[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

Govt focuses on 4 priorities to ensure business-friendly environment: BIDA chief

Executive Chairman of Bangladesh Investment Development Authority (BIDA) and Bangladesh Economic Zones Authority (BEZA) Chowdhury Ashik Mahmud Bin Harun has said the government is focusing on four priorities to ensure business-friendly environment. "BIDA and BEZA are focusing on four main prioriti

thefinancialexpress.com.bd

Govt focuses on 4 priorities to ensure business-friendly environment: BIDA chief

BSS
Published :
Jun 21, 2025 16:34
Updated :
Jun 21, 2025 16:34

Executive Chairman of Bangladesh Investment Development Authority (BIDA) and Bangladesh Economic Zones Authority (BEZA) Chowdhury Ashik Mahmud Bin Harun has said the government is focusing on four priorities to ensure business-friendly environment.

"BIDA and BEZA are focusing on four main priorities: fast-tracking high-impact investment projects, expanding and improving One-Stop Services, solving problems faced by investors, and creating a strong pipeline of major investments," he said.

Ashik Chowdhury said this while talking to BSS in an interview at the Investment Building in the city.

The BIDA chief said the government's goal is to continue the momentum, notwithstanding the fact that this is an interim administration.

"We are putting in significant efforts to ensure that investors do receive comprehensive support and the assurance that their investments in Bangladesh will be secured and profitable," he added.

Responding to a question on 'Bangladesh Investment Summit 2025', Ashik Chowdhury mentioned that it was quite successful for the government against its planed objectives.

"We received a very positive response from international and local investors, development partners, and stakeholders. Many investors showed their strong interest in exploring opportunities in Bangladesh across sectors like renewable energy, information technology, manufacturing, infrastructures, and healthcare," he said.

He stated that this summit clearly demonstrated that the global business community sees Bangladesh as a promising and reliable investment destination.

"It also allowed us to highlight the government's efforts in building an investor-friendly environment and world-class infrastructures. In continuation of this, we were able to generate a pipeline of potential investors. We are highly encouraged by the outcomes and fully committed to converting this strong interest into real, on-the-ground investments," he explained.

The BIDA chief, however, said the government's top priority after the 2025 Bangladesh Investment Summit is to stay in close contact with the potential investors.

"We have built a comprehensive database of the participants and are now engaging with customized support based on their investment lifecycle. We have plans to continue building relationships with these investors throughout their decision-making journey to eventually convert their interest into active investments," he added.

Responding to another question on whether the government would follow up and act on the policy suggestions made by the investors and the various stakeholders in different sessions of the summit, he said, "Of course, yes. Investors, in our opinion, are our partners. Their opinions are highly valuable to us."

During the summit, he said, they carefully recorded all the suggestions made during the sessions.

"The key points highlighted were very similar to our initially identified priority areas: Renewable Energy & Green Growth, Digital Economy & Tech Transformation, Textile & Apparel (Advanced & Sustainable), Healthcare & Pharmaceuticals, and Agro-processing & Food Value Chain. We plan to expedite initiatives to address these areas," he added.

A four-day 'Bangladesh Investment Summit 2025' was held from April 7 to April 10 to showcase the country's evolving investment opportunities and economic reforms.

The summit has yielded initial investment proposals worth Tk 3,100 crore (Tk 31 billion). Several additional investment proposals are currently in the pipeline.

A total of 415 foreign delegates from 50 countries attended the event.​

 

[Saif]

Bangladesh to get $500m from WB to boost governance, financial sector stability

World Bank has approved $500 million loan to help improve trust in Bangladesh’s public institutions through increased accountability and transparency and enhance corporate governance and stability in the financial sector.

en.prothomalo.com

Bangladesh to get $500m from WB to boost governance, financial sector stability

UNB Dhaka
Published: 21 Jun 2025, 22: 53

World Bank has approved $500 million loan to help improve trust in Bangladesh’s public institutions through increased accountability and transparency and enhance corporate governance and stability in the financial sector.

The Strengthening Governance and Institutional Resilience Development Policy Credit supports public and financial sector reforms, which are key for sustained economic growth, according to a press release.

The reforms will also lay the foundations for improved services for vulnerable households.

Bangladesh has one of the lowest revenue-to-GDP ratios among middle-income countries, significantly limiting the government’s ability to deliver quality services to its people, said the press release.

This programme supports reforms aimed at improving domestic revenue mobilisation.

The reforms would make tax administration and policy-making more transparent and efficient aligning with international best practices.

Further, it will support reforms to move to a more strategic, systematic, and transparent approach to managing tax exemptions that will require Parliamentary approval for all exemptions, which would be a significant step away from current ad hoc practices.

The financing will also strengthen corporate governance and risk management frameworks by aligning financial reporting with international standards and increasing transparency.

It will help improve financial sector stability by providing the Bangladesh Bank with a complete range of resolution powers to address vulnerabilities in the banking sector.

A third strand of reforms will improve transparency, accountability and efficiency across the public sector.

By 2027, all government project appraisal documents will be required to be made public. Public procurement system will be required to use electronic government procurement (e-GP), disclose of beneficiary ownership, and remove price caps to foster competition and reduce corruption risks.

To improve financial accountability and transparency in the public sector, the Office of the Comptroller and Auditor General’s auditing capacity will be strengthened.

The independence of the Bangladesh Bureau of Statistics will improve data transparency, leading to better service delivery for citizens.

Finally, cash transfer programs for the poor and vulnerable will be made more effective with the operationalisation of a dynamic social registry.

World Bank Interim Country Director for Bangladesh Gayle Martin said that Improvements in how public finances are managed are important for Bangladesh’s economy to grow sustainably.

“The government is taking ambitious steps to make its institutions more open and answerable, so they can serve the people better,” he said.

He mentioned that this financing will support the government's efforts to strengthen its policies and regulatory framework to build a stronger, more inclusive economy that benefits everyone.

“Through another project that was approved last week, we are supporting the government to implement these reforms.”

World Bank Senior Economist and Task Team Leader for the project Dhruv Sharma said that This Financing is closely aligned with the citizen’s desire for transparency and accountability and will support Bangladesh’s ambitious reform agenda for improving domestic revenue mobilization, financial sector stability and governance, and public sector performance.

“Improving data systems and moving towards improved selection of beneficiaries will ensure that government resources effectively reach poor and vulnerable households, especially during economic shocks and natural disasters.”​

 

[Saif]

From Promise to Prosperity

Foreign direct investment (FDI) has been a cornerstone of economic transformation in many developing countries. It brings not only capital but also global market access, cutting-edge technology, managerial know-how, and integration into international production networks. Countries like Vietnam and

thefinancialexpress.com.bd

From Promise to Prosperity
Getting FDI Right in Bangladesh

M G Quibria
Published :
Jun 24, 2025 00:58
Updated :
Jun 24, 2025 00:59

Foreign direct investment (FDI) has been a cornerstone of economic transformation in many developing countries. It brings not only capital but also global market access, cutting-edge technology, managerial know-how, and integration into international production networks. Countries like Vietnam and Mexico have harnessed FDI to build dynamic industrial bases, diversify exports, and sustain robust growth trajectories. An important feature of the FDI inflow into these two countries has been the type of FDI - the majority being platform FDI, an investment mainly geared to export to third countries. By contrast, Bangladesh's experience has been far more modest. Despite its notable gains, until recent reversals, the country has remained a peripheral player in the global FDI landscape in poverty reduction and macroeconomic stability. This failure is neither accidental nor inevitable. It reflects deep-rooted structural weaknesses, policy inertia, and strategic misalignments.

The numbers alone are stark. Bangladesh has attracted less than $3 billion in annual FDI inflows in recent years, amounting to under 1 per cent of gross domestic product (GDP). This places it well behind its successful peers. Vietnam draws around $20 billion annually, while Mexico receives between $35-40 billion, despite its proximity to the turbulent United States (US) political and trade environment. More troubling than the quantity is the quality of investment. In Bangladesh, although there has been a change in direction, FDI was traditionally channelled into non-tradable sectors such as telecommunications and energy. These sectors, while important, do not catalyze export growth, industrial upgrading, or widespread employment.

In contrast, Vietnam and Mexico have consistently drawn FDI into globally competitive, export-oriented sectors, including electronics, automotive, textiles, and, increasingly, high-tech industries such as semiconductors and aerospace. Some other Asian countries that successfully attract FDI are more import-substituting than export-promoting. India's Production-Linked Incentives (PLI) policy has positively incentivised FDI toward exports, yet its success has been, at best, limited.

Why has Bangladesh lagged so far behind? The answer lies in a combination of institutional, infrastructural, and human capital deficiencies, compounded by policy inconsistency and weak governance. While some reforms have been introduced recently, they remain piecemeal and often poorly implemented.

