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.

Sonali Life Insurance PLC has partnered with mobile financial services provider Nagad to offer two life insurance products through its digital platform, aiming to expand customer access to insurance services in Bangladesh.

Under the strategic partnership agreement signed at Sonali Life's head office in Dhaka on 14 October, the company's Quick Savings Insurance Plan and Monthly Savings Plan will be made available through Nagad's platform.

The initiative will allow customers to purchase the insurance products digitally, while enabling Sonali Life to reach a wider customer base through Nagad's existing digital network.
Md Rafiqul Islam, additional managing director and chief executive officer (in charge) of Sonali Life Insurance, said digital transformation was an important part of the company's strategy to improve customer experience and expand access to insurance.

He said the partnership would provide customers with a convenient digital channel to purchase the two products and support the company's efforts to offer accessible, customer-focused insurance solutions.

Sheikh Mohammad Danial, a director of Sonali Life, said the agreement marked a step towards expanding access to life insurance through digital innovation. Offering the products through Nagad could help the company reach more customers and raise awareness of insurance, he added.

Fauzia Quamrun Tania, another director of Sonali Life, described the partnership as an initiative to make financial protection more accessible in Bangladesh. Combining the insurer's expertise with Nagad's digital reach could help bring life insurance to more people, she said.

Mohammed Shahin Sarwar Bhuiyan, chief commercial officer of Nagad, said the partnership would expand access to life insurance through digital channels.

He said Nagad had been working to simplify everyday financial transactions while introducing new digital services, expressing optimism that the initiative would make purchasing insurance more convenient and support the growth of digital financial services in Bangladesh.

The signing ceremony was attended by Sonali Life directors Fauzia Quamrun Tania and Sheikh Mohammad Danial, Chief Operating Officer Mohammad Manzur Morshed, Chief Financial Officer Mohammad Abdul Hannan, and Chief Information Officer and Company Secretary Md Abdur Rob, along with other senior officials.

Representing Nagad, attendees included Md Saidur Rahman Dipu, head of business sales; Istiaque Ahmed Shawon, head of bank, financial institution, insurance and microfinance business; Tapash Ahmed, lead for insurance and non-bank financial institutions; and Al Timayat, key account manager.

The partnership is expected to broaden the distribution of life insurance products through digital platforms as both companies seek to make insurance services more accessible to customers.

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”.

The government has approved the purchase of nine liquefied natural gas (LNG) cargoes from Trafigura between December 2026 and December 2027 subject to mutually agreed upward or downward adjustments, while rejecting a separate proposal for a Tk13,161 crore floating LNG terminal at Kutubjom in Cox's Bazar.

At separate meetings yesterday (13 October), the Cabinet Committee on Economic Affairs also recommended in-principle approval for LNG procurement from five international suppliers to ensure uninterrupted gas supplies.

The proposals cover direct purchases from BP Singapore Pte Limited, Sahara Energy Resource Limited and Shell International Trading Middle East Limited FZE, alongside G2G procurement from Cheniere Marketing International LLP and Trafigura Pte Ltd. The proposals did not specify volumes, contract values or delivery schedules.

Separately, the Cabinet Committee on Government Purchase (CCGP) declined to approve a proposal to establish a floating storage and regasification unit (FSRU) at Kutubjom in Maheshkhali under a G2G arrangement. The Energy and Mineral Resources Division later withdrew the proposal, according to a Cabinet Division press release.

Proposed by China National Energy Engineering and Construction Company, the terminal was estimated to cost Tk12,324 crore over 15 years or Tk13,161 crore over 20 years.

Scheduled for completion by 2028, it would have added 600 million cubic feet per day of regasified LNG to the national grid amid declining domestic gas production and technical problems at existing terminals. The committee had granted in-principle approval on 28 July.

The CCGP also approved fertiliser imports worth around Tk1,466 crore from Saudi Arabia, the United Arab Emirates, Russia and Canada, covering urea, muriate of potash (MOP) and diammonium phosphate (DAP).

The approved purchases include 82,000 tonnes of urea from Saudi Arabia and the UAE, 115,000 tonnes of MOP from Russia and Canada, and 40,000 tonnes of DAP from Saudi Arabia.

