[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

Card-based forex transactions rise

Foreign currency transactions through cards reached a four-month high in April, reflecting a rebound in international travel and improved economic stability in Bangladesh...

www.newagebd.net

Card-based forex transactions rise
Staff Correspondent 12 June, 2025, 23:11

A file photo shows a salesperson swiping a credit card of a customer through a POS machine in the capital Dhaka. | New Age photo Wellness retreats.

Foreign currency transactions through cards reached a four-month high in April, reflecting a rebound in international travel and improved economic stability in Bangladesh.

According to Bangladesh Bank data, card-based foreign currency transactions totalled Tk 728 crore in April, up from Tk 614 crore in March, Tk 604.19 crore in February, and Tk 681 crore in January.

However, April’s figure remains below the Tk 834 crore spent abroad via cards in December 2024 — the highest of the year.

December 2023 had recorded even higher card-based overseas spending at Tk 929 crore.

With educational institutions in Bangladesh closed during this period, many people travel abroad with their children, contributing to the rise in foreign currency transactions via cards, bankers said.Bangladeshi cuisine recipes

Bankers noted that the foreign exchange transactions by cards depended on availability of dollars and the number of travellers going abroad.

Bankers attribute the April rise to several factors including greater foreign currency availability, increased outbound travel, and seasonal patterns.

They said that due to restricted visa issuance from India, many travellers shifted destinations to Southeast Asia, the Middle East, and Europe for medical, education, and tourism purposes.

Another key driver behind increased card transactions is the improved availability of US dollars in the market.

According to the Bangladesh Bank, the country received $27.5 billion in remittances from July 2024 to May 2025 — 28.7 percent up from $21.37 billion during the same period in FY24.Bangladeshi cuisine recipes

This surge in remittance inflow helped stabilise the dollar market, making it easier for banks to meet the foreign exchange demands of individual travellers.

Bankers also point to the devaluation of the taka as a contributing factor. The dollar has steadily risen from Tk 85.80 in December 2021 to Tk 123 in recent months, raising the local currency equivalent of any foreign transaction.

Despite this, card usage has grown due to convenience and accessibility.

Banks have streamlined their forex card services, making it easier for customers to pay tuition fees, hospital bills, and shopping expenses abroad without the need for physical cash or lengthy approval processes.

The card-based foreign currency transactions started rebounding after July 2021 with relaxation of travel restrictions and the amount crossed Tk 250 crore in December 2021. In July 2022, it was Tk 441 crore.

The monthly average transaction volume through cards remains over Tk 600 crore for a year.

Foreign currency transactions using cards have experienced significant growth in the current financial year, as it has become much easier for travellers to obtain foreign currency through cards from banks, bankers said.

Transactions like shopping bills and utility payments can now be made with ease, and transferring money between banks takes just a click—reducing the need to carry cash and making daily life more convenient.​

 

[Saif]

Bangladesh to become half a trillion-dollar economy in FY27

The government expects the country’s economy to cross the $500 billion mark in the fiscal year (FY) 2026-27, buoyed by stabilising policies and sectoral improvements.

www.thedailystar.net

Bangladesh to become half a trillion-dollar economy in FY27
Govt also estimates gross national income to cross $500b in FY26

The government expects the country's economy to cross the $500 billion mark in the fiscal year (FY) 2026-27, buoyed by stabilising policies and sectoral improvements.

These projections were made by the Finance Division in its Medium-term Macroeconomic Policy Statement, released on June 2 alongside the national budget proposal for FY26.

The statement includes forecasts for gross national income (GNI), foreign exchange reserves, exports, imports and inflation through to FY28.

These projections were made using forecasting models developed by the International Monetary Fund (IMF) and the World Bank, adjusted with historical data.

Gross domestic product (GDP) measures the total market value of all goods and services produced within a country in one year, according to Investopedia.

GNI, by contrast, includes income earned by residents and businesses both at home and abroad.

According to the Finance Division, the nominal GDP of Bangladesh will reach $514 billion in FY27, up from a provisional estimate of $463 billion in FY25. In FY26, it is projected to stand at $487 billion.

GNI is expected to overtake the GDP earlier, with the government forecasting it to hit $512 billion in FY26, up from $486 billion in FY25.

However, some economists have questioned the reliability of the data used to make these predictions.