A key obstacle is the country's weak institutional framework for investment promotion. Although the Bangladesh Investment Development Authority (BIDA) was created to serve as a one-stop shop for investors, it remains burdened by slow, opaque, and often arbitrary administrative processes. Investors report long delays in project approvals, inconsistent regulatory enforcement, and difficulties in obtaining land and utility connections. The country's poor rankings in the now-discontinued World Bank Doing Business Index-particularly in contract enforcement, cross-border trade, and dealing with construction permits-underscore these challenges.

In contrast, Vietnam has taken a proactive, coordinated approach to investment facilitation. Special economic zones (SEZs) there are not mere geographic enclaves but fully integrated industrial ecosystems offering streamlined services, legal clarity, and infrastructure linkages. Mexico, too, provides a more mature investment regime bolstered by a relatively independent judiciary, clear rules for dispute resolution, and a deep network of bilateral investment treaties. These frameworks reduce uncertainty and reassure investors. Despite recent policy documents such as the FDI Heat map 2025 identifying priority sectors, Bangladesh has yet to develop a comprehensive, investor-friendly institutional architecture with teeth.

Infrastructure gaps pose another critical constraint. Bangladesh's logistics network remains underdeveloped, with congested ports, limited container-handling capacity, and unreliable power supplies. Transport connectivity between industrial hubs and ports is weak, raising costs and reducing competitiveness. Although the opening of the Padma Bridge has improved regional connectivity, broader infrastructure bottlenecks persist-hampering not only trade but also the movement of labour and capital.

Vietnam's ports are now among the most efficient in Southeast Asia, and the country's emphasis on physical infrastructure has dramatically reduced logistics costs. Due to its proximity to the United States, Mexico benefits from extensive highway and rail corridors that connect seamlessly with North American value chains. Bangladesh, lacking such locational advantages, must compensate through aggressive investment in transport, logistics, and energy infrastructure. Initiatives such as the Economic Zones (Amendment) Bill 2023 and new G2G industrial parks are promising -but their sluggish execution undermines their potential impact.

Compounding these physical bottlenecks are protectionist trade policies that discourage export-oriented investment. Bangladesh maintains high average tariff rates and a dense web of para-tariffs. While these may protect domestic firms in the short term, they deter foreign firms seeking to use Bangladesh as a base for regional or global exports. Moreover, the country has remained relatively isolated from regional and bilateral trade agreements. It is not a member of any major economic bloc comparable to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) or the Regional Comprehensive Economic Partnership (RCEP), which have been instrumental in driving FDI into Vietnam.

Mexico's membership in the USMCA (formerly NAFTA) has provided it with privileged access to the vast U.S. market, a magnet for global investors. For Bangladesh, the challenge is not just negotiating new trade agreements but undertaking the internal reforms-such as customs simplification, reduction of non-tariff barriers, and harmonisation of standards-required to benefit from them.

The country's labour market is another area of concern. Bangladesh often touts its large labour force as an asset, which hides a serious skills deficit. The education system, particularly technical and vocational training, is poorly aligned with labour market demands. Institutions remain underfunded, teachers under-qualified, and curricula outdated. As a result, even in labour-intensive sectors like garments, productivity remains low compared to peers. Foreign investors are often compelled to provide extensive on-the-job training or import higher-end skilled workers -both costly propositions that circumscribe Bangladesh's competitiveness.

Vietnam, by contrast, has made targeted investments in technical education, working closely with the private sector to design training programs. Mexico, too, has fostered a skilled workforce in niche areas such as automotive engineering and aerospace technology. For Bangladesh, the path forward requires a national skills strategy that integrates education, industry, and investment planning. Piecemeal projects will not suffice; a coordinated, adequately resourced push is needed.

Governance also looms large as a deterrent. Investors consistently cite concerns over regulatory unpredictability, legal opacity, and corruption. While Bangladesh has achieved some measure of macroeconomic stability-evident in moderate inflation and a growing GDP-it has not translated into a stable business environment. Political volatility, weak contract enforcement, and perceptions of favouritism erode investor confidence.

Efforts to liberalise the financial sector, such as the Offshore Banking Act of 2024, are steps in the right direction. However, without improvements in regulatory quality, judicial independence, and anti-corruption enforcement, these reforms are unlikely to alter perceptions in a meaningful way. In contrast, Vietnam offers a relatively predictable investment climate, and even Mexico, despite facing security challenges, provides legal protections under a network of international agreements that mitigate investor risks.

Another underappreciated factor is the lack of export diversification. Over 80 per cent of Bangladesh's exports come from ready-made garments (RMG), a sector that, while successful, is increasingly vulnerable to automation, environmental scrutiny, and shifting global demand. Vietnam and Mexico have diversified aggressively, attracting investment in high-tech sectors. Vietnam has become a manufacturing base for global electronics giants such as Samsung and Intel. Mexico, meanwhile, has emerged as a competitive hub for aerospace and automobile production. These countries offer not just low costs but ecosystems of suppliers, skilled labour, and logistics that reinforce FDI flows.

Bangladesh's efforts to emulate this model-such as the One-Stop Banking Service (2023) launched by BIDA and BRAC Bank-are helpful but far too limited in scope. It has been argued that a broader industrial policy framework is needed, one that actively supports the emergence of new export sectors through targeted infrastructure, tax incentives, and R&D support.

Geographic disadvantage is another oft-cited explanation for Bangladesh's FDI underperformance. The country is remote from major global markets and surrounded by challenging neighbours with whom it shares complicated political and logistical relationships. While there is an element of truth to this explanation, this truth is not immutable to time and effort. Vietnam, too, once suffered from isolation and conflict but overcame it through strategic investments in connectivity, openness to trade, and deep institutional reform. Bangladesh can follow a similar path-if it has the will.

Crucial to this transformation is a decisive commitment to education. Despite broad acknowledgment of its importance, the education sector remains chronically underfunded and politically manipulated. Public schools suffer from poor facilities, low teacher morale, and weak oversight. University curricula are often out of sync with market needs. Even more troubling is the politicisation of student life: student groups, historically agents of progressive change, have become tools of political patronage, undermining the development of a forward-looking, employable youth population.

This long-standing neglect has created a large pool of low-skilled labour-unsuited for a knowledge-intensive, globally competitive economy. Unless Bangladesh radically improves the quality and relevance of its education system, it will fail to generate the human capital necessary to attract high-value FDI.

Bangladesh's disappointing FDI record is not a function of bad luck or immutable geography. It is the product of avoidable policy failures. The experiences of Vietnam and Mexico demonstrate that with strategic vision, institutional reform, trade openness, and investments in human capital, countries can transcend initial disadvantages and become investment hubs. Bangladesh must shed its complacency and embrace a reform agenda that is bold, sustained, and coherent.

The window of opportunity is narrowing. As global value chains reorganise in response to geopolitical shifts and technological disruption, investors are scouting for reliable, efficient, and responsive partners. Bangladesh has the potential to be one of them. But potential means little without execution. Reform-not resignation-is the only viable path forward.



Dr M G Quibria is a development economist and former Senior Advisor at the Asian Development Bank Institute. His academic career spans institutions across three continents.​

 

[Saif]

IMF board okays $1.3b payout to BD

Bangladesh is receiving US$1.3 billion from the International Monetary Fund in its lending programme's latest two tranches trapped in unmet reform-related conditions as the IMF board finally nods the payout, sources said. Finance Division officials in Dhaka said the executive board of the Wash

thefinancialexpress.com.bd

TAGS BINDING LENDING PACKAGE BENT
IMF board okays $1.3b payout to BD

Syful Islam
Published :
Jun 24, 2025 00:49
Updated :
Jun 24, 2025 00:49

Bangladesh is receiving US$1.3 billion from the International Monetary Fund in its lending programme's latest two tranches trapped in unmet reform-related conditions as the IMF board finally nods the payout, sources said.

Finance Division officials in Dhaka said the executive board of the Washington-based Fund cleared the credit release as the deadlock over the two instalments of the $4.7 billion worth of lending package was over.

The approval follows a staff-level agreement reached in mid-May for the fourth review of the credit programme. The IMF staff and the Bangladesh authorities had reached staff-level agreement for the third review in December last year.

However, citing Bangladesh's repeated failure in fulfilling prerequisites, the IMF board held back approval for the loan's fifth and fourth tranches expected to be available in February and May respectively.

Two unmet tags, which stood as big barriers to approval for both the loan tranches, were enhancing revenue mobilisation and ensuring exchange-rate flexibility.

The dispute over the release of the loan tranches deepened after the country's revenue board had declined to set a larger revenue target for the forthcoming fiscal year 2025-26. Also, the central bank showed unwillingness to make exchange rate flexible as suggested by the IMF.

