.”

‘SPEED UP PUBLIC SPENDING’

BIDS Research Director Iqbal said high interest rates and low investment, both public and private, are likely to bring economic growth down. But it is hard to tell the extent.

“The only way to push the growth rate is to boost public investment in the short run,” he said, adding that ADP implementation is the key.

The head of the International Monetary Fund on Wednesday called for countries to make "urgent repairs" to address fiscal balances, as bond yields spike and pressure grows on governments to manage ballooning debt.

"What is our loudest call to policymakers right now? Make urgent repairs to the fiscal house before the cracks widen," Managing Director Kristalina Georgieva said at the Annual Meetings of the IMF and the World Bank in Bangkok.
"Now is the time to enhance revenues, to rationalise spending and improve public financial management," she said.

The comments come as officials and experts gather in the Thai capital to discuss challenges facing the global economy, as higher energy prices caused by the US war with Iran drive up costs.

In its closely watched World Economic Outlook released on Tuesday, the IMF raised its 2026 global growth forecast by 0.1 percentage points to 3.1 percent.

However, it warned that while there is new economic activity sparked by rising investment in artificial intelligence, poorer countries are not benefiting as they deal with soaring energy costs.

The global economy "remains resilient in the face of very frequent repetitive shocks and in the face of uncertainty", Georgieva said at a news conference Wednesday. "But this resilience is reaching its limits."

The IMF is "ringing the alarm bell on excessive global economic imbalances growing", she added.

"To put it very simply, China needs to spend more, the US has to save more and Europe has to invest more," she said.

Bangladesh is caught in a trap of low growth, high inflation, and weak job creation that will not break without decisive governance reforms, prominent economists warned following a series of grim regional forecasts.

According to the International Monetary Fund's (IMF) latest World Economic Outlook on Tuesday, Bangladesh is projected to become South Asia's slowest-growing economy through 2031. The IMF expects growth to decelerate to 3.2% in the current fiscal year (FY27) and bottom out at 2.2% in FY28, before making a sluggish recovery to roughly 3% by FY31. This trajectory contrasts sharply with the interim government's five-year strategic framework published in August, which sets an ambitious growth target of 8.5% by FY31.

Compounding the growth slowdown, the IMF projected average inflation to reach 10.9% this fiscal year, a 16-year high and nearly double the 6% rate forecast six months ago. Bangladesh has already endured inflation exceeding 8% for four consecutive years.

Zahid Hussain, former lead economist at the World Bank's Dhaka office, said the IMF has provided a baseline projection that could materialise if the government fails to deliver on its promised reforms or restorations in three areas – banking, energy, and business regulation.

Fahmida Khatun, a distinguished fellow at the Centre for Policy Dialogue, said the downgrade reflected a prolonged slowdown and high inflation since mid-2022. She said policy mistakes, including a 6-9% interest rate cap, and reform inertia had made matters worse, and that the Middle East war had made the situation more critical.

Hossain Zillur Rahman, executive chairman of the Power and Participation Research Centre (PPRC), said Bangladesh is in a low-growth, high-inflation, and low-employment trap. He said poverty reduction, once a hallmark success for Bangladesh, was now reversing.

Pessimistic

The IMF's outlook for the current fiscal year is more pessimistic than those of the World Bank and the Asian Development Bank. Just a week ago, the World Bank projected 3.4% growth for Bangladesh in FY27, while the ADB forecast 4% in September.

The successive downgrades by the three global lenders over less than three weeks reflect chronic structural bottlenecks further aggravated by energy shortages stemming from the persistent Middle East war.

The IMF's forecast for FY31 is 5.5 percentage points below the government's target. The framework, published in August, targets 6.5% growth in FY27, rising by half a percentage point each year.

Bangladesh ranks last among seven South Asian economies in the IMF's table in both FY27 and FY31. India is forecast to grow above 6.8% every year from 2027 to 2031. By FY31, the IMF expects Bhutan to grow 5.52%, Nepal 5.02%, Pakistan 4.5%, the Maldives 4.03% and Sri Lanka 3.51%, against 2.97% for Bangladesh.