"The Bangladesh Bureau of Statistics is still relying on previous figures. It should carry out fresh surveys to reveal the real state of the economy," said Professor Mustafizur Rahman, a distinguished fellow at the local think tank Centre for Policy Dialogue (CPD).

He said that based on previous figures and accounts, GDP might exceed the half-trillion mark in FY27 if the government meets its growth targets of 4 percent in FY26 and 5.5 percent in FY27.

As for GNI, the economist added, "It is always higher than GDP in Bangladesh because our nationals earn more abroad than foreign nationals earn here."

The upbeat outlook by the government comes at a time when several international development partners, including the World Bank, IMF and Asian Development Bank, have offered more cautious estimates.

Citing political uncertainty, weak investment and geo-political tensions, they expect real GDP to grow between 3 and 4 percent in FY25.

In its provisional estimate for FY25, state-owned statistical agency BBS also projected GDP growth at 3.97 percent

Despite the current slowdown, the Finance Division expects a gradual recovery. It projects real GDP growth to reach between 5.5 and 6.5 percent by FY28, supported by efforts to bring down inflation, boost productivity and strengthen the external sector.

"The government's efforts to control inflation, enhance productivity, and maintain external resilience will be critical for ensuring macroeconomic stability," said the policy statement.

Following the Covid-19 pandemic, Bangladesh struggled to keep its exchange rate stable as foreign currency reserves depleted fast.

For FY25, the Finance Division revised the estimate for foreign exchange reserves to $26.7 billion, down from $31.8 billion in the original projection.

In FY24, actual forex reserves were at $26.9 billion.

The government expects reserves to rise to $34 billion in FY26, with a slight increase the following year.

Professor Rahman said the target could be met, but only under certain conditions.

"Gross reserves might cross $34 billion, but that depends on assumptions that import growth stays low at around 6 percent and export growth remains strong," he said.

But sluggish import growth could spell trouble, he said.

"If import growth stays this low, it does not bode well for GDP growth, investment or job creation. This trend is mainly due to falling imports of capital machinery.

"What we need is higher imports of capital machinery, not just a push to increase foreign currency reserves," he added.

The central bank currently uses two methods to measure foreign currency reserves. According to Bangladesh Bank data, gross reserves stood at $25.8 billion on May 29, while the BPM6 method by the IMF recorded it at $20.6 billion.

"We need to maintain reserves at a sustainable level," said Rahman. "But we must also remember that reserves will be used if investment rises and capital machinery imports go up."

"I would prefer strong investment, higher growth, stable reserves and a steady exchange rate rather than low investment, weak growth and artificially high reserves," he added.​

 

[Saif]

Govt spending among world's lowest, signals further fall

Bangladesh's aggregate public spending remains among the lowest in South Asia and in the world at large as the government walks tightrope to make two ends meet principally for weak revenue mobilisation, and finance officials foresee further fall. The ministry of finance predicts that in the ou

thefinancialexpress.com.bd

Insufficient revenue, budget-deficit caps squeeze fiscal space
Govt spending among world's lowest, signals further fall

FE REPORT
Published :
Jun 14, 2025 00:32
Updated :
Jun 14, 2025 00:32

Bangladesh's aggregate public spending remains among the lowest in South Asia and in the world at large as the government walks tightrope to make two ends meet principally for weak revenue mobilisation, and finance officials foresee further fall.

The ministry of finance predicts that in the outgoing fiscal year the government expenditure may rise to 13.2 per cent before taking a downturn again to reach 12.7 per cent in the next fiscal year, as a share of GDP.

In the latest Medium-Term Macroeconomic Policy Statement (MTMPS), the finance ministry says while it is projected to remain at approximately 12.8 per cent of GDP over the medium term, "the projected level of government expenditure is highly susceptible to downside risks".

"In the absence of significant enhancements in revenue collection, government's capacity to maintain elevated expenditure levels…may be compromised, thereby constraining long-term economic prospects."

The finance officials think increased expenditure is crucial to advancing key development priorities and supporting sustained economic growth.