In the first week of April, an IMF team, led by Chris Papageorgiou, the agency's Mission Chief for Bangladesh, visited Dhaka for the fourth review of the credit programme.

However, after ten days of reviewing the progresses made under loan programme, the IMF team on April 17 announced that the staff-level agreement with Bangladesh authority had been delayed due to the existence of some differences over the exchange- rate flexibility and higher revenue-generation target.

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


Later, the two sides discussed the issue in Washington on the sidelines of the Spring Meetings. However, a consensus eluded the parties. Back to Dhaka, a Bangladeshi team, led by central bank governor Dr Ahsan H Mansur, continued discussion virtually with IMF officials in Washington.

After series of parleys the central bank governor in mid-May agreed to go for market-driven exchange rate to remove roadblock to IMF loan payout worth $1.3 billion.

Thereafter, the IMF on May 14 announced reaching staff-level agreement with the Bangladeshi authorities and said the "agreement is subject to approval by the Executive Board of the International Monetary Fund, contingent on the completion of prior actions related to tax-revenue mobilisation and full implementation of exchange-rate reforms".

The Fund granted the $4.7 billion loan to Bangladesh in January 2023 to help support the country's sluggish economy and slim foreign-exchange reserves. The loan was scheduled to be given in seven instalments by May 2026.


Until now, the country has received $2.295 billion under this loan programme.​

 

[Saif]

$400m more comes from AIIB

Assistance worth US$400 million is forthcoming from the Asian Infrastructure Investment Bank (AIIB) in a latest flow of foreign aid for bankrolling Bangladesh's budgetary programmes--this one for climate-centric reforms. This amount comes under a credit deal signed Monday in Dhaka between Econom

thefinancialexpress.com.bd

Budget support
$400m more comes from AIIB
Reforms regarding climate resilience in focus

FE REPORT
Published :
Jun 24, 2025 00:55
Updated :
Jun 24, 2025 00:55

Assistance worth US$400 million is forthcoming from the Asian Infrastructure Investment Bank (AIIB) in a latest flow of foreign aid for bankrolling Bangladesh's budgetary programmes--this one for climate-centric reforms.

This amount comes under a credit deal signed Monday in Dhaka between Economic Relations Division (ERD) under the Ministry of Finance (MoF) and the China-based AIIB.

Additional Secretary of the ERD Mirana Mahrukh and the AIIB Acting Chief Adviser Rajat Misra inked the deal. Under terms of funding laid down in the 'Climate Resilient Inclusive Development Programme-Subprogramme-2', Bangladesh has to conduct different climate-related reforms, officials said.

The AIIB's $400-million budget support would be the co-financing with the Asian Development Bank (ADB) where the Manila-based lender provided a $400 million to help Bangladesh enhance its resilience against climate impacts, cut emissions in climate-critical sectors, and promote inclusive development.

With AIIB and ADB's financial supports, the Ministry of Finance (MoF) would establish "environment for climate priorities across the ministries, facilitate climate-adaptation priorities, and accelerate climate-change-mitigation actions".

Meanwhile, the World Bank on June 21 confirmed US$500 million worth of budget support and the Asian Development Bank another $500 million on June 20.

The $500-million budget support from the ADB would be utilised to stabilise and reform the banking sector by strengthening regulatory supervision, corporate governance, asset quality, and stability.

The AIIB will charge SOFR-plus a variable spread and a 0.25-percent front-end fee for the $400 million loan confirmed Monday, ERD officials said.

The maturity of the loan will be 35 years with a grace period of five years.

Under the 'Climate Resilient Inclusive Development Program- Subprogramme-1' last year, the AIIB also provided another $400 million to Bangladesh in budget support for implementing some climate-related reforms.​

 

[Saif]

Foreign loans should be phased out: Anisuzzaman Chowdhury

Anisuzzaman Chowdhury, special assistant (economic affairs) to Chief Adviser, said that foreigner enjoy influence in the country's policymaking due to dependence on foreign loans.

en.prothomalo.com

Foreign loans should be phased out: Anisuzzaman Chowdhury

Staff Correspondent Dhaka
Published: 23 Jun 2025, 18: 46

Anisuzzaman Chowdhury, special assistant (economic affairs) to Chief Adviser, speaks at a budget review meeting in Dhaka on 23 June 2025. Prothom Alo

Anisuzzaman Chowdhury, special assistant (economic affairs) to the Chief Adviser, said that foreigners enjoy influence in the country's policymaking due to dependence on foreign loans.

The country must comply with various conditions while accepting foreign loan in development sectors and that hampers both revenue collection and foreign investment, that is why Bangladesh must pashed out foreign loans, he said.


Anisuzzaman Chowdhury made these remarks while speaking as the chief guest at a budget review meeting organised by Metropolitan Chamber of Commerce and Industry (MCCI) and Policy Research Institute (PRI) at Police Plaza in the capital on Monday.

The special assistant said, “We have no plan regarding when our tax policy will be formulated or implemented. Whereas I have seen in Australia that a political party loses an election merely for proposing a rise in VAT.”

He highlighted the lack of national unity, apathy towards implementing political agenda, and tendency of politicisation in healthcare and education sectors.

“We have no national unity. We think about our narrow political interests. Even doctors and teachers here are divided into separate associations of BNP, Awami League, and other parties. We have no national vision. If we catch a mild cold, we rush to Singapore. So, how will the healthcare sector of the country make progress?,” he said.

Anisuzzaman further said that the country continues to operate on the politics of the 21-point, 11-point, and 6-point programmes, but there is no roadmap for implementing them.

MCCI president Kamran T Rahman and PRI chairman Zaidi Sattar, among others, spoke at the event.​

 

[Saif]

Bangladesh’s reserves stand at $21.75b

The foreign exchange reserves held by Bangladesh Bank have increased to $21.75 billion, according to the BPM6 method of calculation used by the International Monetary Fund (IMF). On Apr 30 this year, reserves had exceeded $22 billion after 19 months. Before that, reserves had previously reached

thefinancialexpress.com.bd

Bangladesh’s reserves stand at $21.75b

Published :
Jun 24, 2025 17:45
Updated :
Jun 24, 2025 17:45

The foreign exchange reserves held by Bangladesh Bank have increased to $21.75 billion, according to the BPM6 method of calculation used by the International Monetary Fund (IMF).

On Apr 30 this year, reserves had exceeded $22 billion after 19 months. Before that, reserves had previously reached $22 billion in September 2023, as per a bdnews24.com report.

However, due to the payment of dues at the Asian Clearing Union (ACU), the number dipped below $22 billion again on May 6, within six days. The country's reserves have now been below $22 billion for 48 days.

Bangladesh Bank Executive Director and spokesman Arief Hossain Khan spoke to the media on reserves on Monday night. The data said that the country’s gross reserves stood at $26.82 billion.

During the coronavirus pandemic in 2020, the country’s foreign reserves had risen to $48 billion, on the verge of the $50 billion milestone.

However, after the pandemic ended, fuel and food prices shot up in the global market. Then came the war in Ukraine, which drove up import costs. Foreign reserves have been on the decline since 2022.

But remittance flows and exports have been increasing since August 2024. As a result, there is a bit more stability in the dollar market.

Though remittances and exports have increased, reserves are not increasing as much as expected. On this, a senior official of Bangladesh Bank told bdnews24.com that the new governor has not sold dollars from reserves since taking office.

However, during this time, the outstanding dues on the previous letter of credit have been repaid. Therefore, even though remittances and export earnings have increased, reserves have not.

Under the circumstances, the question naturally arises - where have the approximately $9 billion that came in from excess remittances and export earnings in the current fiscal year go?

The answer is that Bangladesh Bank’s balance of payments (BOP) calculations say that the success of the large growth in remittances and export earnings has been offset by a decline in foreign direct investment (FDI), foreign grants and medium and long-term foreign loans.

Compared with the previous fiscal year, FDI was about $370 million less in the first 10 months (July-April) of the current fiscal year 2024-25. At the same time, grants (foreign aid) fell by $1.86 billion.

Medium and long-term foreign loans were also $1.36 billion lower. In total, these three sectors -– all important for any country's economy -– brought in $3.61 billion less.

And in the first 10 months of the current fiscal year, goods worth an additional $2.42 billion were imported. The amount of foreign loan repayments and expenditure in the service sector also increased during this period.

Bangladesh Bank officials say that the dollar crisis that prevailed in the last two to three years has passed. Since the change of course, a record amount of foreign debt, service charges, and outstanding letters of credit (LCs) dues have been paid on time.

Due to this, despite the large growth in remittances and expatriate income, reserves have not increased.

However, it is also true that the reserve level is not putting a strain on the economy. Traders are now able to open LCs for imports according to their needs.