The committee also recommended awarding Meghna Sugar Refinery Ltd contracts to supply 10,000 tonnes of sugar for Tk103.45 crore through open tender.

Finance Minister Amir Khosru Mahmud Chowdhury chaired the CCGP meeting.

US inflation rose faster than expected in the 12 months to September, according to official data, in the final major inflation report before next month's midterm elections.

The annual inflation rate climbed to 3.7%, up from 3.4% in the year to August, driven largely by rising gasoline prices amid disruptions to energy supplies in the Middle East linked to the US-Israel conflict with Iran, reports BBC.

The cost of living has emerged as a major issue in the US midterm elections, putting renewed focus on the pace of price increases and their impact on households.

What is inflation?

Inflation measures how quickly the prices of goods and services rise over time.

For example, if a bottle of milk costs $1 and its price increases to $1.10 after a year, the annual inflation rate for that product is 10%.

In the US, the Bureau of Labor Statistics (BLS) tracks inflation using the consumer price index (CPI). The index measures price changes across a wide range of everyday goods and services, including food, gasoline and medical care, to assess overall price movements in the economy.

The BLS periodically updates the basket of goods and services used in its calculations to reflect changes in consumers' spending patterns and lifestyles.

What causes inflation?

Inflation can rise for several reasons, including stronger demand, limited supply and higher production costs.

When demand for a product exceeds the available supply, sellers may increase prices. The popularity of Labubu dolls in recent years, which pushed up resale prices, is one example.

Rising incomes can also increase consumer spending, potentially putting upward pressure on prices.

Supply disruptions can have a similar effect. When the availability of a product falls but demand remains steady, prices tend to rise. Crude oil is one example, as it is a key raw material used to produce gasoline and diesel.

Before the US-Israel conflict with Iran began, crude oil was trading at just over $70 a barrel. Disruptions to supplies during the conflict pushed prices sharply higher, with oil currently trading above $100 a barrel, according to the supplied BBC report.

What is the current rate of inflation?

US inflation reached 3.7% in the year to September, exceeding expectations as gasoline prices surged.

Fuel prices rose 34.2% over the 12-month period and increased by 9.1% in September alone. The monthly rise accounted for more than half of the overall increase in inflation, according to the BLS.

Energy inflation climbed 20.4% over the year, reflecting higher prices for fuel oil, energy services and electricity. Fuel oil, which is commonly used for home heating, recorded a 74.2% annual increase.

Economists will be watching whether higher energy costs spread to other parts of the economy, particularly food prices, and push inflation further upwards. The US Federal Reserve will also monitor these developments as it considers interest-rate policy.

Food inflation remained relatively subdued, with prices unchanged in September and up 2.5% over the year. Core inflation, which excludes food and energy prices, stood at 2.6%.

Will the inflation hike change Social Security payments?

Following the inflation report, the Social Security Administration announced a 3.6% increase in Social Security benefits for 2027, covering programmes including retirement, survivors and disability insurance.

The adjustment is expected to raise the average monthly retirement benefit by $75.

The cost-of-living adjustment will take effect in January for around 72 million people. Higher payments for the 7.2 million people receiving Supplemental Security Income are due to begin on 31 December.

How have tariffs affected inflation?

Since returning to office for a second term, US President Donald Trump has imposed tariffs on imports from trading partners around the world.

After the Supreme Court struck down most of the additional global tariffs in February, Trump announced a new 10% global tariff to replace them.

Trump has argued that tariffs would increase government revenue, encourage domestic manufacturing and persuade consumers to buy American-made products. However, the additional import taxes have also contributed to higher prices, according to research by the Federal Reserve Bank of New York.

Tariffs are taxes on imported goods that are generally paid by importing businesses. Unless overseas suppliers cut their prices to absorb some of the additional cost, US companies face higher expenses that can be passed on to consumers.

The New York Fed found that foreign exporters reduced their prices only marginally in response to the new tariffs, leaving US businesses to bear nearly 90% of the additional tax burden.

Tariffs can also increase the cost of domestically manufactured products when US producers rely on imported components or raw materials.

The research found that each percentage-point increase in average tariffs led to an almost 0.25% rise in consumer goods prices after one year.

Has inflation been worse lately?

Although the current inflation rate remains above the Federal Reserve's 2% target, it is well below the levels recorded in recent years.