The World Bank attributed Bangladesh's subdued growth prospects partly to the prolonged Middle East war, which is aggravating existing economic weaknesses, including problems in the financial sector, low revenue mobilisation, energy-sector inefficiencies and an unfavourable investment climate.

"The return of political stability was expected to lead to a rebound in economic activity, but this has not yet materialised," the World Bank said in its Bangladesh Development Update, released on 6 October.

The assessment followed the ADB's outlook on 23 September, which warned that banking-sector distress and structural constraints would continue to weigh on economic growth.

"High nonperforming loans, weak bank balance sheets, bank preference for safer government securities, and high borrowing costs limit private-sector access to credit," the ADB said.

It also pointed to unreliable energy supplies, logistical constraints and lengthy regulatory and approval procedures as factors holding back investment and limiting the economy's response to monetary easing or fiscal stimulus.

What economists say

Forecasts by international development partners are in line with those of local research organisations because both use the same available data, said Hossain Zillur Rahman.

If we cannot improve political and economic governance, the trap (stagflation) will not be broken.

Hossain Zillur Rahman Executive chairman, PPRC
He said Bangladesh is caught in a trap of low growth, high inflation and low employment, which is the outcome of long-running economic and institutional trends. The country had cut its poverty rate over the years, but that progress is now reversing.

"If we cannot improve political and economic governance, the trap will not be broken," Zillur said.

He also outlined what needs to be done. Law and order must improve first, he said, followed by decentralisation, more efficient administrative services, coordinated policies and less wastage.

Fahmida Khatun said the IMF's latest forecast is grimmer than its earlier one because current data and trends justify it.

The government should not focus on growth; its core focus should be on controlling inflation.

Fahmida Khatun Distinguished fellow, CPD
She noted, however, that the IMF revises its forecasts every few months, so the next one could be better or worse.

"But the latest projection signals that the economy has become from weak to weaker and riskier as well," Fahmida said.

She said the main reasons behind the weak forecast are a prolonged slowdown in economic activity, low growth and high inflation since mid-2022. A lack of appropriate policies, at times wrong ones such as the 6-9% interest rate cap, and reluctance to carry out reforms have made matters worse, Fahmida said. The Middle East war and wider geopolitical situation have made things more critical, she added.

Fahmida said the government should keep monetary policy tight to contain inflation, which hits the poor and low-income people hardest. It should also follow austerity measures, she said, because its revenue is not rising amid low investment and high inflation.

"Now, the government should not focus on growth; its core focus should be on controlling inflation, which will help the poor and contribute to a cut in the cost of doing business," she said.

Rejecting arguments that attribute the country's economic woes purely to external shocks, Zahid Hussain pointed to systemic institutional failures.

If you compare Bangladesh's governance scores with those of regional countries, you will find that we rank in the bottom 20-25% across all six indicators.

Zahid Hussain Former lead economist, World Bank's Dhaka office
"If you compare Bangladesh's governance scores with regional peers using World Bank indicators, we rank in the bottom 20–25% across all six parameters," Hussain said. "This explains why our performance is weaker than that of other countries facing identical global crises. Blaming external factors alone is a half-truth at best."

Zahid Hussain added that the IMF's figures present a baseline scenario that will materialise unless the government delivers on structural restorations across banking, energy, and regulatory frameworks.

Bangladesh could more than double its export earnings from the UK to $10 billion a year if businesses look beyond readymade garments to products such as pharmaceuticals, food, shrimp, agricultural goods, bicycles, light engineering goods and plastics, stakeholders said.

The country shipped goods worth $4.67 billion to the UK in fiscal year 2025-26, mostly apparel, according to the Export Promotion Bureau (EPB).
But a more diverse export basket could lift that figure to $10 billion, said Mohammad Hasan Arif, vice-chairman and chief executive officer of the bureau.

Speaking at a workshop titled “Export Growth in the UK Market: Opportunities Beyond RMG” in Dhaka yesterday, he said Bangladesh accounts for only 0.49 percent of total UK imports of $948 billion, which points to significant room for growth.

“Increasing the share to 1 percent could take Bangladesh’s exports to the UK to around $10 billion,” Hasan said in his keynote presentation.

