[🇧🇩] Monitoring Bangladesh's Economy

[Bilal9]

Bangladesh Exports Hit Record $50 Billion in 2024​

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2 min read​

Last updated Jan 5, 2025

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Bangladesh’s exports soared to an all-time high of $50 billion in 2024, fueled by a sharp spike in December. This milestone provided much-needed relief for an economy navigating external pressures and challenges. Export growth rose by 8.3% year-on-year, as per data from the Export Promotion Bureau (EPB) stated in a report.

The December boom contributed $4.62 billion, an 18% increase compared to the same month in 2023, making it the strongest month since March 2024, when exports crossed $5 billion. The readymade garment (RMG) sector played a pivotal role, earning $19.88 billion in the first half of fiscal 2024-25, a 13.28% year-on-year increase.

Knitwear exports rose 13.01% to $10.83 billion, while woven garments brought in $9.05 billion, up 13.60%. Other sectors also saw remarkable growth: leather goods surged 10.44% to $577.29 million, cotton products grew 16.32% to $319.06 million, and non-leather footwear exports skyrocketed by 39.10% to $273.89 million.

Plastic goods exports increased by 29.72%, while agricultural products and frozen fish grew by 9.31% and 13.01%, respectively. Home textiles also saw a 7.85% uptick, reaching $410.81 million.

However, traditional exports like jute and jute goods faced challenges, with shipments falling 8.11% to $417.39 million during July-December.

Industry leaders, including Shams Mahmud of Shasha Denims Ltd and former BGMEA president Faruque Hassan, expressed optimism for the future. According to Hassan, easing inflation in major Western markets like Europe and the US, along with rising demand for value-added garments such as suits and jackets, positions Bangladesh’s RMG sector for sustained growth.

The leather industry also thrived, with significant seasonal boosts from winter footwear orders for Christmas, said Nasir Khan of Jennys Shoes. Businesses are hopeful that 2025 will bring stability after navigating inflation, labor unrest, and natural disasters in recent years.

Despite the hurdles, Bangladesh’s resilient exporters have proven their strength and reliability, earning the confidence of international buyers and setting the stage for further growth in the years to come.

 

[Saif]

View attachment 16414

Bangladesh Exports Hit Record $50 Billion in 2024​

​

2 min read​

Last updated Jan 5, 2025

Share
Bangladesh’s exports soared to an all-time high of $50 billion in 2024, fueled by a sharp spike in December. This milestone provided much-needed relief for an economy navigating external pressures and challenges. Export growth rose by 8.3% year-on-year, as per data from the Export Promotion Bureau (EPB) stated in a report.

The December boom contributed $4.62 billion, an 18% increase compared to the same month in 2023, making it the strongest month since March 2024, when exports crossed $5 billion. The readymade garment (RMG) sector played a pivotal role, earning $19.88 billion in the first half of fiscal 2024-25, a 13.28% year-on-year increase.

Knitwear exports rose 13.01% to $10.83 billion, while woven garments brought in $9.05 billion, up 13.60%. Other sectors also saw remarkable growth: leather goods surged 10.44% to $577.29 million, cotton products grew 16.32% to $319.06 million, and non-leather footwear exports skyrocketed by 39.10% to $273.89 million.

Plastic goods exports increased by 29.72%, while agricultural products and frozen fish grew by 9.31% and 13.01%, respectively. Home textiles also saw a 7.85% uptick, reaching $410.81 million.

However, traditional exports like jute and jute goods faced challenges, with shipments falling 8.11% to $417.39 million during July-December.

Industry leaders, including Shams Mahmud of Shasha Denims Ltd and former BGMEA president Faruque Hassan, expressed optimism for the future. According to Hassan, easing inflation in major Western markets like Europe and the US, along with rising demand for value-added garments such as suits and jackets, positions Bangladesh’s RMG sector for sustained growth.

The leather industry also thrived, with significant seasonal boosts from winter footwear orders for Christmas, said Nasir Khan of Jennys Shoes. Businesses are hopeful that 2025 will bring stability after navigating inflation, labor unrest, and natural disasters in recent years.

Despite the hurdles, Bangladesh’s resilient exporters have proven their strength and reliability, earning the confidence of international buyers and setting the stage for further growth in the years to come.

Bilal bhai, we have to diversify our export products and also our export markets. What do you say?