Inflation accelerated during the Covid-19 pandemic as supply-chain disruptions and other pressures pushed up costs.

Energy prices climbed further in early 2022 after Russia launched its full-scale invasion of Ukraine, sending oil prices above $100 a barrel.

Together, these pressures helped drive US inflation to a peak of about 9%.

Can inflation ever go down?

A slowdown in inflation does not necessarily mean prices are falling. It means prices are increasing at a slower pace.

For example, if inflation drops from 5% to 3%, goods and services are generally still becoming more expensive, but at a slower rate than before.

Moderate inflation is widely considered compatible with a healthy economy. The Federal Reserve's 2% target reflects its aim of maintaining relatively stable prices while supporting economic activity.

If inflation falls too low, consumers may postpone purchases in anticipation of further price declines. Weaker demand can then prompt businesses to cut wages or reduce their workforce, potentially slowing economic growth.

Factory owners, trade union leaders and economists yesterday called for a review of garment workers’ wages to reflect the rising cost of living.

They made the call at a seminar organised by the Garment Workers’ Trade Union Center (GWTUC) at the Jatiya Press Club in Dhaka.
In a statement presented at the seminar, the GWTUC said the latest minimum wage for garment workers was fixed in 2023 and took effect on December 1 that year.The minimum monthly wage was raised from Tk 8,000 to Tk 12,500, but the increase was only half of what workers had demanded, the statement said. Since then, the cost of living has continued to rise, while the minimum wage has remained unchanged.

The statement estimated that goods and services that cost Tk 8,000 in 2018 would now require Tk 14,500 to Tk 15,000 to buy.

Despite nominal wage increases, workers’ purchasing power has therefore declined, it said.

Workers’ incomes are insufficient to cover essential expenses such as food, rent, healthcare, education and transport, according to the statement. Many are forced to work excessive overtime but still struggle to maintain a basic standard of living for their families.

It said wage determination should take into account the actual cost of living, inflation, productivity and the equitable distribution of wealth generated by the industry.

Mujahidul Islam Selim, former president of the Communist Party of Bangladesh, said workers’ interests and the garment industry’s interests were not contradictory.

Fair wages, better working conditions, skills development and investment in technology could strengthen the industry’s long-term competitiveness, he said.

Mahmud Hasan Khan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said employers supported the formation of a wage board, but the timing of its formation was for the government to decide.

He said the BGMEA’s current leadership would not interfere in the selection of workers’ representatives to the board.

Employers would also need time to implement a new wage structure, he added.

Khondaker Golam Moazzem, president of Knowledge Hub Institute Trust, said garment workers had already taken to the streets demanding higher wages.

Although the minimum monthly wage for the lowest grade is Tk 12,500, workers in a lower grade are paid Tk 9,875, he said.

Moazzem urged workers to remain united, select their own representatives to the wage board and announce their choices publicly.

He also called for garment workers’ wages to reflect the industry’s productivity.

GWTUC President Montu Ghosh chaired the seminar.

Bangladesh and Bhutan have discussed strengthening bilateral trade and cooperation, alongside issues related to the SAARCFINANCE working group, during a meeting between their central bank governors on the sidelines of the ongoing 2026 Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group here.

Governor Yangchen Tshogyel of the Royal Monetary Authority of Bhutan (RMA) paid a courtesy call on Bangladesh Bank Governor Md Mostaqur Rahman today to exchange views on matters of mutual interest, according to a Bangladesh Bank press release issued today.

The meeting focused on issues related to the SAARCFINANCE working group, as well as bilateral trade and cooperation between Bangladesh and Bhutan.

Bangladesh Bank Deputy Governor Dr Md Habibur Rahman and RMA Deputy Governor Ms Uygen Choden were also present at the meeting.

Both sides considered the meeting successful.

SAARCFINANCE is a network of central bank governors and finance secretaries of the SAARC member states that provides a platform for regional cooperation on monetary and financial issues.

The Bangladesh Securities and Exchange Commission (BSEC) has formed a seven-member interim board to oversee the Capital Market Stabilisation Fund (CMSF), ending a 26-month leadership vacuum as the regulator moves to replace the fund's existing rules-based framework with a dedicated law.

