[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

Forex reserves dip below $30b after ACU payment

The country's gross foreign- exchange (forex) reserves have fallen below the $30-billion mark following the payment of $2.02 billion in import bills through the Asian Clearing Union (ACU), according to Bangladesh Bank (BB). After this significant settlement, Bangladesh's gross forex reserves stood

thefinancialexpress.com.bd

Forex reserves dip below $30b after ACU payment

FE REPORT
Published :
Jul 09, 2025 00:37
Updated :
Jul 09, 2025 00:37

The country's gross foreign- exchange (forex) reserves have fallen below the $30-billion mark following the payment of $2.02 billion in import bills through the Asian Clearing Union (ACU), according to Bangladesh Bank (BB).

After this significant settlement, Bangladesh's gross forex reserves stood at $29.53 billion based on BB's calculation and $24.45 billion as per the International Monetary Fund (IMF) methodology, as of 7 July 2025.

The current members of the ACU include Bangladesh, Bhutan, India, Iran, Myanmar, Nepal, Pakistan, Sri Lanka, and the Maldives. However, Sri Lanka withdrew from the union in October 2022 due to its own reserve crisis.

Under the ACU mechanism, member countries settle their import-export payment obligations every two months.​

 

[Saif]

Record remittance inflow boosts forex reserves

Within just eleven months of the interim government, Bangladesh's foreign currency reserves have gone up from less than US$20 billion in 2024 to over $31 billion by June, 2025, indicating that the country is now going well through an economic recovery phase.

en.prothomalo.com

Record remittance inflow boosts forex reserves
BSS Dhaka
Published: 08 Jul 2025, 22: 40

Within just eleven months of the interim government, Bangladesh's foreign currency reserves have gone up from less than US$20 billion in 2024 to over $31 billion by June, 2025, indicating that the country is now going well through an economic recovery phase.

During this period, the record inflow of remittances into the country's national reserves is substantially contributing to the stability of institutions, easing of the liquidity crisis, and to some other activities.

Economists and experts observed that the record inflow of remittances has been an important bellwether of Bangladesh's economic recovery.

According to the Bangladesh Bank (BB) latest data, the country's gross reserves have risen to $31.72 billion by 2 July 2025.

However, as per the International Monetary Fund (IMF) methodology under the Balance of Payments and International Investment Position Manual (BPM6), Bangladesh's net reserves currently stand at $26.67 billion.

The surge came after a significant increase in remittance inflows, which reached $30.33 billion in the outgoing fiscal year 2024-25 (FY25), marking the highest amount ever received in a single fiscal year in the country's history.

This figure reflects a 26.80 percent increase compared to the $23.91 billion received in the previous fiscal year (FY24).

This surpasses the earlier record of $24.77 billion received in FY 2020-21 during the Covid-19 pandemic, when remittances spiked due to restrictions on informal hundi channels and the introduction of incentive bonds.

A record $3.29 billion in remittances came through the banking channel in March 2025, the highest in a single month in the country's history.

In continuation of this, more than $2 billion remittances have arrived in the country each month of the last fiscal year (FY25).

Talking to BSS, a senior official of the central bank said that the reserves are rising due to the declining trend in money laundering, with a good flow of expatriate income and high growth in exports.

"Almost eleven months ago, the Interim Government came to power, promising to bring changes across the board. A number of policy measures have been taken to reform the national economy, organizations, administration, and thus establishing a strong system of fostering public spirit," he said.

He added the dollar exchange rate has remained stable at around Tk 122 for a long time which is also a positive aspect.

"The main reason for the decline in the dollar price is the increase in supply. The supply of dollars is now at its best over the last two years," he noted.

The Bangladesh Bank official said several factors contributed to the sudden surge of remittances in Bangladesh.

"While the government took a range of initiatives to tackle price manipulation under the capital market, defying the norm, surging exports reaching a staggering amount of $48 billion which has also contributed to this rise," he mentioned.

He said the non-residents or the Bangladeshi expatriates also felt motivated to send remittances legally through the banking channel.

Renowned economist Dr Zahid Hussain said the surge in remittances has played a crucial role in replenishing the reserves, providing much-needed relief to the economy.

"Due to the dollar crisis, Bangladesh economy faced a lot of problems. It was difficult to open letter of credit (LC) for banks. Now everything is gradually becoming normal," he added.