 

[Saif]

Govt ditches 10 economic zones as superfluous

Licences of 10 of a slew of economic zones-five public and as many private-have been rescinded as the interim government recasts Bangladesh's industrial- development strategy. Chowdhury Ashik Mahmud Bin Harun, the newly appointed Executive Chairman of both the Bangladesh Investment Developme

thefinancialexpress.com.bd

Govt ditches 10 economic zones as superfluous
BD doesn't need 100 EZs: BIDA chief
FE REPORT
Published :
Apr 14, 2025 00:35
Updated :
Apr 14, 2025 00:35

Licences of 10 of a slew of economic zones-five public and as many private-have been rescinded as the interim government recasts Bangladesh's industrial- development strategy.

Chowdhury Ashik Mahmud Bin Harun, the newly appointed Executive Chairman of both the Bangladesh Investment Development Authority (BIDA) and the Bangladesh Economic Zones Authority (BEZA), announced the decision at a press conference held Sunday at the Foreign Service Academy in Dhaka.

He said the move was approved during a recent meeting with the chief adviser of the post-uprising government that has undertaken umpteen reforms in the country following the changeover.

The government-run zones that lost their licences are Sonadia Eco Tourism Park in Cox's Bazar, Sundarban Tourism in Bagerhat, Gajaria Economic Zone in Munshiganj, Shreepur Economic Zone in Gazipur, and Mymensingh Economic Zone in Ishwarganj.

The five private zones are BGMEA-proposed Garment Industries Park in Munshiganj, Chatak Economic Zone in Sunamganj, Famkam Economic Zone in Bagerhat, City Special Economic Zone in Dhaka, and Sonargaon Economic Zone in Narayanganj.

Chowdhury points out that Beza had previously approved a total of 97 economic zones-68 under the public sector and 29 private-during the tenure of the previous government.

"I have said before that the country does not need 100 economic zones. Today, we have cancelled 10. We believe these are unnecessary," he states to justify the axing of the dormant EZs.

He also emphasises that moving forward, no new economic zone will be approved without an inter-ministerial meeting and a formal commitment from relevant ministries to ensure adequate service delivery to investors.

"Currently, zones are approved, but investors often wait years without receiving proper services," he told the press.

The announcement happens to come in the wake of the recently concluded Bangladesh Investment Summit 2025, which drew significant international attention. The summit, held over four days, hosted more than 3,500 participants, including 415 foreign delegates from 50 countries. It featured 130 speakers and panelists, and facilitated around 150 official meetings.

Two companies-Handa Industry and ShopUp-announced investment plans totalling Tk31 billion. Six memorandums of understanding (MoUs) were signed during the summit.

According to BIDA's Head of Business Development Nahiyan Rahman Rochi, the total government expenditure for the event stood at Tk14.5 million-42 per cent less than the original budget estimate.

Chowdhury, however, cautioned against judging the summit's success solely by the immediate investment figures.

"No one comes to a summit and writes a cheque for a billion. Much of the preparatory work had been done earlier," he explains.

He stresses that the summit's real achievement was in altering foreign perceptions of Bangladesh. "Visitors often return home with outdated or negative views. This time, they'll be able to share a more accurate and positive picture of the country," he said.

Foreign delegates were taken on site visits and introduced to investment opportunities across sectors. "We've explained where and how to invest. The feedback has been overwhelmingly positive," says Chowdhury on an upbeat note, adding that Bida and Beza would continue to follow up with interested investors to maintain momentum.

He also recommends that future governments organise similar events on a regular basis to sustain global interest in Bangladesh's investment landscape.

To a question, he said as India scrapped transshipment, Bangladesh takes it as an opportunity. "We will develop our airports and strengthen capacity, increase efficiency to ship the goods from different airports, including Dhaka airport," he added.​

 

[Saif]

25 dev projects lined up for foreign funding

The Economic Relations Division (ERD) under the Ministry of Finance is set to host a meeting of the "foreign assistance search committee" today to finalise foreign funding for 25 development projects proposed for inclusion in the Annual Development Programme (ADP) of the upcoming fiscal year. The

thefinancialexpress.com.bd

25 dev projects lined up for foreign funding
JAHIDUL ISLAM
Published :
Apr 13, 2025 00:14
Updated :
Apr 13, 2025 00:14

The Economic Relations Division (ERD) under the Ministry of Finance is set to host a meeting of the "foreign assistance search committee" today to finalise foreign funding for 25 development projects proposed for inclusion in the Annual Development Programme (ADP) of the upcoming fiscal year.