Established in 2021 with undistributed dividends and other unclaimed investor assets, the CMSF holds around Tk1,700 crore, including Tk900 crore in cash and Tk800 crore in stocks.
The fund had been operating without a board since the previous board's tenure expired in 2024.

In a directive, the BSEC said the interim Board of Governors would ensure uninterrupted operations until the proposed Capital Market Stabilisation Fund Act, 2026, receives final approval. It instructed the fund to complete the necessary formalities while complying with all applicable laws, rules, regulations and directives.

BSEC Chairman Masud Khan will lead the board. Other members are BSEC Commissioner Hossain Sadat; an additional secretary from the Financial Institutions Division, subject to ministry nomination; Institute of Chartered Accountants of Bangladesh President Sabbir Ahmed; Bangladesh Association of Publicly Listed Companies President Riad Mahmud; Dhaka Stock Exchange Managing Director Nuzhat Anwar; and the CMSF chief executive officer, who will serve as member secretary.

CMSF Act to establish legal basis

The regulator is pursuing a dedicated law to strengthen the fund's legal standing following concerns raised by Bangladesh Bank over the legal basis for receiving unclaimed investor dividends.

A joint committee of Finance Ministry officials and the BSEC was formed to address the issue. Sources said the committee initially recommended winding up the fund and transferring its assets to the government exchequer, but the regulator maintained that the money should be used exclusively for investors. The decision was subsequently made to replace the rules-based framework with a statutory act.

After stakeholder feedback, officials expect the draft law to be placed before parliament for approval.

Draft law expands fund's mandate

Under the draft law, the fund's resources would include undistributed dividends and rights shares, unallotted initial public offering (IPO) and qualified investor offering (QIO) subscription money, undistributed assets of delisted companies, investment returns, government and institutional grants, and other approved sources.

The CMSF would act as custodian of these assets and settle eligible claims for dividends, rights shares, bonus shares, IPO subscription money and undistributed assets of delisted companies.

Claims would remain valid indefinitely until settled. Lawful heirs could also claim assets by following the prescribed procedures, subject to verification.

The draft would establish a centralised framework for dividend distribution and tax deducted at source (TDS) management. It would also allow the fund to finance investor education and awareness programmes, institutional capacity building, research and training.

Existing rules govern fund investments

The CMSF was established under the BSEC's Capital Market Stabilisation Fund Rules, 2021, to hold undistributed cash and stock dividends, unrefunded public subscription money and unallotted rights shares from listed issuers. Investors can claim eligible cash and shares indefinitely.

Under the existing rules, up to 40% of the fund's cash balance may be used to buy and sell listed securities. At least 50% must be used to provide refinancing loans to market intermediaries for margin lending, while up to 10% may be invested in fixed deposits, government and fixed-income securities, mutual funds and other permitted instruments.

Bangladesh’s economy has found some breathing space in its foreign currency flows, but the relief has yet to reach the factories, businesses and investment decisions that drive growth.

Instead, three key indicators are flashing warning signs: imports of industrial machinery are falling, private-sector credit growth remains below 5 per cent, and government development spending has slowed to a crawl.

Together, they paint a picture of an economy struggling to turn greater external stability into productive activity.

Business leaders blame high borrowing costs, energy shortages, concerns over law and order, and uncertainty over whether new investments will generate adequate returns.

Economists warn that if the slowdown persists, it could constrain industrial output, job creation and the growth of people’s purchasing power.

After a year and a half of turbulence under the interim government, the arrival of a new political administration in February had raised hopes of a more favourable investment climate.

Nearly eight months into its tenure, however, those expectations have yet to translate into a meaningful revival.

Machinery Imports Tell a Troubling Story

Bangladesh imported $506.9 million worth of capital machinery in July and August, the first two months of the 2026-27 fiscal year, according to Bangladesh Bank data.

That was down 32.5 per cent from $750.7 million in the same period a year earlier.

The decline came even as overall merchandise imports increased. Import expenditure rose by around 12.1 per cent year-on-year to $12.2 billion during the two months.

The contrast suggests that businesses are spending more on imports overall but pulling back on machinery needed to establish, expand or modernise factories.

Imports of other industrial capital goods also fell, dropping 12.5 per cent to $1.1 billion from $1.25 billion a year earlier. Combined spending on industrial capital goods was $1.6 billion, down about 20 per cent from nearly $2.01 billion.