The MTMPS points out that Bangladesh's public spending is significantly lower than that of neighbouring countries like India, Nepal and Pakistan. Data show public expenditure in Bhutan is over 25 per cent of GDP, in India is nearly similar, in Pakistan over 15 per cent, Nepal nearly 20 per cent, Indonesia 15 per cent, in the United States over 35 per cent, and Germany's is nearly 50 per cent. A key reason behind low public expenditure is Bangladesh's adherence to a de facto fiscal rule that caps the budget deficit at 5.0 per cent of gross domestic product, it notes.

With the revenue-to-GDP ratio stagnating around 8.0 per cent for many years, the government has little option but to maintain a correspondingly low level of expenditure, the MTMPS reads.

Consequently, the persistently low tax-GDP ratio has emerged as a major structural constraint, limiting government's ability to expand public spending and necessitating gradual efforts to increase it.


The macroeconomic policy mentions that government expenditure in Bangladesh has remained relatively modest and requires substantial augmentation to meet the country's development needs.

Over the past five fiscal years (FY20-FY24), the average annual growth rate of government spending was 9.4 per cent, falling short of the nominal GDP-growth rate, which averaged 11.2 per cent during the same period.

During this period, the overall growth in the revised budget allocation was 10.1 per cent, and the average growth of the development budget was only 8.5 per cent -- an insufficient pace considering the investment-driven demands of Bangladesh's economy.

Moreover, the situation deteriorated further in FY25, with the revised development budget for the year registering a 17-percent decline year on year.

The MTMPS also mentions that "notable strides are being made to improve the efficiency and rationality of public expenditure, particularly through a comprehensive review of ongoing projects".


As a result of these policy adjustments, government spending for FY26 has been scaled down compared to the previous fiscal year.​

 

[Saif]

Can spending cuts cool inflation?

The proposed national budget for the 2025-26 fiscal year is shaped by a strong resolve to tackle the long-standing and urgent problem of inflation. Although numerous aspects of the budget adhere to established trends, there is a clear trend towards contractionary policies, which means the governmen

thefinancialexpress.com.bd

Can spending cuts cool inflation?

SYED MUHAMMED SHOWAIB
Published :
Jun 14, 2025 00:29
Updated :
Jun 14, 2025 00:29

The proposed national budget for the 2025-26 fiscal year is shaped by a strong resolve to tackle the long-standing and urgent problem of inflation. Although numerous aspects of the budget adhere to established trends, there is a clear trend towards contractionary policies, which means the government is trying to cut back on expenditure. Set at Tk 7.9 trillion, this budget is Tk 70 billion lower than the original outlay for the current 2024-25 fiscal year. This reflects a rare reversal in the usual pattern of expanding government budgets. Given that this budget was presented by an interim administration, with national elections scheduled for first half of 2026, this approach was perhaps inevitable. The public largely perceives this administration as a caretaker government, responsible only for essential reforms and election preparations. As such, the government has refrained from allocating funds for big-ticket infrastructure projects typically pursued by elected governments.
FE

A large portion of the budget is driven by a basic fiscal reality in which mandatory expenditures take up most the government's resources. A massive Tk 1.13 trillion has been allocated solely for interest payments on existing debt. This number is almost one-seventh of the entire budget, but the public receives no real benefit from it. With the overall amount of the government's domestic and foreign debt approaching $100 billion, it simply represents the weight of prior borrowings. That means a significant portion of the budget is already spoken for before a single new policy initiative is implemented. The estimated Tk 820 billion in core revenue expenses involving salaries and benefits is another fixed cost. Apparently, the budgetary priorities are wildly out of balance. The amount set aside for interest payments is more than what is to be spent on either education and technology or transport and communication, which are both very important for the long-term economic growth and development. It's no surprise that inflation gets harder to control in a country that spends more on paying off its debt than on building up its people or its assets.

However, the government's allocations in sectors outside these mandatory expenditures show a clear intention to bring inflation under control. This is no easy task for an interim administration, especially at a time when falling foreign exchange reserves and strict IMF loan conditions are creating added pressure. When the interim government took office about ten months ago, inflation was spiraling, reaching 11.66 per cent in July 2024, which is one of the highest rates in recent memory. Since then, the government has managed to marginally ease inflation into 10.89 per cent in December 2024 and further to 9.17 per cent in April 2025. The finance adviser is optimistic that inflation could fall to 8 per cent by the end of the current fiscal year and to 6.5 per cent by the close of FY 2026. However, whether these targets are achievable will depend on a combination of factors.