The combined preliminary cost of the projects that will be discussed at the meeting with ERD secretary Shahriar Kader Siddiky in the chair, stands at around Tk 2.0 trillion.

"Of this, the government aims to secure approximately Tk 1.5 trillion in loans and grants from foreign sources," said an ERD senior official.

Among the projects on the agenda is the upgrade of the existing metre-gauge double railway line from Laksam to Chattogram via Chinki Astana to a dual-gauge double line.

The agenda also included two projects to procure watercraft for various agencies under the Ministry of Shipping, and another "Construction of Bhola Bridges on Barisal-Bhola Road over Kalabador and Tentulia River".

The meeting will also focus on securing financing for four projects aimed at generating a combined 430MW of electricity from solar and solar PV power plants.

Following the completion of the fourth phase of the Primary Education Development Programme (PEDP-4), the proposed fifth phase (PEDP-5) has been included for consideration.

Other notable projects on the list include the establishment of a second unit at the Eastern Refinery Limited (ERL) and the installation of a new gas pipeline from Bhola to Khulna.

ERD officials stated that such meetings are regularly organised to finalise the commitment of foreign assistance for various development projects.

The meeting will cover the estimated costs of the proposed projects, potential sources of foreign assistance, the progress of financing discussions with relevant development partners, and the various conditions set by the donor agencies, including loan interest rates.

The analysis found that the total cost of the three components of the Bangladesh Clean Air Project (BCAP) is estimated at Tk 29.04 billion, of which Tk 2.0 billion will be funded by the government, while the remaining Tk 27.04 billion will be provided by the World Bank (WB).

The government has already signed a $300-million loan deal with the WB for this purpose, according to sources from the Ministry of Environment, Forest and Climate Change.

The Ministry of Shipping is seeking a loan of Tk 14.48 billion for the "procurement of six new vessels, including chemical product oil tankers (40,000 DWT each) and three bulk carriers (50,000-55,000 DWT each), through a government-to-government (G2G) basis", with a proposed cost of Tk 18.43 billion.

Additionally, the ministry is requesting Tk 14 billion in assistance for the procurement of a 3,500 cubic metre trailing suction hopper dredger, two 28-inch cutter suction dredgers, ancillary vessels, and spare parts for Mongla Port.

The government of China has agreed to provide Tk 28.48 billion to support the implementation of these two projects, said a senior official of the shipping ministry.

Although the meter-gauge railway line from Laksam to Chattogram via Chinki Asthana was upgraded to a double line a few years ago, Bangladesh Railway is now planning to further upgrade the corridor to a dual-gauge double line, with an estimated cost of Tk 159.54 billion.

It is reported that discussions are ongoing for a loan of Tk 134.49 billion from the Asian Development Bank (ADB) to fund this project.

The Local Government Division (LGD) is seeking Tk 18.60 billion to implement the "Khulna Water Supply Project (Phase 2)," which is estimated at Tk 26.64 billion.

Additionally, the LGD is also searching for Tk 12.15 billion to implement the "Water as Leverage: Natural Drainage Solutions for Khulna City" project.

However, the ADB has agreed to provide loans of Tk 39.66 billion to support the implementation of these projects.

The Energy and Mineral Resources Division (EMRD) has proposed the modernisation and expansion of the Eastern Refinery Limited (ERL) to establish a second refinery, with an estimated cost of Tk 364.10 billion.

The meeting will focus on securing Tk 255.01 billion in funding from China, the JICA, the World Bank or other development partners.

Additionally, the EMRD has proposed the construction of the Bhola-Barishal-Khulna gas transmission pipeline project involving Tk 50.00 billion to utilise the gas reserves in Bhola area.

The government has decided to withdraw the project titled "Construction of Bhola Bridges on Barisal-Bhola Road over Kalabadar and Tentulia rivers" from the public-private partnership (PPP) list and implement it as an ADP project.

The Bridges Division is seeking funding for the majority of the project's preliminary estimate, which stands at Tk 129.16 billion.

"The economy of Bangladesh, particularly its development activities, is facing a significant downtrend due to the shrinking fiscal space of the government," said Dr Mustafa K. Mujeri, former director general of the Bangladesh Institute of Development Studies (BIDS).

He emphasised that efforts must be intensified to ensure a substantial inflow of foreign aid to sustain these development activities.

