[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

IMF to release loan as Bangladesh to go for flexible exchange rate

According to sources at Bangladesh Bank, the IMF will disburse USD 1.3 billion in two tranches, which are expected to be received by June.

en.prothomalo.com

IMF to release loan as Bangladesh to go for flexible exchange rate
Staff Correspondent Dhaka
Published: 13 May 2025, 18: 47

The signage of Bangladesh Bank Reuters file photo

Bangladesh Bank has agreed to adopt a more flexible US dollar-taka exchange rate as the International Monetary Fund (IMF) is going to release two more installments of the ongoing USD 4.7 billion loan programme.

According to sources at Bangladesh Bank, the IMF will disburse USD 1.3 billion in two tranches, which are expected to be received by June.

Bangladesh Bank governor Ahsan H Mansur is scheduled to hold a press conference tomorrow, Wednesday, to provide further details. In a press release, the central bank said the press briefing may come with the official announcement over the loan installments. The governor will join it virtually from Dubai, United Arab Emirates.

Also, the IMF is likely to issue a statement on the decision to disburse the funds soon.

Speaking to two officials from Bangladesh Bank, it was learned that the current system for determining the dollar rate will remain in place, but there will be scopes for greater flexibility based on market demand.

The method of determining the exchange rate is known as a ‘crawling peg’ system. Here, the exchange rate may fluctuate by up to 2.5 per cent from the current rate of Tk 119 per US dollar. It means the dollar can be traded for as much as Tk 123.

Bangladesh entered the USD 4.7 billion loan programme with the IMF on 30 January 2023. So far, it has received USD 2.31 billion in three installments up to June 2024. The remaining USD 2.39 billion is yet to be disbursed.

Disbursement of the fourth installment came to a halt. The government officials said that two installments would be released together in June. However, it too was mired in uncertainty.

The authorities have been negotiating with the IMF over the exchange rate for nearly one month. An IMF mission visited Dhaka from 6 to 17 April, to review the second and third tranches of the loan programme, but left without reaching a negotiation.

Discussions continued during the IMF–World Bank spring meetings in Washington DC, from 21 to 26 April, but again without a negotiation.

Later, Bangladesh and the IMF held a two-day virtual meeting on 5 and 6 May, and it too ended without any consensus.

In response to an inquiry from Prothom Alo on 5 May, the IMF said in an e-mailed statement that their discussions with Bangladesh continued during the meetings in Washington DC. A virtual meeting was ongoing to accelerate the reform work under the loan programme.​

 

[Saif]

undefined | The Financial Express

thefinancialexpress.com.bd

Bangladesh eyes $3.0 billion in loan support from IMF, development partners by June
bdnews24.com
Published :
May 14, 2025 18:37
Updated :
May 14, 2025 18:37

The finance ministry has said there is a strong possibility that the International Monetary Fund (IMF) will disburse the fourth and fifth tranches of its loan to Bangladesh by June, adding that the country is likely to receive $3 billion in total loan support from international development partners.

In a statement issued on Wednesday, the ministry said that these funds, allocated as budget support, would help strengthen Bangladesh’s foreign currency reserves and stabilise the exchange rate.

The update follows remarks made just two weeks ago by Finance Advisor Salehuddin Ahmed, who told reporters after returning from Washington that Bangladesh’s economic recovery was strong enough that the remaining IMF loan tranches were “not urgently needed”.

Among the IMF’s key policy recommendations tied to the loan are reforms in revenue administration, particularly the NBR, and a market-based exchange rate regime.

While Bangladesh has agreed to pursue institutional reforms, the finance advisor had earlier expressed reservations about fully floating the currency.

According to Bangladesh Bank, as of the end of April, the country's gross foreign exchange reserves stood at $27.42 billion, while reserves measured using the BPM6 methodology stood at $22.04 billion.

On the same day, Bangladesh Bank Governor Ahsan H Mansur announced the central bank’s decision to move toward a market-based exchange rate for the dollar.

“The IMF's fourth review has been successfully completed. Following a decision after the third review, it was agreed that the fourth and fifth tranches would be released together, pending additional review of key reforms in revenue management and exchange rate policy,” the finance ministry said.

“In line with that decision, detailed discussions were held during the fourth review in Dhaka in April, followed by continued engagement at the World Bank–IMF Spring Meetings in Washington, DC, later that month.”