Even after the exchange rate was market-oriented, the price of the dollar has remained stable. These are good signs for the country's economy, say senior officials of Bangladesh Bank.​

 

[Saif]

Reducing impacts of indirect tax on public

In about every instance of the government's attempt at increasing revenue income from businesses, the burden ultimately falls on the common consumers. The general public, the overwhelming majority of whom are people in the low and middle income bracket, are law-abiding citizens and hence not

thefinancialexpress.com.bd

Reducing impacts of indirect tax on public

Published :
Jun 25, 2025 00:57

In about every instance of the government's attempt at increasing revenue income from businesses, the burden ultimately falls on the common consumers. The general public, the overwhelming majority of whom are people in the low and middle income bracket, are law-abiding citizens and hence not willing to fall afoul of the law. But that is hardly the case with some business entities which are prone to evade tax and pass the buck to the general consumers. Some 152 items, majority of which belonging to the category of essential commodities such as rice, wheat, edible oils, etc., according to a report published in this paper on June 23, are going to see a price hike with the budget for FY 2025-26 taking effect from July 1 next.

The general consumer will have to spend extra money because the revenue authority will impose Advance Income Tax (AIT) at 2.0 per cent rate at the import stage of many of those commodities. Notably, the items under consideration are exempted from such kind of taxes in the current budget (for FY2024-25). Essentially, the measure aims to gradually phase out exemptions from the tax regime and enhance tax compliance among all the members of the business community and at the same time boost the government's revenue earning. AIT is expected to bring the usual tax-dodgers under the tax net, because they would like to be reimbursed against AIT paid before. Whether such hope of the revenue department would be finally realised remains to be seen.

The tax authority's target is, as could be gathered, to increase revenue collection by around Tk20 billion. But the sectors' targeted for such exemption phase-out include critical raw materials for the country's garment sector such as cotton and manmade fibres. The essential food items include potato, onion, lentil, chickpea, soybean, maize and so on. Also, fertilisers, crude edible oil, sugar, various medical implements, computers, printers, even aircraft and buses will be affected by the new tax regime. It is worthwhile to note that each of the mentioned items to be brought under the phase-out programme is going to affect common consumers. But how is the exemption phase-out measure by the revenue authority affect the average taxpaying citizens? In the case of essential commodities, for instance, traders who import those essential items would avoid submission of tax returns. In consequence, they won't get the opportunity to be reimbursed by the tax authority against AIT they were supposed to pay at the beginning. But to make up for the loss, the only option before them will be to punish the general consumers by hiking up commodity prices. Price hike of essential commodities means a concomitant rise in inflation rate, though the Bangladesh Bank expects that the inflation will remain within the range of 7.0 to 8.0 per cent. But once the impact of AIT on the previously tax-exempted items start to affect the commodities market by pushing up prices, the projection that the inflation rate would at a point decline to 5.0 per cent by the end 2025 may not materialise.

So, any fall in prices of commodities and energy in the next fiscal may turn out to be a pipe dream. Such pessimism is not entirely attributable to the developments at home. Bangladesh being highly dependent on the external markets for its imports as well as exports, any instability in the international market is going to affect not only the economy, but also life in general here. Any disruptions in the energy supply chain arising, for instance, from the ongoing Middle-Eastern conflicts would spell disaster locally. The government's policies ought to be geared to making life easier for common people by reducing additional tax or any other forms of burden.​

 

[Saif]

undefined | The Financial Express

thefinancialexpress.com.bd

Transitory inflation relief may mask risks of derailing recovery

FE REPORT
Published :
Jun 25, 2025 00:41
Updated :
Jun 25, 2025 00:41

inset-p-1-2Transitory inflation relief may be masking long-term risks that could derail Bangladesh's economic recovery, an official outfit alerts as pressures of prices persist.

High prices of essential food items, particularly rice and fish, have kept food inflation stubbornly high, despite signs of macroeconomic stabilisation and government efforts to tame prices, says the General Economic Division (GED) of the Planning Commission.

In its latest report, the GED reveals that these two staples alone accounted for a staggering 62 per cent of total food inflation in May, highlighting deep-rooted structural weaknesses in agriculture and supply chains.

The June issue of the 'Economic Update and Outlook' shows that headline inflation fell to 9.05 per cent in May -- the lowest since the post-pandemic and Ukraine war-induced inflationary surge.

However, volatility in essential-commodity markets continues to plague consumers, and the GED warns that short-term relief may be masking long-term risks that could derail the broader economic recovery.

The General Economic Division released its publication Tuesday, underscoring continued volatility in the essential-commodity markets.

It points out that the medium varieties of rice alone contributed 20.46 per cent to the food inflation, followed by significant inputs from coarse rice and Hilsa fish. Price drops in potatoes and poultry saved the situation with modicum relief, but were insufficient to counteract the broader upward pressure from staple items.

"Inflationary pressures remain a serious concern," the report notes. The government's dual-track approach, combining supply-side actions with foreign-exchange stabilisation, has helped cool prices slightly, but long-term risks persist.

Despite latest signs of macroeconomic stabilisation, the GED alerts, Bangladesh's economy remains burdened with persistent inflation, weak revenue mobilisation, and external-sector vulnerabilities.

The report also analyses several issues of the national budget worth Tk 7.97 trillion for the next fiscal year (FY 2025-26) approved recently and marks a shift toward fiscal restraint.

The GED says the budget aims to reduce the deficit to 3.62 per cent of GDP but successful implementation of the budget is contingent upon collecting revenue equal to 9.0 per cent of GDP -- an ambitious target in a slow-growing, inflation-hit economy.

The budget sharply reduces bank borrowing targets by 24 per cent compared to the current fiscal year, but weak revenue inflows have already led to increased government dependence on bank financing.

Although bank-deposit growth briefly improved in March due to increased remittances and regained clientele trust, high inflation continues to erode real savings.

The division found strong export-sector performance in May, following a seasonal low in April, but expressed concern over persisting pressure on exchange rate.

Meanwhile, Bangladesh's nominal and real effective exchange rates point to a loss in external competitiveness, driven by structural imbalances and rising import costs, it says.

Foreign-exchange reserves showed signs of recovery, peaking in April, but usable reserves remain under pressure as reflected in BPM6-adjusted figures.

The GED report applauds initiatives such as digital budgeting, tariff cutbacks in preparation for LDC graduation, and expansion of social- protection schemes.

Daily wages for employment-support programmes are set to rise from Tk 400 to Tk 500, and monthly allowances for the disabled and widows will also increase.

But GED stresses that these measures must be backed by reforms in banking, capital market, and governance to deliver real impact.

A noteworthy feature of the FY26 budget is recognising women's unpaid domestic and caregiving work in GDP estimates -- a significant shift in economic accounting.

"While the fiscal framework signals a return to discipline, risks around inflation, exchange-rate volatility, and revenue shortfalls could undermine budget execution," the report concludes.

The government targets 5.5-percent GDP growth and 6.5-percent inflation for the next fiscal year, but GED warns that without urgent reforms, these targets may prove overly optimistic in an increasingly uncertain economic environment.​

 

[Saif]

Reserves to edge up as IMF expands support to $5.5b

Bangladesh’s foreign exchange reserves are projected to rise modestly to $23.6 billion in the next fiscal year from $21.7 billion in the current year, as the International Monetary Fund (IMF) expanded its total support package amid ongoing efforts to stabilise the country’s macroeconomy.

www.thedailystar.net

Reserves to edge up as IMF expands support to $5.5b
The lender backs reform progress despite political uncertainty, trade volatility

Bangladesh's foreign exchange reserves are projected to rise modestly to $23.6 billion in the next fiscal year from $21.7 billion in the current year, as the International Monetary Fund (IMF) expanded its total support package amid ongoing efforts to stabilise the country's macroeconomy.

The reserve uptick comes after the IMF Executive Board approved the completion of the third and fourth reviews of Bangladesh's reform programme. The decision unlocked immediate access to a combined amount of $1.34 billion.

Gross reserves stood at $27.30 billion as of June 24, while reserves measured under the IMF's BPM6 manual were $22.24 billion, according to data published by Bangladesh Bank. The latest numbers underscore the limited room available to manage external shocks.

With foreign reserves still fragile, a narrow fiscal margin, and banking risks rising, the IMF's backing provides both funding and credibility. But, as the IMF made clear, the next phase of Bangladesh's recovery will depend on consistent execution across all fronts -- from exchange rate management and tax reform to governance and green investment.

"Bangladesh's economy continues to navigate multiple macroeconomic challenges," said Nigel Clarke, IMF deputy managing director and acting chair. "Despite a difficult environment, programme performance has remained broadly on track, and the authorities are committed to implementing necessary policy actions and reforms."