After taking office, Dr Zahid, also the former lead economist of the World Bank Dhaka office, mentioned that the interim government started to restore regulations in the banking sector, supported the distressed institutions from falling further and took initiatives to bring back
the laundered money from abroad.

The government has advanced a lot in freeing the banking sector from the clutch of a business conglomerate, he said.

"We're going towards a more or less stable condition, but I won't say the crisis is over," he added.

Deputy Managing Director (DMD) of the Premier Bank PLC Abdul Quaium Chowdhury said since August, 2024, remittances have consistently increased, providing the interim government a respite amid the rapid depletion of foreign exchange reserves.

This has evolved as a critical economic relief for a nation that is currently suffering from macroeconomic strains, he added.​

 

[Saif]

Bangladesh's growth depends on women's economic empowerment

There are three major aspects of women’s empowerment—social, political and economic.

www.thedailystar.net

Bangladesh's growth depends on women's economic empowerment

FILE ILLUSTRATION: ANWAR SOHEL

There are three major aspects of women's empowerment—social, political and economic—and all three are equally important. It is widely recognised that economically empowering women can help achieve developmental goals such as economic growth, increased productivity and the reduction of household poverty. To achieve economic empowerment, women must be given decision-making power and control over financial resources in the form of loans and grants, as well as other factors of production such as land, training, technological support, employment opportunities and market access.

It has been widely demonstrated that women's economic empowerment contributes to GDP growth and a more equitable society. Women's contributions to family income benefit children's health and education, thereby helping to build human capital and facilitate movement out of poverty. In Bangladesh, although significant progress has been made, women still lag behind in most economic indicators such as business skills, digital literacy, employment, earnings, and access to productive assets (land, capital and machinery). In addition, social barriers such as the high rate of early marriage and early pregnancy discourage many young women from seeking training and employment or competing with their male counterparts in business ventures.

According to the Labour Force Survey (LFS) 2022, only 42.5 percent of working-age women in Bangladesh participate in the labour force, compared to 81.3 percent of men. Although women's labour force participation increased from 36.3 percent in the LFS 2017, it remained half that of men in 2022. Around 16.5 percent of adolescent girls aged 15 to 24 years are unemployed—twice the rate experienced by adolescent boys in the same age group. A significant wage gap also exists between male and female workers.

According to World Bank data, about 21 percent of Bangladeshi women are engaged in the fields of science, technology, engineering and mathematics (STEM), compared to 43 percent in India, 41 percent in Sri Lanka, and 37 percent in Indonesia. As per the Global System for Mobile Communications Consumer Survey 2023, a gender gap of 20 percent exists in mobile ownership and a 40 percent gap in mobile internet adoption in Bangladesh—higher than in India and Indonesia. In addition, 68 percent of women in Bangladesh own mobile phones compared to 85 percent of men, and the gender disparity is even more pronounced in smartphone ownership.

Experience from most developed countries shows that with economic development, poverty levels fall and gender inequality is reduced. This typically occurs as women take advantage of a growing economy by engaging in diverse economic activities. Governments increase budget allocations for health and education and introduce various incentives to encourage women's participation in productive sectors. Although a similar trend is observed in Bangladesh, the pace of economic empowerment remains slower than expected due to the factors explained below.

The Bangladesh government allocates a substantial amount of resources for women in the annual budget. According to the Gender Budget Report 2024-2025, the government allocated Tk 271,818 crore—representing 34.11 percent of the total budget and 4.86 percent of GDP—towards women's empowerment and development, including social safety net programmes. However, many economists argue that the gender budget is not properly monitored, making it difficult to assess the impact of these expenditures on women each year. Particularly concerning is that the overall education and health budgets have consistently remained low over the years in Bangladesh—1.7 percent of GDP for education and 0.75 percent for health—thus failing to improve the quality of education and healthcare service delivery in the country. By contrast, the education budget in EU countries averages about 4.7 percent of GDP in 2025, with the highest allocations in Sweden (7.1 percent) and Denmark (6.4 percent). The average government expenditure on health in EU countries was 7.3 percent of GDP in 2023, rising to 12 percent in Germany and France, and over 10 percent in Austria, Belgium, Sweden and Portugal. These comparisons highlight the inadequacies of public spending on health and education in Bangladesh.