The ministry added that both parties have reached consensus on revenue reforms, foreign exchange measures, and other structural policy changes after carefully evaluating macroeconomic stability. With a staff-level agreement now in place, Bangladesh expects the IMF to disburse $1.3 billion covering both the fourth and fifth tranches by June.

In addition to the IMF support, Bangladesh also expects to receive around $2 billion in budget assistance from other development partners, including the World Bank, Asian Development Bank (ADB), Asian Infrastructure Investment Bank (AIIB), Japan, and the OPEC Fund for International Development.

While these loans do come with reform conditions, the finance ministry said that all decisions were being taken with Bangladesh’s socio-economic context in mind.

“The inflow of these funds will further strengthen foreign exchange reserves and help maintain stability in the exchange rate,” the ministry said.

“The reform programmes being undertaken in exchange for budget support are designed solely by the Government of Bangladesh based on national interests, with technical assistance from development partners limited to an advisory role.”​

 

[Saif]

Revenue reform should also consider progressive taxes

THE government has dissolved the National Board of Revenue with the Revenue Policy and Revenue Management Ordinance 2025, promulgated on May 13, to effect reforms in the revenue sector. The ordinance aimed at modernising tax administration and bolstering revenue collection has replaced the...

www.newagebd.net

Revenue reform should also consider progressive taxes
15 May, 2025, 00:00

THE government has dissolved the National Board of Revenue with the Revenue Policy and Revenue Management Ordinance 2025, promulgated on May 13, to effect reforms in the revenue sector. The ordinance aimed at modernising tax administration and bolstering revenue collection has replaced the revenue board with two divisions, the Revenue Administration Division and the Revenue Policy Division, under the finance ministry. The policy division will design tax laws, set rates and oversee international tax treaties while the management division will handle enforcement, audits and compliance for income tax, value-added tax and customs. The restructuring has been done as the revenue board had consistently failed to meet the revenue collection target over 50 years and the country’s tax-to-gross domestic product ratio has remained about 7.4 per cent, one of the lowest in Asia. Amid widespread allegations of corruption in the revenue sector, the government’s reform initiative is promising if it delivers what it promises on paper.

The government says that the ordinance would address several long-standing issues, including the conflict of interests, inefficient revenue collection, weak governance, bureaucratic overlap, demoralisation and internal tensions. The revenue board officials have, however, staged protests, saying that the reforms are made without adequately taking into account their concern and suggestions. They are concerned that such reforms would undervalue the experienced and skilled work force. Some argue that the ordinance runs the risk of weakening accountability and essential technical expertise while encouraging politicisation by directly subordinating revenue administration under the finance ministry. The over-reliance on indirect, or regressive, tax that has for long been identified as the problem of the taxation system has, however, remained unaddressed. An over-reliance on indirect taxes such as the value-added tax adds to inequality in society as it disproportionately burdens the poor. Tax evasion by companies and corporate TIN holders is yet another concern. Bangladesh loses, as a report by the London-based Tax Justice Network says, more than $144 million in tax revenue each year, mainly because of corporate tax abuse and offshore tax evasion. The success of higher revenue mobilisation targets would, therefore, require curbing corruption and introducing direct, or progressive, taxes, which would increase revenue collection and act as a powerful tool to combat economic inequality.

The government’s move to restructure the revenue sector is a welcome move considering years of failures in raising the tax-to-GDP ratio. The government should, however, respond to the concern that annexeing the taxation structure under the finance ministry could risk politicisation. More important, the government needs to abandon its over-reliance on regressive tax and make a policy shift towards a progressive tax system, where the average tax burden increases with income.​

 

[Saif]

NBR bifurcation: Towards fairer revenue regime

The recent bifurcation of the National Board of Revenue (NBR) into two separate entities under the Ministry of Finance has come as a surprise, despite tentative moves taken previously in this direction. The newly established Revenue Policy Division and Revenue Management Division will now split res

thefinancialexpress.com.bd

NBR bifurcation: Towards fairer revenue regime
Published :
May 16, 2025 00:02
Updated :
May 16, 2025 00:02

The recent bifurcation of the National Board of Revenue (NBR) into two separate entities under the Ministry of Finance has come as a surprise, despite tentative moves taken previously in this direction. The newly established Revenue Policy Division and Revenue Management Division will now split responsibilities that were so long handled by a single organisation. The Policy Division will focus on drafting tax laws and setting tax rates, while the Management Division will be tasked with enforcement, audits and compliance. This structural reform is intended to enhance transparency and eliminate potential conflict of interests by separating those who design tax policies from those responsible for implementing them.