For the full 2025-26 fiscal year, capital machinery imports reached $3.21 billion, up 4.93 per cent from $3.06 billion the previous year.

But the longer-term picture remains uneven. Imports peaked at $5.15 billion in 2018-19 before falling and fluctuating in subsequent years.

The figures matter because machinery purchases often signal whether businesses are preparing to increase production capacity or build new facilities. Their retreat points to weakening appetite for fresh investment.

Businesses Struggle to See a Return

For entrepreneurs, the central question is no longer simply whether they can invest, but whether they can expect a return in an uncertain business environment.

Anwar-Ul-Alam Chowdhury Parvez, president of the Bangladesh Chamber and a former president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said the conditions for new investment remained deeply unfavourable.

“How can there be new investment? Who will invest? Who can guarantee that an investment will bring returns? For many, even keeping their existing businesses afloat has become difficult,” he told bdnews24.com.

Problems continue to accumulate, he said, despite the arrival of a new government.

“One problem after another keeps cropping up. A new government has come in, and we thought everything would now run smoothly. Sadly, the situation has not improved. Many are disappointed.

“Law and order have not improved. Taken together, an investment-friendly environment has yet to return to the country, and interest rates are high. I do not know when a normal, favourable environment will return.”

Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), also described a punishing climate for business.

“Business and investment are currently going through an extremely adverse situation. Entrepreneurs are fighting to survive in the market. Then came the energy crisis. These are major blows to business.

“Who would dare think of expanding a business in such circumstances? They say lending has grown by nearly 5 per cent, but I do not know how that growth came about or who the borrowers are. Will they be able to repay their loans? I have serious doubts about that.”

Private Credit Remains below 5 per cent

Private-sector credit growth, another key indicator of investment appetite, stood at 4.75 per cent at the end of August, up slightly from 4.62 per cent in July, Bangladesh Bank data show.

It had fallen to 4.47 per cent in June, the lowest level recorded at the time, after standing at 4.98 per cent in May. Despite small monthly fluctuations, growth has remained below 5 per cent.

Weak credit growth can indicate limited demand for loans to finance new investment or business expansion. But lending also depends on banks’ capacity to provide credit, the quality of borrowers and demand across the wider economy.

In May, Bangladesh Bank Governor Mostaqur Rahman announced a special Tk 600 billion lending package to revive closed and struggling factories and stimulate economic activity.

Initiatives have been taken to implement the scheme across several sectors, but the anticipated acceleration in lending has yet to materialise.

The central bank had expected private-sector credit growth to approach 5.5 per cent by June 2026. It later set a target of 6.8 per cent by December under its next six-month monetary policy.

Shamsul Arefin, managing director of NCC Bank, said global uncertainty was also weighing on demand.

“The global economy is still facing a degree of uncertainty because of geopolitical tensions. Its effects are being felt in our economy, too. Credit growth is unlikely to be very strong at a time like this.”

Syed Mahbubur Rahman, managing director of Mutual Trust Bank, said the outlook could improve as the elected government settles into office. But demand remains decisive.

“There are many reasons for a decline in lending. The biggest is whether there is demand in the economy,” he said.

“Entrepreneurs will borrow only when they are confident they can use the money in a secure environment. They have to pay interest as soon as they borrow. Now that a political government has come to power and some time has passed, demand may begin to rise.”

Public Development Spending Slows

The government’s own investment drive is also lagging. In July and August, ministries and divisions spent Tk 57.1 billion under the Annual Development Programme (ADP), equivalent to just 1.85 per cent of the total allocation, according to the Implementation Monitoring and Evaluation Division (IMED).

Implementation stood at 2.39 per cent in the same period a year earlier, when spending reached Tk 57.15 billion. In the first two months of 2024-25, the rate was 2.57 per cent, with expenditure of Tk 71.43 billion.

The slowdown in public development spending adds to the weakness in private investment, limiting another potential source of economic momentum.

World Bank Cuts Growth Forecast

The investment malaise has prompted concern over Bangladesh’s growth prospects. In its latest report on the country, published on Oct 6, the World Bank forecast GDP growth of 3.4 per cent for the 2026-27 fiscal year, down from its April projection of 4.6 per cent.Buy Maps

The lender cited energy-sector constraints, weaknesses in the financial system, revenue shortfalls and global uncertainty as factors weighing on investment and economic activity.