The original IMF loan package for Bangladesh, approved in 2023, totalled $4.7 billion. Following the augmentation approved on Monday, the total size of the programme has increased by $800 million to $5.5 billion. Of this, $3.31 billion has been disbursed so far.

The IMF cited "broadly satisfactory" performance despite political instability, rising trade barriers, and financial sector stress in the wake of the 2024 popular uprising that unseated the previous government. "Advancing the reform agenda is critical to restoring economic stability, protecting the vulnerable, and supporting inclusive and environmentally sustainable growth," the IMF said.

Trade figures highlight ongoing volatility. Exports are expected to grow by 5.2 percent in FY2025, recovering from a 17.1 percent decline the previous year. Momentum is projected to accelerate in the next fiscal year, with exports rising 19.8 percent. Imports are also set to increase by 5.8 percent in FY2025 and 11.6 percent the following year, reflecting a gradual pickup in domestic demand and higher energy-related costs.

Economic growth is now projected at 5.4 percent in the next fiscal year, a downward revision from the IMF's earlier 6.5 percent forecast, and broadly in line with the government's own estimate of 5.5 percent. Annual average inflation is expected to fall to 6.2 percent in FY2026, down from 9.9 percent in the current year. In April, the IMF had forecast a lower 5.18 percent inflation rate.

"Near-term policies should prioritise rebuilding external resilience and reducing inflation," Clarke said. "The authorities' recent steps to implement a new exchange rate regime and include revenue-enhancing measures in the FY2026 budget are welcome."

Clarke warned that "efforts to raise tax revenues and rationalise expenditures, including through subsidy reduction, are critical for creating the fiscal space needed to strengthen social, development, and climate initiatives."

"Sustained progress in reducing government subsidies to a fiscally sustainable level, along with enhanced public financial management, is essential to improving spending efficiency and mitigating fiscal risks," he added.

The IMF also flagged continued stress in the financial sector and urged authorities to accelerate banking reform. "Financial sector policy should prioritise safeguarding stability and addressing rising vulnerabilities," Clarke said. "Developing a comprehensive, sequenced strategy to guide reforms is an immediate priority, followed by the swift implementation of the new legal frameworks to enable orderly bank restructuring while protecting small depositors."

On climate finance, the IMF reiterated that reforms must be anchored in institutional efficiency. "Building resilience to natural disasters is essential for achieving high and inclusive growth," Clarke said.

While the IMF granted a waiver for the temporary breach of a performance criterion related to exchange restrictions, citing corrective measures, the IMF made clear that the path ahead will require sustained reform. "Sustained structural reforms are essential for Bangladesh to achieve its goal of attaining upper-middle-income status," Clarke said.​

 

[Bilal9]

Bulging NPLs enough to derail economy

A sound banking sector is the bedrock of a sound economy. The experience of economies across the world attests to this assertion: without a vibrant, healthy, and functioning banking system, no country can dream of sustainable development, let alone achieve rapid economic growth. In Bangladesh, howe

thefinancialexpress.com.bd

Bulging NPLs enough to derail economy

Mir Mostafizur Rahaman
Published :
Jun 17, 2025 00:00
Updated :
Jun 17, 2025 00:00

View attachment 18944

A sound banking sector is the bedrock of a sound economy. The experience of economies across the world attests to this assertion: without a vibrant, healthy, and functioning banking system, no country can dream of sustainable development, let alone achieve rapid economic growth. In Bangladesh, however, the very pillar that is meant to support the economy stands increasingly weakened by a long-standing and dangerous affliction -- classified loans, also known as non-performing loans (NPLs).

Non-performing loans are the Achilles heel of the country's banking sector. This is not a new problem; it has plagued Bangladesh for decades. Yet the gravity of the crisis has intensified alarmingly in recent years, especially since the previous Awami League-led government came to power. That regime, often accused of favouring certain oligarchic business groups, oversaw a disturbing trend of ballooning bank credit disbursed to politically connected individuals and firms. As these borrowers defaulted on repayment, with little or no punitive action, the culture of willful default took root and grew like an unchecked weed.

Despite efforts by the current interim government to restore discipline in the banking sector, the classified loan problem continues to snowball. The new administration had pledged decisive steps to reduce bad loans, and indeed it undertook several measures aimed at stricter classification rules and enforcement. Yet, the latest figures paint a grim picture: the volume of NPLs has risen significantly, threatening not just the stability of the banking sector but also the broader economy.

According to the latest data, classified loans in Bangladesh's banking industry soared by around Tk 750 billion in just three months -- an astronomical jump that pushed total NPLs to a record Tk 4.20 trillion by the end of March 2025. This now accounts for a staggering 24.13 per cent of all loans -- up from just 11.11 per cent a year earlier. In real terms, nearly one out of every four taka lent by the banks has gone bad.

To put this into perspective, the total outstanding loans across the 61 commercial banks in the country now stand at Tk 17.42 trillion. The Tk 4.20 trillion in classified loans includes substandard, doubtful, and bad/loss categories. Alarmingly, a massive 81.38 per cent -- over Tk 3.41 trillion -- of this amount falls under the "bad loan" category, which means there is little hope of recovery unless extraordinary measures are taken.

The implications are serious. When banks are saddled with high NPLs, their ability to disburse fresh loans gets crippled. As more of their funds are locked up in unrecoverable accounts, their liquidity dries up, forcing them to become extremely conservative in extending new credit. This hits private investment hard. Without access to finance, businesses cannot expand, create jobs, or innovate. Economic stagnation follows. And in a country like Bangladesh, where private sector investment is a key growth driver, this can be disastrous.

Furthermore, banks are legally required to maintain provisioning -- setting aside a portion of their earnings to cover the potential losses from bad loans. As NPLs mount, so does the provisioning requirement, which eats into bank profits and leaves them less capitalised. Weak capitalisation can invite further regulatory scrutiny, damage investor confidence, and eventually force banks into a vicious cycle of distress.

The Bangladesh Bank (BB), the country's central bank, acknowledges the worsening trend. In an effort to impose tighter discipline, the central bank revised the overdue loan classification system, reducing the tenure from nine months to six months. Starting from March 31, 2025, the classification period will be further shortened to three months. While these stricter norms are commendable and necessary, they also mean that the banks must brace for more loans turning classified in the coming quarters unless recovery improves dramatically.

There are structural and historical reasons behind this surge in NPLs. For the last 15 years, during the previous government's rule, a number of business accounts were opened by individuals and entities favoured by the regime. Many of these accounts were based on inflated projections, non-existent cash flows, or political protection. With the change in regime following the July-August 2024 mass uprising, many such businesses have gone into hibernation. Sales turnover has plummeted, and cash flow has dried up. These accounts are now turning toxic, and banks are left to deal with the fallout.

Moreover, some banks have been effectively captured by vested interest groups -- a "vicious circle" of politically connected borrowers and complicit bank directors. These forces have laundered public money with impunity, leaving behind a hollowed-out financial system. Now, with the regulatory environment tightening, the hidden rot is surfacing.

The problem is not just managerial but also philosophical. Many banks in Bangladesh have failed to recognise that banking is a high-risk business -- especially in emerging markets. Lending money is not just a routine function; it requires robust Credit Risk Management (CRM) frameworks, capable loan appraisals, and vigilant monitoring. Unfortunately, in several banks, especially state-owned ones, risk management has been perfunctory or even non-existent. Even the presence of Board Risk Management Committees (BRMCs), a requirement in many jurisdictions, has been symbolic at best.

The way forward requires a multi-pronged approach.

First, banks must urgently intensify their cash-recovery efforts. The current recovery rate is abysmally low and reflects a lack of seriousness. Legal processes to recover defaulted loans need to be streamlined, special tribunals empowered, and willful defaulters publicly named and penalised.

Second, the regulatory role of the Bangladesh Bank must be strengthened. No more political interference in bank appointments -- especially at the board and managing director levels -- should be tolerated. Independent directors must be made truly independent, and audit committees must be empowered to flag irregularities.

Third, policymakers must realise that the banking sector does not operate in isolation. Global factors -- such as ongoing conflicts in the Middle East, fluctuating oil prices, and rising U.S. tariffs -- can all affect trade and investment in Bangladesh. Hence, any national strategy to improve bank performance must be built on macroeconomic foresight and external risk assessment.

Fourth, structural reforms are essential. The government must seriously consider merging weaker banks and recapitalising them, but only after ensuring good governance and accountability. No recapitalisation should be done blindly using taxpayer money without resolving the root causes of inefficiency.

Finally, a broader cultural shift is necessary. The idea that bank loans are grants or political rewards must be shattered. Loan default must carry social stigma and legal consequences. At the same time, good borrowers -- especially SMEs and exporters -- must be incentivised and supported.