In Bangladesh, microfinance institutions (MFIs) play a significant role in economically and socially empowering women. By 2023, as many as 731 MFIs certified by the Microcredit Regulatory Authority had benefitted over 40.86 million members, around 90 percent of whom are women. These MFIs disbursed a total of Tk 2,500 billion in soft loans to their members for undertaking small and medium enterprises. They also provide various services such as basic education, training, maternal health and technical support. According to World Bank estimates, microfinance lifted about five million people out of poverty between 2000 and 2020.

In terms of quantitative estimates, the coverage of disadvantaged women under government and NGO programmes may appear impressive but remains insufficient. Various structural weaknesses persist in these programmes. One of the key areas where women continue to lag behind is in financial inclusion. There are gender gaps and exclusions in financial literacy and numeracy, access to finance, and digital financing, all of which prevent women from fully benefiting from available financial services in Bangladesh.

Data shows that around 65 percent of women remain unbanked, only 7 percent of registered small and medium-sized borrowers are women, and the gender gap in mobile phone ownership is approximately 30 percent. These barriers limit women's access to adequate finance and hinder the achievement of true economic empowerment. Although several banks now offer female-friendly financial products, these require greater promotion, trust-building, and improvements in women's financial literacy. However, this alone will not address the root challenge faced by poor women who lack assets and income and who are therefore likely to remain unbankable—reliant solely on small-scale NGO loans.

To expedite women's economic empowerment and ensure inclusive economic growth, certain practical steps are necessary. These include taking bold decisions to increase sustainable investment in health, education, and skills development to reach 10 percent of GDP, alongside establishing proper monitoring systems, gender-disaggregated databases, and evaluation mechanisms to ensure accountability; promoting women's employment in suitable service and industrial enterprises such as leather, food processing, toy-making, sustainable energy solutions, and cottage industries; adopting stronger policy measures to expand access to soft loans for building women-friendly enterprises and providing inclusive financial literacy training; creating special industrial zones for female entrepreneurs and promoting both local and export market opportunities; prioritising women's access to industrial land, financial resources, and vocational training, as well as creating decent work opportunities; and last but not least, taking critical steps to reduce early marriage and early pregnancy in the country.

We need to accelerate efforts in these areas to enable the large and potentially productive population of working-age young women to participate meaningfully in the economy and help raise Bangladesh's stagnating growth rate.

Dr Nawshad Ahmed, a retired UN official, is an economist and urban planner. He is currently working as an independent consultant​

 

[Saif]

BB set to relax monetary policy, ease interest rates

Bangladesh Bank will unveil its new monetary policy by the end of July, signalling a shift from its current contractionary stance in a bid to spur economic growth while still reining in inflation. Sources indicate the central bank is preparing modest adjustments to the policy interest rate under I

thefinancialexpress.com.bd

BB set to relax monetary policy, ease interest rates

Published :
Jul 09, 2025 12:53
Updated :
Jul 09, 2025 12:54

Bangladesh Bank will unveil its new monetary policy by the end of July, signalling a shift from its current contractionary stance in a bid to spur economic growth while still reining in inflation.

Sources indicate the central bank is preparing modest adjustments to the policy interest rate under International Monetary Fund (IMF) guidance.

Business leaders are, however, pinning their hopes on a more investment-friendly regime of lower lending rates and continued political stability, according to a UNB report.

Monetary policy is the primary lever for steering a nation’s economic course, fostering development, taming inflation and regulating money supply over a given period.

For the first half of the current fiscal year, Bangladesh Bank is fine-tuning its strategy to strike a delicate balance between curbing inflation and reviving private investment.

Business leaders have long argued that the prevailing tight policy has dampened investment, a situation worsened by recent political uncertainty.

DCCI President Taskin Ahmed said, "We hope the upcoming monetary policy will be more business-friendly and geared towards increasing credit flow. We are looking for a more lenient monetary policy, particularly hoping for a reduction in the interest rates that have risen significantly.”

To contain soaring consumer prices, the central bank previously raised its policy rate from 8.5 per cent to 10 per cent. Although the move helped ease inflation, it also choked off investment momentum.

Acknowledging this, policymakers now appear inclined to soften their approach.

Bangladesh Bank spokesperson Arif Hossain Khan said, "If we continue with a contractionary policy, it won't be investment-friendly. We have already achieved two of our three key factors, and while we haven't fully controlled inflation, we have managed to reduce it somewhat. Considering this, this time around, we might see a slightly different approach; it may not be as contractionary.”

Economists warn that inflation cannot be curbed solely through monetary tightening.