One such factor is the stability of the newly adopted floating exchange rate. Bangladesh switched to this system last month and the exchange rate hasremained stable since then. In the short term, this stability grants the Bangladesh Bank greater control over monetary policy, allowing it to focus on domestic inflation without the burden of defending a fixed exchange rate. However, Bangladesh's economy is heavily import-dependent. If the Taka depreciates significantly, import costs will rise, pushing up prices for essential goods and raw materials. This pass-through impact has potential to reignite inflation. Moreover, a fluctuating exchange rate could create business uncertainty, reduce investor confidence, and instill inflationary expectations in the public's mind. If these risks materialize, the progress made so far in controlling inflation could be undone rapidly.

Another critical area is revenue collection. The proposed budget sets an ambitious target of Tk 5.64 trillion in revenue, with Tk 4.99 trillion expected to come via NBR. This goal is equal to roughly 9 per cent of the country's GDP, and is, by most standards, highly optimistic. Historically, Bangladesh has struggled to meet its revenue targets. In FY 2023-24, the highest-ever revenue collection was only Tk 3.82 trillion. Given the current slowdown in economic activity, rising unemployment, and subdued investment climate, it is difficult to see how this year's revenue target will be met without resorting to desperate measures.

If revenue collection falls short, as it likely will, the resulting budget deficit will compel the government to borrow more, both domestically and from foreign sources. Domestic borrowing, especially from the banking sector, poses its own inflationary risks. If the government turns to the central bank for financing, it would be tantamount to printing new money, increasing the money supply without a corresponding increase in goods and services. This scenario is a textbook recipe for inflation. Even borrowing from commercial banks could lead to credit expansion, which would further fuel inflationary pressure.

The government has so far pursued a contractionary monetary policy, raising the policy interest rate by 150 basis points to 10 per cent. However, there is only so much that monetary tightening can achieve on its own in curbing inflation. When inflation is also fueled by structural inefficiencies, supply chain disruptions, and lax fiscal discipline, monetary policy alone cannot offer a comprehensive solution.

To its credit, the budget does make provisions for protecting the most vulnerable segments of society. Food subsidies are set to rise by nearly 20 percent and the number of low-income families receiving food assistance will also grow. These measures are necessary, but they must be implemented efficiently to ensure that relief reaches those who need it most.

If the government stays committed to aligning fiscal and monetary policies, stabilizing the exchange rate, boosting production and protecting the livelihoods of low-income groups, there is a genuine possibility of bringing inflation under control. It remains uncertain whether the interim administration will have the time or political inclination to implement these reforms fully, but the groundwork, at the very least, seems to be in place.​

 

[Saif]

World Bank approves $250 million loan to Bangladesh

The World Bank said on Saturday it approved $250 million loan to the government while more in pipeline from other lenders, laying importance mostly on transparency, accountability and public service delivery.

www.newagebd.net

World Bank approves $250 million loan to Bangladesh
More in pipeline with focus on transparency, accountability, public service
Staff Correspondent 14 June, 2025, 15:45

The World Bank said on Saturday it approved $250 million loan to the government while more in pipeline from other lenders, laying importance mostly on transparency, accountability and public service delivery.

The WB loan will facilitate the implementation of the ‘Strengthening institutions for transparency and accountability’ project until 2030 to modernise public service delivery at the Bangladesh Bureau of Statistics, National Board of Revenue, Planning Division, Bangladesh Public Procurement Authority, and the Office of the Comptroller and Auditor General.

In a press release issued on the day, the World Bank also said that the loan was approved ahead of the proposed budget support worth $500 million that was expected to be discussed in its board meeting later this month.

It hoped that the $500 million support would help ensure transparency and accountability in domestic revenue mobilisation, banking sector, data production and dissemination, public investment management and procurement, audit and accountability, and the delivery of social programmes.

The ‘Strengthening institutions for transparency and accountability’ project would supplement the proposed budget support, according to the release.

The approval of the $250 million loan by the WB on Saturday came ahead of the board meeting of the International Monetary Fund scheduled for June 23.

The IMF board meeting will decide on the disbursement of the combined fourth and fifth tranches under the $4.7 billion loan programme going on since 2023.

Bangladesh received $2.3 billion in three tranches until June 2024 under the loan programme initiated by the Awami League government before being ousted on August 5, 2024 amid a mass uprising.