Bangladesh's banking sector has reached a critical juncture. The rise in classified loans is not just a financial issue; it is a national crisis. If left unaddressed, it could derail the country's economic ambitions. The interim government must use this window of opportunity to enact meaningful reforms -- reforms that may be difficult but are indispensable. The alternative is continued decay and erosion of public trust in the very institutions that are supposed to safeguard the country's financial health.

As the numbers rise, so must our collective resolve. Bangladesh deserves a banking system that fuels growth -- not one that drowns it.​

The govt. should enforce lifetime jail to bank managers for providing loans by taking bribe.

 

[Saif]

The govt. should enforce lifetime jail to bank managers for providing loans by taking bribe.

They should start with Islami and Janata bank managers.

 

[Saif]

Bangladesh’s Forex reserve soars to $22.65b

Bangladesh’s gross foreign exchange reserves, calculated under IMF guidelines, soared to $22.65 billion on Wednesday amid fresh disbursements from the International Monetary Fund, World Bank and strong remittance inflows...

www.newagebd.net

Bangladesh’s Forex reserve soars to $22.65b
Staff Correspondent 25 June, 2025, 17:21

A file photo shows a man counting US dollar notes in the capital Dhaka. | New Age photo New age fashion

Bangladesh’s gross foreign exchange reserves, calculated under IMF guidelines, soared to $22.65 billion on Wednesday amid fresh disbursements from the International Monetary Fund, World Bank and strong remittance inflows.

According to Bangladesh Bank data, reserves increased to the current level from $20.86 billion on June 15.

BB officials said that IMF had approved over $1.3 billion in fourth and fifth instalments of its $4.7 billion loan to Bangladesh. The World Bank also approved $350 million in funds.

These funds are expected to be added to the reserves in phases in the coming days.

Moreover, high remittance inflow and export earnings contributed most to the surge in reserve balance.

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

Besides, export earnings grew by 8.6 per cent in July-May in the 2024-25 financial year, reaching $36.56 billion, up from $33.67 billion in the previous year.

In addition, according to conventional valuation by the Bangladesh Bank, the foreign exchange reserve increased to $27.67 billion on Wednesday from $26.14 billion on June 15.

Additionally, the BB repaid $3.3 billion, or nearly 90 per cent, of foreign overdue payments between August 5, 2024, and December 30, 2024, following a political change.

The BB follows the IMF’s Balance of Payments and International Investment Position Manual, 6th edition (BPM6), for calculating gross and net international reserves.

Meanwhile, the Bangladeshi taka has continued to weaken against the US dollar, reaching Tk 123 per dollar due to a dollar shortage and pressure on banks to settle import payments.

Bangladesh’s trade deficit, although still large, also showed slight improvement in July-April.

The gap narrowed to $18.22 billion, compared with $18.7 billion a year earlier.

However, import payments rose to $54.8 billion in July-April—an increase of 4.6 per cent from $52.37 billion during the same period in the previous year.​

 

[Saif]

Political clarity boosting economic confidence

Bangladesh’s economic confidence has improved following the announcement of a firm election timeline, ending political uncertainty that had been weighing on investor sentiment, according to Finance Adviser Salehuddin Ahmed.

www.thedailystar.net

Political clarity boosting economic confidence
Salehuddin says

Bangladesh's economic confidence has improved following the announcement of a firm election timeline, ending political uncertainty that had been weighing on investor sentiment, according to Finance Adviser Salehuddin Ahmed.

"A clear timeline for elections has removed the uncertainty in politics," Ahmed told reporters after a meeting of the Cabinet Committee on Government Purchase yesterday. "Politics is important for any economy. But nothing has happened in recent months that would disrupt our economic momentum," he said.

Ahmed said global stakeholders, including the World Bank, had raised questions in recent months about whether elections would be held on time. "Even in the World Bank meetings, I was asked when elections would take place," he said.

But with the timeline now set, he said, "There's a general sense of satisfaction."

The finance adviser also pointed to recent approvals of budget support from major development partners, including the International Monetary Fund (IMF) and the World Bank, as evidence that confidence is returning.

"They are broadly satisfied with the reforms we are undertaking," he said.

However, he acknowledged that concerns remain regarding overall governance, the rule of law and investor confidence -- areas the government is working to improve.

Ahmed said the government was taking steps to restore trust among businesses and would soon hold a press briefing to clarify the real state of the economy.

"There are often reports based on incomplete or inaccurate information. We will address that."

The purchase committee yesterday approved procurement deals worth Tk 11,649 crore, including contracts for liquefied natural gas (LNG), petroleum, fertiliser and wheat.

Among the contracts, Vitol Asia won a deal to supply one cargo of liquefied natural gas at $13.52 per MMBtu for the July 28-29 delivery. The purchase proposal was placed by Rupantarita Prakritik Gas Company.

Separately, Dubai-based Cereal Crops Trading will supply 50,000 tonnes of wheat at $275 per tonne to the Directorate General of Food.

Ahmed said Bangladesh had avoided cost spikes in global markets despite tensions in the Middle East and fears of supply disruption in the Strait of Hormuz.

"We acted in time. As a result, in many cases, we saved money," he said, citing energy imports that came in $5-$10 cheaper per unit and led to savings of as much as Tk 80 crore.

A favourable wheat deal also saved the government an additional Tk 20 crore, he said.​

 

[Saif]

Bangladesh's forex reserves exceed $30 billion

Bangladesh's foreign exchange reserves climbed to $30.51 billion on Thursday, reflecting a renewed strength in the country's external sector. But, officials said, under the International Monetary Fund's (IMF) Balance of Payments and International Investment Position Manual (BPM6), the reserve is c

thefinancialexpress.com.bd

Bangladesh's forex reserves exceed $30 billion

Published :
Jun 26, 2025 22:21
Updated :
Jun 26, 2025 22:21

Bangladesh's foreign exchange reserves climbed to $30.51 billion on Thursday, reflecting a renewed strength in the country's external sector.

But, officials said, under the International Monetary Fund's (IMF) Balance of Payments and International Investment Position Manual (BPM6), the reserve is calculated at $25.51 billion.

The usable portion of this, according to the same method, stands at $19.80 billion, said the Bangladesh Bank officials.

The boost in reserves follows a notable rise in remittance inflows through formal channels, according to UNB.

This surge in remittances has brought much-needed relief to the foreign exchange market, easing pressure on the reserve position.

However, the central bank has not sold any dollars from its reserves over the past 10 months. The increase is also supported by the inflow of over $5 billion in loans for budgetary support, debt servicing, and reforms in the banking and revenue sectors.

Besides, the IMF is expected to release a $900 million loan, taking into account the country's repayment capacity.

A further $1.5 billion in loans from the World Bank, Asian Infrastructure Investment Bank (AIIB), Japan and the OPEC Fund is anticipated to be added to the reserves by the end of this month.

The officials expect this inflow to push the total reserves to around $32 billion by month-end.​

 

[Saif]

Bangladesh receives fourth and fifth tranches of IMF loans

The International Monetary Fund (IMF) has disbursed the fourth and fifth tranches of its loan agreement with Bangladesh, amounting $1.33 billion. In addition, Bangladesh’s reserves have crossed $30 billion in a single day due to the remittance flow, alongside the release of committed budget

thefinancialexpress.com.bd

Bangladesh receives fourth and fifth tranches of IMF loans

Published :
Jun 27, 2025 17:43
Updated :
Jun 27, 2025 17:43

The International Monetary Fund (IMF) has disbursed the fourth and fifth tranches of its loan agreement with Bangladesh, amounting $1.33 billion.

In addition, Bangladesh’s reserves have crossed $30 billion in a single day due to the remittance flow, alongside the release of committed budget assistance from the World Bank, the Asian Development Bank, and JICA (Japan International Cooperation Agency).

It is the first time reserves have crossed $30 billion after two years, according to a bdnews24.com reports.

On Jun 24, the IMF approved the fourth and fifth tranches of its loan agreement with Bangladesh, totalling nearly $1.34 billion. It issued a press release on the loan’s approval by its executive board around midnight Bangladesh time on Monday.

Bangladesh received the message of the disbursement on Thursday, central bank spokesman, Executive Director Arif Hossain Khan said. “The IMF has released two installments. But the effect on the reserve account will be seen next Monday,” he said.

Although the money has been added to the foreign exchange reserves, the voucher settlement (the final certificate of account between the two parties after receiving and sending the money) has not been completed due to geographical distance.

The settlement process will not be completed before the weekend as Friday and Saturday are weekly holidays in Bangladesh and Sunday falls on the weekend in the United States.

Bangladesh will be able to publish its foreign reserve information formally on Monday after the settlement process is completed on.

On Jun 25, the gross reserves stood $27.67 billion as per the data released by Bangladesh Bank.