Besides reducing reliance on garments, he called for stronger value-chain management, internationally recognised testing and standards facilities, and better understanding among exporters of UK regulations and market opportunities.

The Dhaka Chamber of Commerce and Industry (DCCI), the EPB and the British High Commission in Dhaka jointly organised the event. Participants of the programme focused on helping exporters make the most of the UK Developing Countries Trading Scheme (DCTS), particularly as Bangladesh nears graduation from the least developed country (LDC) category.

The DCTS is a UK trade preference programme that cuts tariffs and simplifies trading rules. It replaces the Generalised Scheme of Preferences (GSP).

In his welcome address, DCCI President Taskeen Ahmed said the scheme could help Bangladeshi businesses expand their presence in Britain, but exporters would need to prepare to benefit from it.

He said exports to the UK remain heavily dependent on garments, leaving considerable scope to ship other products.

He urged businesses to improve product quality, meet international standards, strengthen certification and supply-chain traceability, and invest in packaging and branding.

Better access to market intelligence and stronger compliance would also help exporters compete in the UK, he said.

Taskeen also called for the removal of tariff and non-tariff barriers to boost bilateral trade and investment.

James Goldman, acting British high commissioner to Bangladesh, said the two countries have longstanding relations and a growing trade and investment partnership.

He said continued access to the UK market after LDC graduation would help businesses plan ahead, expand operations and make investment decisions with greater certainty. He hoped Bangladeshi businesses would take advantage of the opportunities.

Ellie Parker, regional trade adviser for South Asia, Central Asia and the South Caucasus at the British High Commission, led a technical session on the DCTS.

She covered market access under the scheme, including after LDC graduation, preferential tariff arrangements and the practical steps exporters must take to benefit.

During a panel discussion, speakers from the National Board of Revenue’s Customs Bond Commissionerate in Chattogram, the Footwear, Leather Goods and Accessories Exporters Association, Hortex Foundation, Meghna Group, Cupcake Exports Ltd, MUC Foods Ltd and Bangladesh Flexible Packaging Industries Association talked about ways to expand non-RMG exports.

Foreign commercial banks operating in Bangladesh saw their combined net profit fall 38% to Tk2,321 crore in the first half of 2026 as weaker trade activity and limited income-generating opportunities weighed on earnings.

Their net profit declined by Tk1,417 crore from Tk3,738 crore in July-December 2025, according to a Bangladesh Bank report.

Year on year, net profit fell by Tk494 crore from Tk2,815 crore in January-June 2025.

Despite the decline in earnings, the nine foreign commercial banks operating through 67 branches across the country maintained strong capital positions, ample liquidity, and relatively healthy asset quality, the report says.

Although foreign banks account for a relatively small share of the banking sector's total deposits and loans, they play an important role in trade finance, foreign exchange transactions and services for multinational corporations.

Their combined pre-tax profit fell to Tk3,632 crore in January-June 2026, down 18.4% from the same period a year earlier and 17.3% from the preceding six months. Returns on assets and equity also moderated during the period.

Syed Mahbubur Rahman, managing director of Mutual Trust Bank, told TBS that the banking sector is going through an extremely difficult period, with limited opportunities to generate income constraining profitability.

"When the non-performing loan ratio exceeds 30% and the volume of distressed assets is more than 50%, losses become inevitable," he said.

Mahbubur said higher global commodity prices had reduced import volumes while increasing the foreign currency needed to pay for imports. Production had also been disrupted by continued constraints in gas and electricity supplies, reducing import and export activity, and adversely affecting banks' income and profits.

Deposits remain strong as lending growth slows

Foreign banks held deposits of Tk87,378.5 crore, equivalent to around 4% of total deposits in Bangladesh's banking sector.

Unlike domestic lenders, which serve a broader retail customer base, foreign banks focus heavily on corporate clients. Their deposits are dominated by current accounts, savings accounts and resident foreign currency accounts, helping them maintain relatively low funding costs.

Their outstanding loans stood at Tk48,704 crore at the end of June 2026, up just 0.7% from Tk48,355 crore a year earlier.

Foreign banks handle 18.6% of export receipts

Foreign banks processed $3.95 billion in export receipts in January-June 2026, accounting for 18.6% of Bangladesh's total export receipts, according to the report.