Finance ministry officials calculated that the country had received $1.2 billion in budget support in the outgoing financial year of 2024–25 expiring on June 30.

This includes $500 million from the WB under the ‘Second Bangladesh green and climate resilient development policy credit’ signed in December 2024, $600 million from the Asian Development Bank in May under the ‘Strengthening economic management and governance (Sub-Programme-1), and $100 million from the Organization of the Petroleum Exporting Countries und in April.

Officials also said that the proposed $500 million budget support from the WB and $418 million Development Policy Loan from Japan and a $300 million loan from the Asian Infrastructure Investment Bank were currently in pipeline.

They noted that the original projection on availability of budget support in the outgoing FY2024–25 was $2.6 billion.

The WB in its press release said that the investment under the ‘Strengthening institutions for transparency and accountability’ project would leverage digitisation of business processes to help improve transparency so that public institutions become better capable of serving an emerging economy.

This project will help modernise tax administration and increase tax compliance, thereby improving much-needed revenue mobilisation and fiscal sustainability. It will also help improve the efficiency and accountability of public spending, ensuring that resources are utilised effectively for the benefit of all citizens. It will develop second generation of electronic government procurement (e-GP) and broaden its scope, according to the WB press release.​

 

[Saif]

Full automation needed for NBR to implement simpler tax refund process

The National Board of Revenue (NBR) is contemplating whether to introduce an automatic system for refunding excess taxes realised from taxpayers. “We are thinking to send back the refund money directly to the taxpayer's bank account,” a senior NBR official said, UNB reports. But

thefinancialexpress.com.bd

Full automation needed for NBR to implement simpler tax refund process

Published :
Jun 15, 2025 21:01
Updated :
Jun 15, 2025 21:01

The National Board of Revenue (NBR) is contemplating whether to introduce an automatic system for refunding excess taxes realised from taxpayers.

“We are thinking to send back the refund money directly to the taxpayer's bank account,” a senior NBR official said, UNB reports.

But he said that for this system, everything needs to come under the automated system.

The tax refund system in Bangladesh is governed by the National Board of Revenue (NBR) under the Income Tax Ordinance, 1984.

A tax refund arises when a taxpayer has paid more tax than their actual liability for a given fiscal year. Overpayments may occur due to excess tax deduction at source (TDS), advance tax payments, or miscalculation during tax assessments.

To claim a refund, an individual or organisation must submit a formal application along with their annual income tax return (Form-IT-11Ga for individuals or Form-IT-11Gha for companies) within the assessment year.

Supporting documents, such as TDS certificates and payment challans, are required to verify the excess amount paid.

Once submitted, the concerned tax circle officer reviews the application. If the claim is found to be valid, the refund is processed and paid either through direct bank transfer or treasury cheque.

However, the refund process in Bangladesh is often criticised for being time-consuming and bureaucratic.

Delays in processing, lack of automation, and limited taxpayer awareness contribute to low refund issuance rates. In many cases, taxpayers prefer to adjust the excess amount against future tax liabilities rather than await a refund.

To improve the system, the senior NBR official said that the NBR has taken steps to digitise tax return submissions and promote transparency.

The official said that the introduction of the Integrated Tax Administration System (ITAS) aims to streamline tax processes, including refunds, through electronic filing and tracking.

“Efficient tax refund mechanisms are essential for fostering taxpayer confidence and encouraging voluntary compliance,” he said.

He also mentioned that a transparent and prompt refund system would not only benefit individual taxpayers and businesses but also strengthen the overall tax culture in Bangladesh.

“Greater awareness campaigns and institutional reforms are needed to ensure that entitled refunds are processed fairly and timely,” he added.

The NBR official also said that when the total system is automated without any intervention, it would be possible to make the tax refund directly.

“Taxpayers' bank accounts will be connected with the Bangladesh Bank, when the designated officer approves the tax refund, the money will be refunded automatically,” he said.

He also said that there will be no physical interaction in this process as the tax officials will examine everything through an interconnected system.

“But at present, the refund process is a very complex issue in the country, and sometimes some unethical matters get involved in this refund; we have to remove this,” he said.

The NBR senior official said that if the process can be made easy, there is no problem in introducing the automatic refund system in the country to boost taxpayers' confidence.