He also highlighted the importance of proper scrutiny of projects before approval and actively seeking financing to ensure the best value for government spending.

The economist further stressed that investment in human capital development, such as health, education, and social security, should take priority over the implementation of physical infrastructure projects.​

 

[Saif]

Remittance narrows payment deficit

Bangladesh’s current account deficit shrank in July-February of the current financial year due mainly to a sharp increase in remittance inflow, according to Bangladesh Bank data.

www.newagebd.net

Remittance narrows payment deficit
Staff Correspondent 13 April, 2025, 23:51

Bangladesh’s current account deficit shrank in July-February of the current financial year due mainly to a sharp increase in remittance inflow, according to Bangladesh Bank data.

The deficit dropped to $1.26 billion in the first eight months of the 2024-25 financial year compared with that of $4.07 billion in the same period of the previous financial year.

The current account is a key indicator of a country’s external financial health. It measures the gap between the money Bangladesh earns from the rest of the world and what it spends on foreign goods, services, and income payments. It includes exports and imports, income from foreign investments, and transfers like remittances.

The main reason for the improvement in the current account was a significant rise in remittances, which boosted the country’s secondary income.

In July-February of FY25, the secondary income rose to $18.8 billion compared with that of $15.36 billion in the previous year. Of the secondary income, $18.48 billion came from remittances sent by Bangladeshis working abroad.

The country continued to face a primary income deficit — payments made to foreigners for interest, dividends, and salaries. This deficit stood at $2.86 billion, as the income paid out ($3.33 billion) far exceeded the income received ($470 million).

Bangladesh’s trade deficit also declined slightly in the period.

It dropped to $13.69 billion in July–February of FY25 compared with that of $14.32 billion in the same period of FY24.

This was driven by a 9.1-per cent growth in exports, which rose to $30 billion from $27.54 billion.

Imports, however, rose by 4.5 per cent to $43.73 billion compared with those of $41.87 billion, which limited the overall improvement in the trade balance.

The financial account, which tracks foreign investments and loans, however, showed a higher surplus of $1.41 billion in July–February of FY25, compared with that of $654 million in the same period of FY24.

The net foreign loan inflow stood at $3.85 billion during the period, lower than the $4.99 billion received in the same period of FY24. However, repayments of the previous loans increased to $1.75 billion from $1.26 billion a year earlier.

The trade services deficit, which covers payments for things like international travel, transport, and business services, widened to $3.5 billion compared with that of $2.41 billion. This reflects a rise in foreign exchange spent on service-related imports.

As of April 6, Bangladesh’s foreign exchange reserves, measured as per the International Monetary Fund guidelines, stood at $20.46 billion.

The interbank exchange rate rose to Tk 122 per US dollar, continuing pressure on the local currency.​

 

[Saif]

Bangladesh economy in transition

Unarguably, Bangladesh economy pivoted into transition after the regime that was in power for over a decade and a half was ousted violently, leaving little by way of continuity in economic policy making. Restructuring and re-configuring the shattered financial sector rightly received top priority o

thefinancialexpress.com.bd

Bangladesh economy in transition
Hasnat Abdul Hye
Published :
Apr 15, 2025 22:05
Updated :
Apr 15, 2025 22:05

Unarguably, Bangladesh economy pivoted into transition after the regime that was in power for over a decade and a half was ousted violently, leaving little by way of continuity in economic policy making. Restructuring and re-configuring the shattered financial sector rightly received top priority of the interim government. Monetary policy instruments were prudently used to rein in inflation that obstinately hovered around double digit. Reversing the chronic practice of money laundering, attempts have been made to retrieve some of the money siphoned off to safe havens. Public sector spending, particularly under the annual development plan, has been rationalised.

An initiative has been taken recently to develop a new index aimed at providing a more realistic representation of economic activities. Currently, the Bangladesh Bureau of Statistics (BBS) measures only industrial production through the Quantum Index of Industrial Production (QIIP) which fails to capture the full range of economic activities, particularly the contributions of the services sector. According to BBS, the shift in consumption trends, particularly the growing demand for tech services, makes the QIIP inadequate as a measurement of growth of the economy. The services sector’s share in the gross domestic product (GDP) of the country was 52.72 per cent as of fiscal year 2023-24 (FY24) and it is increasing in size. The introduction of a new measurement tool (Quarterly Index of Services Production - QISP) is expected to provide a more comprehensive measurement of the growth of the economy. Alongside, measures are underway to make a realistic estimation of the GDP.