This reserve figure amounted to $22.65 billion according to the BPM-6 method.

According to the primary estimate of central bank officers, Bangladesh’s reserves are now $30.30 billion. According to the BPM6 method, they are at $25.51 billion.

Two years ago, Bangladesh’s reserves dropped to $30.84 billion on June 26, 2023.

Amid the onset of the coronavirus pandemic, the country was on the verge of reaching the $50 billion reserve milestone. Due to a decline in foreign trade and record remittance flows, the reserves reached a maximum of $48 billion on Aug 25, 2021.

However, after the pandemic ebbed, fuel and food prices shot up in the global market, and then the war in Ukraine broke out, which hiked import costs further. This gradually reduced reserves.

Ahsan H Mansur became the governor after the Awami League government was toppled by a mass uprising in August last year. After taking office, the new governor announced that banks would not get support by selling dollars from the reserves. This will increase the reserves, and there was no possibility of them falling further, he said.

Net reserves are calculated according to the IMF accounting method BPM-6. The amount of net or actual reserves is known by deducting short-term liabilities from the gross or total reserves.

The central bank has been publishing information on BPM6 and gross reserves since July 2023, after the IMF approved the loan.

According to Bangladesh Bank, expatriates sent remittances worth $1.98 billion through banking channels in the first 21 days of June.

Bangladesh had to go through many negotiations to secure the fourth and fifth installments of the loan.

After several rounds of negotiations since 2022, Bangladesh signed a $4.7 billion loan agreement with the IMF early in 2023 to address its financial crisis.

The loan disbursement began on Jan 30, 2023. Bangladesh received the first tranche of $476.3 million on Feb 2 of that year. The second tranche of $682 million was received in December of the same year.

The third tranche of $1.15 billion was received in June 2024.

Bangladesh received a total of $2.31 billion from the IMF in those three tranches.

The fourth instalment of the loan was delayed due to several issues, including Bangladesh’s need for more time to make the exchange rate with the dollar fully market-oriented.

During the last IMF visit, it was announced that the international lender had agreed to release the fourth and fifth instalments of the loan together, following discussions with Bangladesh.

After a series of meetings, progress was made in the loan negotiations after the exchange rate became market-oriented. On May 14, Governor Ahsan H Mansur said that the IMF had agreed to release the tranches.

A month and 10 days later, the IMF board meeting approved the disbursement of the tranches. The IMF said that despite the political and economic challenges in Bangladesh, satisfactory progress has been made in implementing the conditions in its loan agreement.

In May, the delegation led by Chris Papageorgiou visited Bangladesh and completed its review of Bangladesh’s progress in hitting the IMF’s conditions, but did not make a decision. They again offered to negotiate.

After a two-week review, the organisation’s representatives said at a press conference at the Bangladesh Bank office on Apr 18 that further discussions on the issue would continue and the two instalments could be made available by the end of June.

IMF mission chief Papageorgiou said that further discussions on the issue would be held at the IMF-World Bank Spring Meeting in Washington, DC.

Later, on the sidelines of the meeting held from Apr 21-26, Financial Advisor Salehuddin Ahmed and Governor Mansur met with IMF officials.

After his return, Salehuddin spoke of negotiating a loan with the organisation on April 29. He claimed that Bangladesh would be able to function even without an IMF loan.

Later, IMF officials held separate virtual meetings with Bangladesh Bank and the Ministry of Finance.

After several rounds of negotiations since 2022, Bangladesh signed a $4.7 billion loan agreement with the IMF early in 2023 to address its financial crisis.

The loan disbursement began on Jan 30, 2023. Bangladesh received the first tranche of $476.3 million on Feb 2 of that year. The second tranche of $682 million was received in December of the same year.

The third tranche of $1.15 billion was received in June 2024.

Bangladesh received a total of $2.31 billion from the IMF in those three tranches.

However, the IMF was not releasing the fourth tranche of the loan due to non-compliance with the conditions set by the organisation on the market-oriented exchange rate, meeting a net foreign exchange reserves target, and fiscal management.​

 

[Saif]

Manufacturers take lead in industry-wide transformation

In a significant step towards environmental sustainability, global apparel and textile manufacturers have launched the Apparel and Textile Transformation Initiative (ATTI), placing manufacturers at the centre of efforts to address climate and environmental challenges across the supply chain. The i

thefinancialexpress.com.bd

NEW GLOBAL APPAREL, TEXTILE SUSTAINABILITY INITIATIVE
Manufacturers take lead in industry-wide transformation
Bangladesh, Turkey first countries to pilot ATTI through national chapters

Monira Munni
Published :
Jun 27, 2025 12:22
Updated :
Jun 27, 2025 12:22

In a significant step towards environmental sustainability, global apparel and textile manufacturers have launched the Apparel and Textile Transformation Initiative (ATTI), placing manufacturers at the centre of efforts to address climate and environmental challenges across the supply chain.

The initiative, spearheaded by the International Apparel Federation (IAF) and the International Textile Manufacturers Federation (ITMF), was unveiled on Thursday during a panel session at London Climate Action Week.

Bangladesh and Turkey are the first countries to pilot ATTI through national chapters, with Bangladesh's leading trade bodies-the BGMEA and BKMEA-formally joining the programme.

The initiative is designed to reduce duplication of environmental requirements across brands and create scalable, country-specific solutions grounded in local needs but aligned with global sustainability goals.

The ATTI aims to provide structured, practical solutions for environmental transformation by ensuring manufacturers-rather than solely global brands-play a leading role.

Miran Ali, Managing Director of Bitopi Group and former BGMEA vice president, will serve as a key coordinator between the IAF, international brands, and Bangladeshi trade associations.

"Every buyer now asks for confusing and difficult-to-achieve renewable energy and sustainability targets. For a factory working with 10 or 12 buyers, it's impractical to meet so many varying environmental strategies," Mr Ali told The Financial Express.

The ATTI, he said, will help consolidate and streamline environmental strategies under one cohesive framework. Mr Ali also highlighted challenges faced by local manufacturers regarding repeated social audits.

"These are often carried out by the same auditors, collecting identical data for different clients, which disrupts production and consumes valuable time and resources," he noted.

Manufacturers, he added, are hoping to avoid such audit fatigue while tackling the sector's environmental impact.

Importantly, the initiative calls on global brands to participate in and co-invest in the industry's shift from carbon-intensive practices to renewable energy-based systems.

"The brands must be part of this transformation," said Mr Ali, "not just setting targets but also sharing responsibility."

In a statement, IAF Secretary General Matthijs Crietee remarked, "The launch of ATTI marks a new era in our efforts to transform the industry. Manufacturers are not just participants-they are leaders in developing the practical solutions our sector urgently needs."

ATTI introduces a structured global governance model with implementation led nationally through ATTI Country Chapters. National apparel associations will take the lead in tailoring transformation plans to their respective local contexts.

The initiative is designed to coordinate globally but act locally, engaging stakeholders at all levels-including manufacturers, brands, governments, financial institutions, and civil society.

Christian Schindler, Director General of the ITMF, stated that ATTI has a wide scope, tackling issues such as emissions, water use and discharge, chemical management, and waste. It aims to complement rather than duplicate existing sustainability efforts by offering a holistic approach based on real country-level needs.

The initiative follows a three-phase model: a comprehensive Needs Assessment to identify gaps and opportunities, a Collaborative Solutions Design involving all relevant stakeholders, and a Structured Implementation stage which will support targeted investments, policy development, clean technology deployment, and technical assistance.

Pilot ATTI chapters are already underway in Bangladesh and Turkey. In Turkey, a national assessment has progressed, and a meeting was held last week in Istanbul, bringing together manufacturers, brands, and government actors.

The group reviewed initial findings and prioritised joint actions, such as upgrading technology, improving access to finance, and engaging regulators.

By uniting diverse stakeholders under one coherent and practical framework, the ATTI is expected to pave the way for transformative change in one of the world's most carbon-intensive industries-starting with Bangladesh and Turkey, two key players in global apparel manufacturing.​

 

[Saif]

Unlocking working capital solution

Bangladesh is entering a new phase of financial innovation. As global investment into the country increases, the need for flexible, rapid, and non-traditional financing options becomes more pronounced. One such mechanism, Standby Letter of Credit (SBLC) monetisation, holds significant promise not o

thefinancialexpress.com.bd

Unlocking working capital solution

Md Saidul Islam
Published :
Jun 27, 2025 22:13
Updated :
Jun 27, 2025 22:13

Bangladesh is entering a new phase of financial innovation. As global investment into the country increases, the need for flexible, rapid, and non-traditional financing options becomes more pronounced. One such mechanism, Standby Letter of Credit (SBLC) monetisation, holds significant promise not only for raising working capital but also for laying the groundwork for a vibrant secondary foreign currency (FC) financial market.