"Inflation is not solely caused by the money supply. Bangladesh's inflation, for instance, won't just come down if the Bangladesh Bank increases the policy rate. To control inflation, we also need to manage the supply chain effectively," said Masrur Reaz, Chairman of the Policy Exchange Bangladesh, a research organisation.

Analysts agree that bolstering the supply chain is pivotal, though implementing such reforms remains a formidable challenge.

Exchange-rate pressures, taka depreciation and elevated borrowing costs have combined to depress private-sector credit growth, currently languishing below 8 per cent.

The resulting drag on industrial output and economic activity has prompted the central bank to contemplate a more accommodating policy stance, according to insiders.

The new policy, due later this month, will reveal how far Bangladesh Bank is prepared to go in loosening the purse strings without letting inflation flare again, officials said.​

 

[Saif]

Govt vehicle purchases, foreign trips halted: Finance Ministry

No government agency will be allowed to purchase vehicles from either the development or operational expenditure budgets in the current fiscal year. Also, participation in all types of foreign seminars, symposiums, and workshops funded by government will remain suspended.

en.prothomalo.com

Govt vehicle purchases, foreign trips halted: Finance Ministry
Staff Correspondent Dhaka
Published: 09 Jul 2025, 21: 59

No government agency will be allowed to purchase vehicles from either the development or operational expenditure budgets in the current fiscal year.

Also, participation in all types of foreign seminars, symposiums, and workshops funded by government will remain suspended.

The finance division of the ministry of finance issued an order in this regard yesterday as part of government’s austerity measures.

According to the order, all allocations for vehicle purchases from the operational budget must be frozen. However, replacement of vehicles included in the TO&E (Table of Organisation and Equipment) that are more than 10 years old may be approved, subject to prior approval from the finance division.

Furthermore, no new residential, non-residential, or other buildings may be constructed, except for facilities related to the Ministries of Education, Health, and Agriculture.

However, if over 50 per cent of an ongoing construction project has been completed, further expenditure may proceed with approval from the finance division.

Land acquisition spending is also suspended, as is the use of block allocations.

The same order outlines restrictions on spending from the development budget. It states that vehicle purchases under development projects are suspended. For land acquisition under development projects, spending may only proceed after completing all formal procedures and with prior approval from the finance division.

Also, for the use of block allocations under development assistance for the planning commission, approval from the finance division is mandatory, even for urgent needs.

Additionally, participation in all types of foreign seminars, symposiums, and workshops by government employees under government-funded development projects is suspended.

However, foreign travel for Master’s or PhD programmes funded by the government, development partners, universities, or foreign governments (through scholarships or fellowships) will be allowed.

Foreign training programmes that are relevant to professional skill development under government funding are also permitted.

Finally, the order states that all types of foreign travel must comply with the circular issued by the chief adviser’s office on 9 December last year.​

 

[Saif]

How we could broaden our export base

Diversifying Bangladesh’s export basket has been a high-priority policy objective for many years.

www.thedailystar.net

How we could broaden our export base

VISUAL: SALMAN SAKIB SHAHRYAR

Diversifying Bangladesh's export basket has been a high-priority policy objective and a much-talked-about subject for many years. As the country prepares to graduate from the LDC status in 2026, accelerating export diversification initiatives and strengthening the country's export competitiveness have become urgent needs.

Challenges to export diversification include issues regarding trade policy regime, trade infrastructure, and other crucial business-enabling factors. Despite these challenges, some of the priority sectors have been making significant contributions to Bangladesh's export earnings, including industries with high potential for higher-value products.

Thanks to the rise of RMG, Bangladesh's economy saw a significant structural transformation in the 1980s. Apparel exports have led our transformation from a primary goods-exporting economy to a manufactured goods-exporting country, thus spurring economic expansion and poverty reduction. Over the decades, the country has achieved a notable industrial production base. Now its export portfolio remains highly concentrated in the RMG sector, which accounts for more than 80 percent of total exports.

The country's entry into the global apparel markets was facilitated by the multi-fibre arrangements (MFAs). Duty-free and quota-free market access particularly under the EU's Generalised System of Preferences (GSP) for LDCs, Relaxed Rules of Origins (ROOs), and supportive trade policy adopted by the government have been instrumental in gaining competitive advantage and sustaining export growth. After the MFA quotas were scrapped in 2005, Bangladesh was able to consolidate its export competitiveness on the basis of its cheap labour cost.