Such a bifurcation is widely seen as a measure to curb irregularities and reduce opportunities for collusion between policymakers and enforcers. The ordinance that enacted this change also dissolved the Internal Resources Division (IRD), in line with long-standing recommendations from international development institutions and economic experts. The goal is to streamline revenue administration and increase Bangladesh's tax-to-GDP ratio, which remains one of the lowest in Asia at approximately 7.4 per cent. In contrast, the average ratio in advanced economies is 16.6 per cent, and over 10 per cent in many developing countries. To meet its development goals, Bangladesh must raise this figure to at least 10 per cent.

A statement from the Chief Adviser's Press Wing emphasised that this move is not merely an administrative reshuffle, but a vital reform to build a fairer and more efficient tax system. Separating tax policy from administration is expected to broaden the tax base, reduce inefficiencies, and enhance the credibility of tax governance. The restructuring is aimed at ending a long-standing conflict of interests, where the same authority was responsible for both framing tax policy and enforcing it. Critics have long argued that the unified structure of the NBR compromised the quality of tax policy, favouring short-term revenue gains over fairness and long-term economic planning. Businesses, in particular, have voiced frustration with tax measures that prioritised revenue collection over consistency and growth.

The call for structural reform is not new. The International Monetary Fund (IMF) first recommended the separation of the NBR's policy and administrative functions as early as 1993, with the World Bank reinforcing the suggestion in 2007. Over the years, economists, think tanks, and international development partners have echoed these views, urging the government to modernise the revenue system for greater effectiveness and transparency.

Despite opposition from within the NBR -- where officials have reportedly initiated a pen-down protest -- the wider expert community, including business leaders and economists, largely supports the change. The task forces and committees formed by the interim government have also advocated for this bifurcation. While the restructuring marks a significant step forward, its success will ultimately depend on how well the transition is managed. Ensuring adequate resources, capacity building, and a clear division of responsibilities between the two new entities will be essential for this reform to deliver its intended outcomes.​

 

[Saif]

Economy on path to recovery: experts

Bangladesh’s economy is recovering after months of slowdown, with stability returning and confidence growing across various sectors, according to experts.

www.thedailystar.net

Economy on path to recovery: experts

Bangladesh's economy is recovering after months of slowdown, with stability returning and confidence growing across various sectors, according to experts.

Speaking at the launch of the inaugural edition of the Monthly Macroeconomic Insights (MMI) by the Policy Research Institute of Bangladesh (PRI) at its Banani office yesterday, experts and economists expressed cautious optimism about the country's economic trajectory.

The MMI, a new analytical initiative by PRI's Center for Macroeconomic Analysis (CMEA), has been developed with support from the Australian Department of Foreign Affairs and Trade (DFAT).

"The economy is on a recovery path," said Ashikur Rahman, principal economist at PRI, calling it a pivotal phase marked by cautious optimism.

He termed the dissolution of the National Board of Revenue (NBR) and the Bank Resolution Order Ordinance 2025 as bold and timely steps by the interim government.

He said these reforms aim to ensure institutional clarity and long-term economic stability.

Addressing the event, Anisuzzaman Chowdhury, special assistant to the chief adviser, emphasised an urgent need to rebuild Bangladesh's social capital alongside reinforcing its economic foundations.

He remarked that while the country has progressed significantly in infrastructure and financial capacity, the erosion of social cohesion and public trust now poses a deeper, long-term threat.

"We need hard reforms and honest reflection," he said. "We are not poor in financial terms alone; our social fabric is also under strain."

Drawing from his early life experiences, Chowdhury reflected on how countries like South Korea and Japan overcame hardship through strategic vision, coordinated reforms, and long-term commitment.

"They didn't just push reforms -- they fixed goals and stayed the course. That's what we need."

Regarding Bangladesh's upcoming graduation from the least developed country (LDC) club, he called it both a challenge and an opportunity. "It's not just about metrics. Without a clear vision, reforms alone won't deliver. We need policy coherence."

He also pointed out that high interest rates, low investor confidence, and disjointed policies are hampering economic diversification. "Why invest in capital markets when banks offer 12 percent with less risk?"

Md Habibur Rahman, deputy governor of Bangladesh Bank, said Bangladesh's economic indicators are showing signs of gradual stability, driven by improvements in the current account and balance of payments.