At the micro level, supply of essentials, particularly food items like rice, edible oil, pulses etc has been smoothed over through duty free imports. This has been supplemented with open market sales of essential food items through Trading Corporation of Bangladesh (TCB).The strategic goals revealed by these policies are obvious: firstly, to rein in inflation to give relief to the average consumers; and secondly, to re-orient development programmes affecting macro-economic variables consistent with repayment capacity. The outcome of the first set of policies can be analysed within a short term framework while the second policy interventions can be judged for their effectiveness only in the medium term. With these introductory observations, an attempt is made below to visualise the state of Bangladesh economy, both at micro and macro levels, as it prevails now.

Micro economy: For the first time in many years, the price of essential food items did not rise during the month of Ramadan. The liberal import policy for food items and weakening of the syndicates that flourished under political indulgence in the past, undoubtedly accounted for this unprecedented behaviour of the market. The role of open market sales of food items through TCB was circumscribed in the beginning because of scrutiny of the card holders which accounted for high food inflation. As a result of the pragmatic policy taken later to combine free market operation and public distribution of food (both bolstered by duty free import of food items) food inflation has now registered a decline. According to BBS, food inflation in March was 8.93 per cent, compared to 9.24 in February last. But the headline inflation has increased to 9.35 per cent in March, up from 9.32 in February because of increase in prices of non-food items. With the sharp decline of oil and gas prices in international market, the domestic price of these crucial non-food items can be expected to register a decline, bringing down both core and headline inflation. What is worrying now is the gap between the rate of increase in wages and the rate of inflation In March. The rate of increase in average national wages was 8.15 per cent, above the rate of inflation at 9.35 per cent. People in the low income group are hard put to make both ends meet because of this discrepancy between their income and market prices. Continuing with social safety net programmes and open market sales of food items appears to be the answer for the short term and perhaps for the medium term as well. As food items take up much of the consumption basket of the low income group and bulk of them are met by local production, growth in agriculture sector will be crucial in determining the level of inflation. The creeping rise in prices for rice, edible oils and vegetables after Eid festival is a warning that market for food items has an inherent tendency of being skittish due to operation of syndicates and there cannot be any let up in the enforcement of regulations and countervailing measures by the government in this respect.

An important initiative of the interim government is a plan of action to examine every stage of the supply chain of nine key commodities so that consumers can buy essential items at fair prices from kitchen markets. The commodities are rice, edible oil, onion, egg, potato, pulse, sugar, green chilli and cauliflower. Different agencies will first inspect their supply chain from import or production stage to consumers’ end to identify the causes of price hikes and prepare a detailed report based on the findings. The Bangladesh Trade and Tariff Commission (BTTC), Directorate of National Consumer Rights Protection (DNCRP) and government intelligence agencies will then finalise the report as per the terms reference (TOR). The TORs include determination of the price of goods, identifying the causes of price spiral, spotting the participants in the supply chain (producers, importers, traders and consumers) and fixing share rates of the participants who are involved in setting prices of essential commodities. This is the first time that a systematic attempt is underway to supervise and control price through a combination of market forces and government intervention. If successful, this will be a test case of micro policy of government working through free market principle.

Macro economy: According to latest report of BBS, at the end of the second quarter of FY25 (October-December, 2024), the rate of growth of GDP was 4.48 per cent. This is a significant improvement from 1.81 per cent growth rate crawled during the first quarter (July-September) of fiscal FY25. The increase in the rate of growth indicates that the shock of the political turmoil during the last days of the ousted regime and its after effects have been overcome to a great extent. But the recovery and growth has not been uniform and varies from sector to sector. For instance, the BBS report shows that during the October-December quarter of FY25, agricultural growth rate lagged behind those in industry and services sectors. Against 7.10 per cent growth in industrial sector and 3.78 per cent in services sector, growth rate in agriculture was a paltry 1.25 per cent. The figure for the corresponding period last fiscal was 4.09 per cent The causes for this laggard performance in agricultural sector, relative to the other sectors, have not been explained. As agriculture was not adversely affected by the political upheaval last year, which affected the services sector the most and industries sector next, the anaemic growth of agriculture calls for in-depth analysis. One explanation may be the three waves of floods last year, the worst being the one in August affecting 11 districts in the eastern part of the country. But there may be structural problems which have become chronic. Among structural problems, low prices at farm gates for farmers are known to have acted as a break on the growth in the sector. Government procurement price to ensure fair price to producers cover only rice and that too fails to benefit farmers because of delay in procurement and built-in corruption. A robust agriculture sector is not only important for boosting GDP growth but is also crucial for reducing dependence on import of agricultural products, especially food items. There is urgent need for bringing about structural changes, ranging from production (subsidy) to marketing (procurement, regulation of wholesale markets) and the interim government provides the ideal backdrop for carrying out necessary reforms in this sector traditionally known as ‘primary’.