However, the overdependence on apparel exports means any adverse impact on the RMG industry would lead to a major setback for our economy. Export concentration in a single sector leaves it vulnerable to the impacts of shocks affecting said industry, such as disruptions in supply chain or production, global demand fluctuations, and changing fashion trends.

As per statistics, knitwear garment products comprise 44.6 percent and woven garments 37.2 percent of Bangladesh's total exports, followed by footwear (2.3 percent), jute products (1.9 percent) and fish (one percent). According to the Asian Development Bank's (ADB) working paper titled "Fostering Export Diversification in Bangladesh," published in June 2024, the country's export structure is among the least diversified in the world.

Because the success of the RMG sector has not been replicated in other sectors, export concentration has become a long-standing challenge, signalling significant risk for long-term export sustainability. Moreover, Bangladesh's export items consist primarily of labour-intensive products with limited value addition.

Leather and leather goods industry is the second highest export-earning sector in Bangladesh. According to the Export Promotion Bureau (EPB), the total leather exports registered a 12.55 percent growth year-on-year in FY2024-25, amounting to nearly $1.06 billion between July 2024 and May 2025. Noticeably, the export of leather goods registered a 6.11 percent decrease and export of finished leather fell by 6.29 percent between July 2024 and March 2025. On the other hand, leather footwear exports rose by 26.08 percent during the first 10 months of FY25. This significant success of leather footwear exports indicates a shift towards the export of higher-value products.

The global leather goods market, valued at $531.07 billion in 2025 to $855.36 billion by 2032, according to Fortune Business Insights, a global market research and consulting firm. To increase the export competitiveness of Bangladesh's leather industry, it is essential to speed up green transformation of the tanneries to become eligible for the Leather Working Group (LWG) certification. Besides, SMEs that work with leather products must be given easy access to finance. A closer industry-academia integration is indeed necessary for creating skilled human resources for the leather industry.

On the other hand, Bangladesh has succeeded in developing the strongest performing pharmaceutical industry—the most knowledge-intensive and advanced technology-dependent industry in the country—among all the LDCs. Several factors have catalysed the development of the pharmaceutical sector; promulgation of the Drug Control Ordinance, 1982 and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), for example, made way for the country to manufacture generic and branded generic medicines. High level of professional knowledge and skills and the innovative ideas and visionary initiatives of some industry leaders orchestrated the establishment of this high performance pharmaceutical industry. It meets almost 98 percent of the domestic demand and exports drugs to at least 151 countries, including the US.

Bangladesh is also among the top 10 producers of rice, jute, farm fish, vegetables and potatoes, among other harvests. The agriculture sector employs over 36.9 percent of the national workforce and contributes 11.2 percent to the GDP, according to government data. According to Bangladesh Investment Development Authority (BIDA), the country produces over 70 million tonnes of agricultural products annually. Due to a lack of adequate processing and storage facilities, as much as 30 percent of the 40 million tonnes of vegetables and fruits produced in the country is lost after harvesting every year. So, agro-processing has the potential and the opportunity to build upon the country's agricultural strength. The agro-processing sector has high prospects for diversifying exports and reaching a growing global processed food market.

The agro-processing industry currently contributes 1.7 percent to GDP and 13 percent to the country's manufacturing value. Value-added food products such as frozen fish, spices, potato flakes, fruit juice, and dry food are exported across the world, including the EU, Middle East, and Japan. Given the projections showing a gradual growth of global food markets, there are significant opportunities for Bangladeshi suppliers to supply agro-processed products.

Light engineering is another potential industry that can contribute to export diversification. This industry produces machinery spares and small tools for automobiles, railways, mills and factories, textiles, agro-machinery, construction equipment, the shipbuilding industry, etc. The sector meets approximately 50 percent of the domestic demand for light engineering products, significantly reducing dependency on imports.

The sector's domestic market size is estimated at $8.2 billion, as of FY2023-24. In 2022, light engineering product export reached $795.63 million. Key export items include bicycles, industrial machinery, refrigerators, optical lenses, and batteries. Industry insiders say Bangladesh's share in the global market is less than one percent. With targeted export promotion and improved market access, this industry has significant potential to support export diversification.

Therefore, policymakers in the country can consider the potential of these sectors to urgently diversify the range of Bangladesh's exports.

T.I.M. Nurul Kabir is a business, technology and policy analyst.​