On the import side, foreign banks facilitated payments worth $4.62 billion, accounting for more than 13% of the country's total import payments.

Although foreign banks handled a larger share of export receipts than of import payments, their net foreign currency contribution depends on the actual value and timing of the associated inflows and outflows.

NPL ratio rises, but capital buffers remain strong

Foreign banks' non-performing loan (NPL) ratio rose to 6.5% at the end of June 2026, from 6.1% a year earlier.

Despite the deterioration, the ratio remained significantly lower than that of domestic banks, according to the report. The relatively lower level of default exposure reflects foreign banks' focus on large corporate borrowers, multinational subsidiaries and highly rated export-oriented businesses.

Their capital adequacy ratio stood at 41.21% at the end of June 2026, substantially above the regulatory minimum. The Tier 1 capital ratio remained close to 39.4%, indicating a substantial buffer against potential financial shocks.

Liquidity indicators also remained strong, with liquid assets accounting for nearly half of total assets and customer deposits exceeding gross loans by more than 28%.

The sector's total assets reached Tk3,10,621.3 crore, supported by substantial capital reserves and a relatively conservative lending strategy.

The global economy has weathered a series of shocks better than expected, but repeated disruptions are eroding countries’ capacity to respond, IMF Managing Director Kristalina Georgieva said on Wednesday.

Presenting the fund’s Global Policy Agenda at a press conference during the 2026 Annual Meetings of the IMF and the World Bank in Thailand, she said global growth is projected at 3.1 percent in 2026, unchanged from the April forecast but below last year’s 3.4 percent.
The IMF said the stable headline figure masks “divergent outcomes” across economies.

Two opposing forces are at work. Wars in the Middle East and Ukraine are disrupting supply chains and driving up commodity prices, while rapid advances in artificial intelligence (AI) are boosting investment, trade and stock markets.

The energy shock proved less damaging than feared, thanks to flexible supply responses, inventory drawdowns, lower oil dependency and fiscal support.A downturn has been avoided “for now”, the IMF said, but growth remains modest and inflationary pressures persist.Energy exporters not directly affected by the conflicts, economies integrated into technology value chains, such as Thailand and Malaysia, and countries with strategic reserves have fared better. Energy importers, countries with limited policy buffers and those less exposed to the technology boom are facing greater strain.

Many low-income and fragile states fall into the latter group, raising the risk of widening income disparities across countries.

ERODING BUFFERS

Policy buffers have weakened, the IMF warned. Global public debt is approaching 100 percent of gross domestic product (GDP), while rising sovereign bond yields in advanced economies are putting additional pressure on emerging and developing economies, particularly low-income countries facing high debt-service costs.

Other risks include trade tensions, El Niño’s potential impact on food markets, a possible market correction linked to AI, vulnerabilities in non-bank financial institutions and cyber threats.

Georgieva said cyber threats were already causing real-world damage, citing an incident in France in which a cyberattack caused refrigerator temperatures to rise, spoiling food. As such attacks become more frequent, they could target financial systems, turning cyber risk into a financial stability concern.

POLICY PRIORITIES

The IMF urged governments to protect people rather than prices, recommending temporary, targeted support for vulnerable households instead of broad price controls.

Credible fiscal consolidation remains a top priority, the fund said. A restrictive monetary stance is generally still warranted but should be calibrated to country-specific conditions. Monetary policy should tighten further if inflation expectations risk becoming unanchored.

Temporary foreign exchange intervention may be justified to curb disorderly currency movements, but it should not replace broader macroeconomic adjustment. Financial supervisors should also contain excessive leverage, particularly in technology-related exposures.

The fund said its “Bangkok Blueprint” aims to strengthen safeguards for digital finance, improve cyber protection and combat digital fraud.

It also cited research suggesting that AI could raise sub-Saharan Africa’s GDP by up to 4 percent cumulatively over a decade.

For low-income countries, the IMF stressed the need to address debt vulnerabilities despite declining official development assistance. It said it was involved in debt restructuring cases under the Common Framework.

The fund is also overhauling its surveillance and programme design to make its support “agile, selective, and realistic”.