Investment has weakened, export growth has slowed, and high inflation has eroded purchasing power while increasing business costs.

The World Bank expects growth to recover to 3.9 per cent in 2027-28, but says improved energy supplies and faster reforms will be necessary. If its current forecast holds, growth would be lower than the 3.45 per cent recorded during the first year of the COVID-19 pandemic.

Currency Pressure Eases, but Costs Remain High

Bangladesh’s foreign currency strain intensified after Russia’s military advancement into Ukraine in February 2022 drove up global food and energy prices, increasing import costs. The country introduced import restrictions to contain pressure on the dollar.

Remittance and export earnings later improved foreign currency inflows, easing some of that pressure. But stronger inflows have not produced a corresponding revival in private investment.

Inflation continues to complicate the outlook. Overall inflation rose to 8.34 per cent in September 2026, from 8.26 per cent in August, according to the Bangladesh Bureau of Statistics (BBS).

Food inflation increased to 7.22 per cent, while non-food inflation edged down to 9.30 per cent.

Businesses remain concerned about gas and electricity supplies, alongside high interest rates, energy costs and broader production expenses. These pressures make long-term investment decisions harder to justify.

Challenge of Turning the Economy around

The combined signals from machinery imports, private credit and public spending point to a persistent weakness in investment. When businesses build factories or expand existing facilities, they can increase production capacity and create jobs. A prolonged investment slump threatens to slow both.

Zahid Hussain, a former lead economist at the World Bank’s Dhaka office, said the lender’s latest assessment reflected familiar problems in Bangladesh’s economy. The government’s response would now be crucial.

Agreeing with the forecast of 3.4 per cent growth this fiscal year, he said: “There does not seem to be much prospect of the economy turning around. Although growth is forecast to reach 3.9 per cent in the next fiscal year, there is no guarantee that it will be achieved.”

He also considered the report’s findings on rising poverty, shrinking investment, exports, private-sector lending, women’s participation in the labour market and declining industrial output to be realistic.

One pressing concern is the potential inflationary impact of higher energy prices and recent public-sector pay rises.

“Based on past experience, I have calculated that the recent increase in electricity prices could add 1 to 2 per cent to food inflation, while the rise in diesel prices could increase non-food inflation by 1 to 1.5 per cent,” he said.

Zahid argued that monetary policy remained the principal tool for controlling inflation and said the central bank should not cut its policy rate further.

He also cautioned that refinancing schemes intended to revive factories must target viable industrial businesses rather than large loan defaulters.

“If the money goes to major defaulters instead of genuine industrial enterprises, it will not contribute to productivity; on the contrary, it could increase inflation.”

He said Bangladesh must protect its reserves while maintaining a flexible exchange rate, and address weaknesses in the financial sector, secure reliable energy supplies and ensure policy continuity to encourage investment and employment.

“The international crisis is not over. There are still many risks,” he said.

For now, the easing of dollar pressure offers only limited comfort. Until businesses see a more predictable environment in which to borrow, produce and earn returns, the recovery in foreign currency flows may do little to revive the investment Bangladesh needs.

An investigation into allegations that state-owned Padma Oil PLC incurred financial losses in handling US dollar earnings from jet fuel sales remains incomplete more than five months after the government ordered it, despite a five-working-day deadline.

The Energy and Mineral Resources Division formed a three-member committee on 27 April and instructed it to submit its findings within five working days.

However, the report has yet to be submitted, a deputy secretary-level division official told TBS yesterday on condition of anonymity.

The delay has left key questions unanswered about whether the company's previous dollar-handling practice caused losses, how much money was involved, and whether any officials were responsible.

Irshad Reza, deputy secretary of the Energy and Mineral Resources Division, heads the committee. The remaining members include Bangladesh Petroleum Corporation (BPC) Director (Planning) Asadul Haque, and Deputy Secretary (Planning Section-1) of the division SM Jakaria.

Asadul told TBS, "Financial investigations are time-consuming. We had to collect various information and data from banks and review them," claiming that he had completed his part of the investigation and submitted his findings to the committee chairman.