"Exchange rate liberalisation will benefit Bangladesh on multiple fronts," he said.

He added that the macroeconomic situation has become more comfortable over the past nine months.

Rahman emphasised that despite recent turbulence, the country's fundamentals remain strong and resilient.

He stressed the importance of signalling confidence to the international community and said measures are in place to protect foreign exchange reserves and manage external pressures effectively, positioning Bangladesh for continued recovery.

Upon reviewing the economic growth scenario, Zaidi Sattar, chairman of PRI, pointed out that in the current year, macroeconomic stability has been restored, and the economy is poised to return to a higher growth trajectory.

"Our export potential is hobbled by a highly protective tariff regime that creates a persistent anti-export bias in policy incentives," he added.

Clinton Pobke, deputy head of mission at the Australian High Commission in Bangladesh, emphasised Australia's commitment to strengthening economic engagement with Bangladesh through a multi-pronged approach encompassing policy reform, trade and investment, and support for public policy discourse.

Speaking at the launch of the new initiative in collaboration with the PRI, Pobke expressed his appreciation for the quality of economic analysis presented.

Outlining Australia's three-track strategy, Pobke explained, "One track focuses on support for policy reform, another on enhancing bilateral trade and investment, and the third on strengthening the policy debate space in Bangladesh."

On trade and investment, Pobke highlighted a recent milestone. "In February, we appointed our first Australian Trade and Investment Commissioner based in Dhaka -- a major step forward."

He also announced the upcoming "Bangladesh-Australia Business Expo 2025" in Sydney, where he hopes to see strong bilateral participation.

Shams Mahmud, president of the Bangladesh-Thai Chamber of Commerce and Industry, said that businesses are currently operating primarily for the benefit of banks and the NBR, while entrepreneurs themselves are struggling to make profits.

Despite positive export figures, he said the business environment remains unfavourable due to persistent inflation and elevated bank interest rates.​

 

[Saif]

BD's move to join trade blocs

Rising protectionism and tariff wars among the world's leading economies in recent years have put the case for multilateralism at a disadvantage. Encouraging local manufacturing by reducing reliance on imported goods or the so-called policy of import substitution might now gain a stronger ground. U

thefinancialexpress.com.bd

BD's move to join trade blocs
Published :
May 17, 2025 00:54
Updated :
May 17, 2025 00:54

Rising protectionism and tariff wars among the world's leading economies in recent years have put the case for multilateralism at a disadvantage. Encouraging local manufacturing by reducing reliance on imported goods or the so-called policy of import substitution might now gain a stronger ground. Unfortunately, the opposite is true. No doubt, high tariffs on imported items raise relative profitability of industries serving the domestic market in the short run. But in the long run, it hampers production for overseas markets, that is, exports. Obviously, for an economy highly dependent on export, the existing policy of high tariffs on imports has created an uneven playing field for Bangladeshi exporters when competing in global markets.

The issue again came to the fore when the ADB chief economist Albert Park was talking to this paper on the sidelines of the multilateral donor agency's recently held annual meeting at an overseas location. In fact, the ADB economist made no bones about the fact that other countries are unwilling to reach both bilateral and multilateral trade arguments with Bangladesh. But the fact that high internal tariff is a number one stumbling block to Bangladesh's expanded trade relations with many international and regional trade blocs is not a realization brought home for the first time. The issue came up on multiple occasions at discussions forums where local experts pointed out that Bangladesh's average nominal tariffs are higher than those in other low-income, middle income and high income countries. The nominal tariff, for instance, is 27.6 per cent in Bangladesh which is higher than many of its neighbouring economies such as India where it is 18.1 per cent and in Sri Lanka 22.4 per cent. But it cannot also be said that those South Asian neighbours have liberal tariff regimes. To tell the truth, their differences, when it comes to liberal tariff policies, are just a matter of degree compared to Bangladesh. So, it is not hard to understand why the South Asian Association for Regional Cooperation (SAARC) could not succeed even four decades after its inception. However, intense political rivalries between two nuclear members, India and Pakistan, are no less to blame for SAARC's stunted growth.

By comparison, the South East Asian economies like Thailand, Vietnam, Malaysia and Indonesia with their 9.7 per cent, 9.6 per cent, 5.6 per cent and 8.0 per cent nominal tariffs are indeed better placed than Bangladesh in reaching mutually beneficial deals with their regional competitors. Small wonder that the 10-member ASEAN with a total GDP of US$4.249 trillion and a population of 683.29 million is a mammoth economic bloc sharing some 8.0 per cent of the global export. Bangladesh could have immensely benefited by being a member of such forward looking trade blocs known for less protectionist trade policies.