Meanwhile, the interim government has revised down the economic growth projection for FY2025 to 5.2 per cent from the previous 6.75 per cent in view of the prevailing challenges in the economy. The Asian Development Bank (ADB) has significantly cut Bangladesh economic growth forecast, suggesting reforms are required to achieve higher growth. ADB has cut Bangladesh GDP projection by 1.2 per cent to estimate GDP for fiscal 2024-2025 at 3.9 per cent in its Asian Development Outlook (ADO) for 2025. The ADO in September 2024 forecast that Bangladesh would expand at 5.1 per cent rate during the current fiscal (FY25). Its economic growth projection in April, 2024 was much higher at 6.6 per cent. Among the causes for reduction in earlier estimate, the ADO mentions ‘slower growth in services owing to political unrest, financial sector tightening and vulnerability, persistent inflation and reduced household purchasing power’. Though it has projected a better economic future in FY2026, estimating 5.1 per cent growth in GDP, it has also drawn a grim picture for the near future resulting from global economic slowdown sparked by sweeping tariffs slapped by America on almost all countries, including Bangladesh. ‘The US is the largest export market for Bangladesh. So, given this, the tariffs are expected to adversely impact export earnings’, the ADO has said. About inflation, the latest ADO of ADB has projected it to an average 10.2 per cent in FY25, which is higher than the latest estimate made by BBS.

Growth of the economy depends on performance of private and public sectors. Here, in addition to sunken investments, new investments play crucial roles. From available data it appears the level of investment in the private sector during FY25 has registered a decline, which is a cause for concern as the sector is a major contributor to growth and employment. One indicator of private sector growth is the level of private sector bank borrowing for investment. According to the current monetary policy, the target for private sector borrowing has been fixed at 9.80 per cent. Bangladesh Bank figures show private sector borrowing till February last was 6.82 per cent compared to 7.5 per cent in the previous month. Increase in interest rate for borrowing, liquidity crisis in banks, shortages and high cost of purchasing foreign exchange and last but not the least, change of regime involving change of investors in private sector are among the main causes for a weakened private sector. Not only new investors have not come forward during the current fiscal because of the factors mentioned, many of the old investors and entrepreneurs who flourished under crony capitalism under the previous regime are either absent (hiding or living abroad) or have reduced operation, biding for a settled political future.

The bulk of bank borrowing by private sector is for opening letter of credit by importers. Because of foreign exchange shortages and high exchange rates, many importers have been discouraged to continue their business or have dramatically reduced it. According to Bangladesh Bank, during the first eight months of the current fiscal (July-February) L/C for capital goods declined by 30.15 per cent. During the same period, L/ C for intermediate goods decreased by 2.5 per cent.

According to the apex business and industries body, many banks were not feeling comfortable in giving loans to the private sector in recent months and were more inclined to the high-yielding, risk free government securities.

Public sector investment has sometimes compensated for sluggish growth in private sector. But because of the financial chaos inherited by the interim government public sector investment has not marked a significant uptick. According to official data, during the first-half (H1) development budget spending has been uninspiring as ministries and agencies under them could spend only Tk 407.28 billion out of the total allocation of Tk 2.81 trillion, implying that up to December 2025, actual expenditure was only 14.47 per cent of the total development budget. Lower rate growth of the public sector is the result of downsizing of the development budget by the new government, weeding out less important projects, static availability of revenue income, higher amount paid for subsidies interest on previous public borrowing, non- disbursal of the third and fourth tranches of IMF’s $ 4.7 billion bailout loan.