Contacted for comment on 8 October, Irshad said he was ill. A ministry source subsequently confirmed that the report had not been formally submitted.

Dollar-handling practice under scrutiny

The probe followed media reports questioning Padma Oil's practice of converting dollars earned from foreign airlines into taka and handing the proceeds to BPC.

BPC then had to purchase dollars from the market to open letters of credit (LCs) for petroleum imports, exposing the state-owned corporation to exchange-rate losses estimated up to Tk2 per dollar.

Following BPC's instructions, Padma Oil and BPC have since opened foreign-currency accounts to avoid repeated conversions between dollars and taka.

Over the past five months, proceeds from jet fuel sales have been deposited into Padma Oil's foreign-currency account and transferred to BPC's account, officials said.

This month, BPC used the funds to open an import LC for petroleum products, marking the first time it had purchased fuel using foreign currency generated directly from jet fuel sales, according to officials.

Although the new arrangement has addressed the need for repeated currency conversion, the pending investigation must establish whether the previous practice caused actual losses, who approved it, whether it complied with applicable rules and why the foreign-currency mechanism was not introduced earlier.

ACC investigates CFO allegations

Separately, the Anti-Corruption Commission has launched an investigation into allegations against Padma Oil Chief Financial Officer and acting General Manager (Finance and Accounts) Kanchan Chandra Shome.

An ACC official, speaking on condition of anonymity, said the commission began investigating a complaint submitted by a Padma Oil employee on 1 September.

The complaint raises allegations concerning Shome's recruitment, financial management, bank deposits, foreign travel, promotions and influence over administrative decisions.

The complainant questions whether Shome's appointment as manager (accounts) in 2009 complied with BPC recruitment rules and alleges irregularities in his reported professional experience.

The complaint also alleges that more than Tk300 crore in company funds was invested in fixed deposits with several banks, with a substantial amount remaining unrecovered. It further claims that company collections were kept for years in special notice deposit accounts offering comparatively low interest rates, causing financial losses.

Another allegation concerns a foreign trip in 2019, which the complainant claims Shome undertook on leave without prior approval from the Energy and Mineral Resources Division. The complaint also questions the handling of the dollar earnings from jet fuel sales.

The ACC investigation will determine whether the allegations have merit and whether any financial or administrative wrongdoing occurred.

Padma Oil, CFO yet to respond

TBS sent detailed questions to Padma Oil Managing Director Md Mofizur Rahman by email and WhatsApp, seeking his response to the allegations and the delay in the government probe.

When contacted by phone, he said he was in a meeting and ended the call.

TBS also sent questions to Shome's official email address and WhatsApp account and attempted to reach him by phone, but he did not answer. Neither had responded before publication.

With the government committee's report still pending and the ACC conducting a separate investigation, questions over financial oversight and accountability at the state-owned company remain unresolved.

The Bangladesh Securities and Exchange Commission (BSEC) has decided to take strict legal action against listed companies that fail to deposit their declared final cash dividends into separate bank accounts before their annual general meetings (AGMs).

The decision was taken at a commission meeting today (13 October), chaired by BSEC Chairman Masud Khan.

Under existing regulatory directives, listed companies proposing annual cash dividends must deposit the full declared amount into a designated dividend bank account at least one day before their AGMs.

They must also obtain a bank certificate confirming the deposit, duly certified by the managing director, chief financial officer and company secretary, and submit it to the stock exchanges before presenting it to shareholders at the AGM.

Noting recent instances of non-compliance, the commission decided to take punitive action against defaulting companies under the applicable securities laws.

The BSEC also decided to amend the existing directive to explicitly prohibit companies from presenting dividend proposals at AGMs without first depositing the full amount into a separate bank account and obtaining the required bank certificate.

In a parallel move to simplify administrative procedures under the Corporate Governance Code, 2018, the capital market watchdog streamlined the appointment and reappointment framework for independent directors.

The commission decided that approval for the reappointment of existing independent directors will now be granted upon receiving an updated clean Credit Information Bureau (CIB) report from Bangladesh Bank.

Additionally, if an independent director was previously granted an exemption or relaxation regarding qualification and experience criteria under condition of the Corporate Governance Code, that waiver will now automatically apply to new appointments in other listed firms or reappointments in the same company, eliminating the need to seek fresh approval.