The good news is Bangladesh has shown interest, thanks to Chief Adviser, Dr Muhammad Yunus's overture to Malaysia's diplomatic mission in Bangladesh soon after his assumption of office in late August last year, to join ASEAN. Also, Bangladesh's effort to join the Regional Comprehensive Economic Partnership (RCEP) to retain preferential trade access to major markets like China, Japan, South Korea and the ASEAN countries after its LDC graduation in 2026 is also commendable. However, while making these moves to join less protectionist trade blocs, Bangladesh should also redouble its efforts to widen and diversify its export basket. Out of its some 1,377 non-RMG export items, 174 are highly competitive. What is urgent is to proactively develop and explore the overseas markets for these products.​

 

[Saif]

Forex reserves stand at $25.44b: Bangladesh Bank

Bangladesh's foreign exchange reserves have stood at $25.44 billion. But, as per the International Monetary Fund (IMF) methodology under the Balance of Payments and International Investment Position Manual (BPM6), Bangladesh's foreign exchange reserves stood at $20.07 billion, BSS reports citi

thefinancialexpress.com.bd

Forex reserves stand at $25.44b: Bangladesh Bank

Published :
May 19, 2025 20:04
Updated :
May 19, 2025 20:06

Bangladesh's foreign exchange reserves have stood at $25.44 billion.

But, as per the International Monetary Fund (IMF) methodology under the Balance of Payments and International Investment Position Manual (BPM6), Bangladesh's foreign exchange reserves stood at $20.07 billion, BSS reports citing a Bangladesh Bank press release.​

 

[Saif]

Division of NBR was not done properly: Debapriya Bhattacharya

Debapriya Bhattacharya, a distinguished fellow at the private research organisation Centre for Policy Dialogue (CPD), criticised the process of dividing the National Board of Revenue (NBR) into two divisions. “It was right to divide the National Board of Revenue into two parts. This was also...

en.prothomalo.com

Division of NBR was not done properly: Debapriya Bhattacharya
Staff Correspondent Dhaka
Published: 19 May 2025, 22: 13

CPD’s distinguished fellow Debapriya Bhattacharya addresses a dialogue titled “Policy reforms and the upcoming national budget” organised by Citizen’s Platform at a Gulshan hotel in Dhaka on 20 May 2025 Prothom Alo

Debapriya Bhattacharya, a distinguished fellow at the private research organisation Centre for Policy Dialogue (CPD), criticised the process of dividing the National Board of Revenue (NBR) into two divisions.

“It was right to divide the National Board of Revenue into two parts. This was also recommended in our white paper. But the way it has been done is not right,” he said at an event on Monday.

According to him, the method of division was flawed as it reduced the space for professionals without proper discussion and maintained excessive control over other autonomous areas.

Ensuring a proper division has become a critical issue now, he remarked.

Debapriya Bhattacharya made these remarks today at a dialogue titled “Policy reforms and the upcoming national budget” organised by Citizen’s Platform at a Gulshan hotel in Dhaka.

During the dialogue, the CPD distinguished fellow pointed out that during the previous government, those involved in kleptocracy or systemic looting included politicians who have now fled, while business groups are not so active now. However, bureaucrats have been revitalised.

Mentioning the government’s lack of attention to economic reform, he said, “Our general concern is that while the government focuses significantly on other reforms, we do not see the same level of attention given to economic reforms. This is a major issue, and they fail to realise that if there is no stability in the economy, no other reform can be sustainable.”

Despite so many shortcomings and inconsistencies, Debapriya Bhattacharya thinks that the implementation of the budget will largely depend on four factors: the outcome of the ongoing dialogue on national unity, a clear roadmap regarding the election, whether the promised justice will be delivered before or after the elections, and the overall situation of law, order, and security.

He further stated, “The current components necessary for investment are not very encouraging. As a result, employment is not increasing. The rate of wage growth for workers is below the rate of inflation, which means their real income is declining. Therefore, we cannot firmly say that the economy is on a way to recovery.”

The chief guest at the event was Anisuzzaman Chowdhury, special assistant to the Chief Adviser, and the special guest was Amir Khasru Mahmud Chowdhury, a standing committee member of the Bangladesh Nationalist Party.​