It was expected that after the overthrow of the autocratic regime, the interim government would receive foreign loans and grants on a larger volume. But though interest was shown by lending agencies nothing much has materialised in real terms. Figures show that instead of increasing commitments and disbursements, both declined during the first eight months of the current fiscal (July-February). Commitments for fresh loans declined by as much as 68 per cent. According to ERD of the Finance ministry, commitments for multilateral and bilateral loans during this period amounted to only US$2.3 billion. Alongside commitments for new loans, disbursement also have seen a decline of 800 million dollar during the same period. (The Financial Express, March 25, 2025).

Among the good news on the macro-economic side is the development in the export sector. According to Export Promotion Bureau (EPB) source, the country’s merchandise export earnings rose by 10.63 per cent to $ 37.19 billion during the first nine months of the current fiscal based on the readymade garment ( RMG) sector’s strong and consistent growth. Export earnings were $33.63 billion during the July-March period of the last fiscal. The single-month earnings in March, 2025 stood at $4.25 billion, marking an 11.44 per cent increase, compared to the corresponding month in 2024. The country’s export earnings from RMG alone stood at $30.25 billion during the July-March period of FY25, marking a10.84 per cent year-on-year rise. The single-month RMG export earnings in March 2025 stood at $3.45 billion, 12.4 per cent higher than that in the corresponding month last year. While the contribution of RMG to export earnings continues to bear good tidings, the dependence of the economy on one item of export has been a matter of concern for policymakers. This concern has been particularly pressing in view of the ensuing cut-off period for Bangladesh’s graduation from LDC-status. The government of Bangladesh is seized with the challenge and has reportedly got down to devising a strategy for keeping competitiveness of four major items of export beyond RMG, after 2026 when export subsidy will be discontinued following LDC-graduation. The four items are: leather and leather goods, jute goods, agriculture and agro- processed goods and pharmaceuticals. It is encouraging to learn that the ministry of finance has formed a committee to devise a strategy to maintain competitive edge in the global market for these four items. But the basket of exports requires to be diversified further to include light engineering products and consumer durables, even heavy engineering sector like shipbuilding where Bangladeshi workers have shown their mettle.

The second piece of good news on the macroeconomic side is the record foreign exchange earnings through remittance sent by wage earners. According to Bangladesh Bank source, the total amount remitted from July 2024 to March 2025, the first nine months of current fiscal, stood at $21.77 billion, compared to $16.69 billion for the corresponding period last year. A new record was set in remittance earnings, reaching an all-time high of $2.74 billion in just 24 days in March. Though a major factor behind the recent surge in remittance was Eid festival, the use of banking channels has been significant for this development. The illegal money transfer through ‘hundi’, that deprived the country from foreign exchange earnings, has drastically dwindled after the change of governments, indicating linkage between hundi operators and their political patrons.

The increase in remittance, along with export earnings, has significant implications for Bangladesh economy, helping to stabilise the foreign exchange reserves and support the forex market. The foreign exchange reserves of the country, as of 24 March, was estimated at $20.01 billion as per IMF’s BPM6 (Balance of Payments and International Investment Position Manual, sixth edition,2009).

According to Bangladesh Bank data, exchange rate of Bangladesh Taka against USD depreciated by 1.67 per cent during July- December period of FY25 while Indian Rupee depreciated 2.19 per cent during the same period, indicating Bangladesh’s foreign exchange market is more stable than that of India. There is now no selling of foreign currency from the forex reserves as was the practice during the previous government. A result of this policy the foreign exchange rate has become market based, relieving the reserves from pressure. The flexible exchange rate operating in market has resulted in a narrow difference in exchange rates between formal and informal markets, which is one reasons why remittance is being sent mostly through banking channels now.

As a result of significant growth in remittance and uptick in exports, Bangladesh is now having surplus in current account for the first time after a year and a half. In a recent interview the Bangladesh Bank governor said, ‘There was a deficiency in the balance of payment, our reserves were falling, and our currency was depreciating rapidly. But after six months of the present government, I would say that we are maintaining a virtual balance in our current account’ . The data of the central bank shows that the current account balance stood at $33 million in surplus during the July- December period of FY25, overcoming a deficit of over $3.47 billion during the same period a year earlier. According to recent data, the country saw 26.70 per cent growth in remittance inflow while exports grew by 11 per cent in the first six months of the current fiscal (FY25). On the other hand, import orders increased only by 3.5 per cent, bolstering the country’s foreign exchange reserves.