“We are earning some Tk 4 lakh as revenue, it would not be a matter for us if we refund genuinely Tk 500 crore to the taxpayers,” he said.​

 

[Saif]

Bangladesh’s remittance growth almost 25pc in outgoing fiscal

Bangladesh received US $1.15 billion in remittances in the first 14 days of June 2025, a slowdown of 30.1 per cent year-on-year. Despite this slide, Bangladesh's remittance earnings grew by 24.5 per cent in the current fiscal year 2024-25. Bangladesh received $28.65 billion in remittances so far i

thefinancialexpress.com.bd

Bangladesh’s remittance growth almost 25pc in outgoing fiscal

UNB
Published :
Jun 16, 2025 00:28
Updated :
Jun 16, 2025 00:28

Bangladesh received US $1.15 billion in remittances in the first 14 days of June 2025, a slowdown of 30.1 per cent year-on-year.

Despite this slide, Bangladesh's remittance earnings grew by 24.5 per cent in the current fiscal year 2024-25. Bangladesh received $28.65 billion in remittances so far in FY25, which was $23.01 billion in the previous FY24.

According to Bangladesh Bank's latest update, the expatriates have sent $1.15 billion remittance in 14 days of June 2025, which was $1.64 billion in June 2024. Last year, Eid-Ul-Azha was celebrated in the third week of June last year. As a result, remittance in that time was 30.1 per cent higher.

The expatriates sent $27.5 billion remittance in 11 months (July-May) of the current FY25. The scenery of 11 months' remittance is as follows:

*May $2.97 billion

*April: $2.75 billion

*March: $3.29 billion

*February: $2.53 billion.

*January: $2.19 billion

*December: $2.64 billion

*November $2.2 billion

*October: $2.39 billion

*September: $2.4 billion

*August: $2.22 billion

*In July: $ 1.91 billion​

 

[Saif]

Economy poised on higher trajectory of pickup

Bangladesh's economy recorded a stronger performance in May as the country's purchasing managers' index (PMI) climbed to 58.9-up six points from April by official count. The PMI rise indicates a faster pace of economic expansion across key sectors, in a rebound from certain recent upsets, econom

thefinancialexpress.com.bd

MAY PMI HITS 58.9 IN FASTER RISE
Economy poised on higher trajectory of pickup
May PMI readings indicate overall economy growing faster, riding on export-led manufacturing buoyancy, uptick in agriculture, says Masrur Reaz

FE REPORT
Published :
Jun 16, 2025 00:34
Updated :
Jun 16, 2025 00:34

Bangladesh's economy recorded a stronger performance in May as the country's purchasing managers' index (PMI) climbed to 58.9-up six points from April by official count.

The PMI rise indicates a faster pace of economic expansion across key sectors, in a rebound from certain recent upsets, economists say in their interpretation of the purchasing-index upturn.

The latest data show agriculture, manufacturing, and services sectors all posted robust gains.

However, the construction sector stagnated with no month-on-month change in overall expansion.

Analysts say the May figures reflect a robust momentum ahead of the Eid season and improving external demand, particularly for manufacturing exports.

However, risks remain, particularly in the construction sector, which has struggled to maintain consistent growth.

"The May PMI readings indicate that the overall Bangladesh economy grew at a faster rate, riding on the export-led manufacturing buoyancy and uptake in agriculture and its supply chain ahead of Eid festival," says Dr M Masrur Reaz, Chairman and CEO of Policy Exchange Bangladesh.

"The construction sector, however, remains the only sector without any growth in expansion," he adds.

Agriculture posted its eighth consecutive month of expansion, with accelerated growth in new business, business activity, employment, and input costs.

Notably, the order-backlog index returned into positive territory.

Manufacturing marked its ninth straight month of expansion, benefiting from strong new business and production activity. However, the order backlogs index continued to contract, albeit at a slower pace-extending its contraction streak to ten months.

Services saw faster growth in May, with significant gains in new business and input costs. Employment growth moderated, but both business activity and order backlogs rebounded into expansion.

Construction remained flat compared to the previous month. While construction activity picked up and order backlogs improved, new business and employment both declined, signaling a mixed bag for the sector.

The future business outlook saw slower expansion in manufacturing, construction, and services, while agriculture remained upbeat with a faster expansion rate.​