A STRATEGIC FINANCIAL TOOL: A Standby Letter of Credit (SBLC) is a bank-issued guarantee, typically used to back trade or financial obligations. When monetised by a third-party financier or bank, the instrument becomes cash or liquid asset. The process allows companies to secure funds based on the creditworthiness of the SBLC issuer, usually a foreign parent company, without diluting equity or undergoing prolonged loan approval processes.

In a typical model, the foreign parent company of a Bangladeshi entity arranges for an SBLC through an internationally recognised bank. This SBLC is then advised to the local beneficiary, often via the Offshore Banking Unit (OBU). Financial institutions or forfeiting houses discount the SBLC and release a significant portion of its value-up to 90 per cent depending on the credit rating of the issuing bank. The monetised funds can be used for working capital, imports, or project execution.

UNTAPPED MARKET POTENTIAL: Bangladesh currently hosts over 500 foreign-owned or joint venture enterprises, many of which are situated in Special Economic Zones, Export Processing Zones, or Hi-Tech Parks. These firms collectively contribute to a trade volume exceeding US$ 10 billion annually.

Conservatively estimating that 25 per cent of this volume could be supported through SBLC-backed financing, the current market size stands at approximately US$ 2.5 to 3 billion. With increasing foreign investment, especially in electronics, renewable energy, and infrastructure, this market could easily grow to US$ 5-6 billion within the next three to five years.

CATALYSING SECONDARY MARKET IN BANGLADESH: SBLCs, particularly those that are transferable, can be used as instruments within a broader financial ecosystem-the secondary market. Such markets exist globally in the form of forfeiting and collateral transfer arrangements, where financial instruments are traded, discounted, or used to raise liquidity.

Bangladesh, with the right regulatory support and institutional infrastructure, can develop a similar ecosystem. Transferable SBLCs can be bought, sold, or used to support further lines of credit. This will not only deepen the country's capital markets but also offer an alternative to sovereign borrowing and domestic bank loans.

BENEFITS AND STRATEGIC VALUE: Monetisation of SBLC offers a host of advantages. It enables firms to retain full ownership while gaining access to liquidity, offering a non-dilutive form of financing. The process is typically faster and simpler than traditional loan arrangements, making it especially attractive for companies with urgent capital needs. Moreover, external borrowing through SBLCs often bypasses the need for prior approval from the central bank, easing regulatory constraints. Most significantly, this mechanism contributes to the development of a formal, instrument-based foreign currency debt market in Bangladesh.

CHALLENGES AND MITIGATION: As with any financial innovation, risks must be managed. Ensuring the authenticity of the SBLC instrument is paramount, necessitating robust due diligence and validation protocols. Exposure to foreign exchange volatility requires the adoption of hedging strategies to manage FX risks effectively. Additionally, a sound legal framework must be in place to govern contracts and facilitate dispute resolution in a standardized and enforceable manner.

SBLC monetisation represents a timely opportunity for Bangladesh to modernise its financial system and unlock new channels of liquidity. It empowers foreign investors, strengthens offshore banking operations, and paves the way for a dynamic secondary financial market.

If supported by proactive policy measures and guided by a risk-sensitive regulatory framework, SBLC-based financing could add US$ 3-5 billion in liquidity annually. This would not only reduce pressure on the domestic banking system but also solidify Bangladesh's position as a rising financial hub in South Asia.

Md. Saidul Islam CDCS is FVP and Head of OBU, Gulshan Branch, Premier Bank PLC.​

 

[Saif]

Forex reserves cross $25bn after two and a half years

On Thursday, forex reserves stood at $25.51 billion as per the IMF’s calculation method

www.thedailystar.net

Forex reserves cross $25bn after two and a half years

Bangladesh's foreign exchange reserves crossed $25 billion after two and a half years, thanks to an increased inflow of remittances and the release of funds by the International Monetary Fund (IMF), World Bank (WB), and other lending agencies.

On Thursday, forex reserves stood at $25.51 billion as per the IMF's calculation method, up from $21.38 billion a week earlier, according to the central bank's data.

As a result, forex reserves rose by $4.13 billion in just a week.

The current level of reserves is the highest since the end of December 2022. At that time, the country had $26.02 billion in forex reserves. Since then, it has been on a downturn, which caused massive depreciation of the taka, increased import costs, and contributed to inflation.

On Thursday, gross forex reserves as per the central bank's calculation rose to $30.51 billion, up from $26.55 billion a week ago.

A senior BB official said that the forex reserves were bolstered because of the release of the third and fourth instalments of $1.34 billion by the IMF.

The BB official said that, in addition, $500 million from the WB and $900 million from the Asian Development Bank have also been added to the reserves, raising the country's capacity to pay import bills for more than four and a half months.

Besides, remittance inflow has been growing since the political changeover in August last year, which helped to tackle the sharp fall in the country's reserves.​

 

[Saif]

Economic cost of uncertainty

The International Monetary Fund's (IMF) approval of a US$1.3 billion disbursement of the third and fourth tranches of Bangladesh's $4.7 billion loan programme may help improve donors' sentiment and more foreign funds may be released in the coming months. But given the lingering state of political u

thefinancialexpress.com.bd

Economic cost of uncertainty

Atiqul Kabir Tuhin
Published :
Jun 28, 2025 21:14
Updated :
Jun 28, 2025 21:18

The International Monetary Fund's (IMF) approval of a US$1.3 billion disbursement of the third and fourth tranches of Bangladesh's $4.7 billion loan programme may help improve donors' sentiment and more foreign funds may be released in the coming months. But given the lingering state of political uncertainty there is little reason to be sanguine about a swift economic recovery.

The IMF's assessment of Bangladesh's economy also reinforces this cautionary outlook. While granting the disbursement of additional loan amount for Bangladesh, the global lender highlighted four major risks facing Bangladesh's economy: persistent political instability, continued tight monetary and fiscal policies, rising global trade barriers, and growing stress in the banking sector. In light of these challenges, it revised its economic growth forecast for Bangladesh from 6.5 per cent to 5.4 per cent in the next fiscal.

This subdued projection aligns with warnings from economists, who voiced concern at a recent post-budget dialogue hosted by the Centre for Policy Dialogue (CPD). They pointed to a growing sense of uncertainty that is stifling investment and slowing down economic momentum. GDP growth fell to just 3.97 per cent in the current fiscal year, which is the lowest in 34 years, apart from the pandemic period. Moreover, import of capital machineries has also dropped significantly, while private-sector credit growth slumped to a decade low of just 7 per cent in the first quarter of 2025.

In the face of sluggish investment, weak growth, and rising unemployment and poverty, the top priority for economic revival should be the stimulation of local investment. Yet, business leaders have voiced frustration at the CPD seminar that, while the interim government has been actively courting foreign investors, domestic investors continue to face inadequate support, unreliable utility services, and policy uncertainty.

Adding to their burden are surging operational costs, driven largely by rising interest rates. Business leaders have expressed their frustration at being made to bear the brunt of this economic burden, especially when many of them had no role in the financial mismanagement of the previous government that contributed to the current crisis. They have called on the authorities to hold those responsible for past misappropriations accountable, rather than passing the cost on to legitimate enterprises. The alleged approach of not bringing local investors into confidence is clearly proving detrimental to the economy, leaving many in a wait-and-see mood.

The interim government deserves some credit for modest progress in lowering inflation and initiating several reform measures aimed at stabilising the economy and put it on the growth path. Yet, these efforts are being undermined by persistent political uncertainty, which continues to act as a drag on investor confidence and policy implementation. The rapport between economic recovery and political stability should not be undermined.

Meanwhile, even though inflation is projected to ease, its lingering effects continue to weigh heavily on the low and middle income families. A recent World Bank report highlights an alarming rise in poverty. It warns that the national poverty rate will reach 22.9 per cent in 2025 from 18.7 per cent in 2022. Inflation and joblessness are key contributors, as the cost of living continues to outpace income growth. The report estimates that up to 3 million people may fall into extreme poverty, defined as living on less than $2.15 a day (adjusted for purchasing power parity), barely enough to afford basic necessities.

Therefore, the economic cost of political uncertainty is not merely a matter of delayed investment or recovery, it directly affects the everyday lives of ordinary citizens. So the question is what measure is the government taking to clear the cloud of uncertainty?

The Consensus Commission has been holding dialogues with political parties, yet a breakthrough on reform measures remains elusive. When there is deep ideological divides among political parties regarding fundamental state principles, it is an uphill task to reach a consensus. In this context, the government would do well to focus on facilitating agreement among the parties on a minimum set of reforms necessary to ensure a peaceful and inclusive election and leave broader reform measures to be decided by the public through democratic processes.​