Capital account, another component of the balance of payment, turned surplus with $217 million during the first half of FY25, up by more than 35 per cent from the same period last fiscal. This has resulted in the reduction to $384 million now from a deficit of $3.45 billion a year ago.

To sum up, during the six months under the interim government, there are mixed performance on the micro economic side but very encouraging developments in terms of macroeconomic variables. Worsening of poverty situation, as recorded by a recent BIDS study, is a spill over from the past, presents a challenge to the interim government even if its tenure may be for the short term. The problem is, the government has undertaken a programme of wide-ranging reforms for which it does not have time. Prioritising the areas of reforms appears to be of the essence.​

 

[Saif]

undefined | The Financial Express

thefinancialexpress.com.bd

Loan review team disclosure today
IMF may disburse $1.14b in twin tranches

Total funds may rise to $1.3b on last-minute consensus
Syful Islam
Published :
Apr 17, 2025 00:28
Updated :
Apr 17, 2025 00:28

Bangladesh may receive US$1.14 billion in two instalments together from a package loan extended by the International Monetary Fund (IMF), finance officials expect as a latest review of the lending terms concludes.

An announcement to this effect will be given today (Thursday) in tune with staff-level agreements the multilateral lender has reached with the Bangladesh authority, they said.

The IMF review mission had a wrap-up discussion with Finance Adviser of the interim government Dr Salehuddin Ahmed at his office on Wednesday afternoon that ended on a positive note, according to the officials.

Headed by Chris Papageorgiou, IMF's Mission Chief for Bangladesh, came to Dhaka on April 6 and its mission would end with the announcement.

The $1.14-billion fund is coming under fourth and fifth tranches in $570 million each. The fourth tranche was scheduled to come by the first week of February, but got stuck.

Approval for the instalment was deferred by the IMF citing Bangladesh's failure to accomplish two prior actions-additional revenue mobilisation and exchange-rate flexibility.

The Washington-headquartered lender later informed Bangladeshi officials that approval for the fourth tranche would be taken together with review of achievements for the fifth tranche of the $4.7-billion lending programme.

Finance Ministry officials, however, could not confirm whether the lender will also provide an additional $750 million that the two sides had agreed in September last.

"It is certain that we are getting two instalments together," said one finance official, referring to their nearly two-week-long discussions with the IMF team.

However, he was hesitant to confirm that Bangladesh is also getting the additional $750 million.

The IMF granted the $4.7-billion loan to Bangladesh in January 2023 to help support the country's dwindling economy to accomplish stability. The loan was scheduled to be given in seven instalments by May 2026.

Finance Ministry officials say the National Board of Revenue (NBR) has made a commitment to generating additional revenue as suggested by the IMF. The Fund had been pushing to set a higher revenue target in the next fiscal budget aiming to raise the tax-GDP ratio by 0.9%.

On exchange-rate flexibility, the two sides have reached a sort of consensus, but still some differences remained pending, officials have said.

So, they say, the two instalments' coming together has been confirmed.

However, another official says, the total amount can even increase to $1.3 billion, each tranche bearing $650 million, if a last-minute consensus reached on some pending issues.

Contacted Wednesday, an IMF official in Dhaka did not make any comment regarding the mission outcome before a formal announcement.​

 

[Saif]

IMF delays staff level agreement with Bangladesh

The International Monetary Fund (IMF) has delayed reaching a staff level agreement due to existence of some differences with the Bangladeshi authorities. A visiting team of the IMF, headed by Chris Papageorgiou, the agency’s Mission Chief for Bangladesh, made the announcement on Thursday at

thefinancialexpress.com.bd

IMF delays staff level agreement with Bangladesh
FE ONLINE REPORT
Published :
Apr 17, 2025 17:00
Updated :
Apr 17, 2025 17:00

The International Monetary Fund (IMF) has delayed reaching a staff level agreement due to existence of some differences with the Bangladeshi authorities.

A visiting team of the IMF, headed by Chris Papageorgiou, the agency’s Mission Chief for Bangladesh, made the announcement on Thursday at a press conference in the capital.

“Discussions are continuing with the objective of reaching a staff-level agreement in the near term- including during April 2025 IMF-World Bank Spring Meetings in Washington, DC-to pave the way for the completion of the combined third and fourth programme review,” Mr Papageorgiou said.

However, Jayendu De, Resident Representative of IMF in Dhaka, said the agency will try to release the fourth and fifth tranches of the $4.7 billion loan before the end of the current fiscal year.​