[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

Machinery imports rise on hopes of political stability

Imports of capital machinery are picking up, showing signs of renewed business interest on expectations of greater stability in both politics and the economy.

www.thedailystar.net

Machinery imports rise on hopes of political stability
Star Business Report

Imports of capital machinery are picking up, showing signs of renewed business interest on expectations of greater stability in both politics and the economy.

In the first half of the fiscal year 2025-26, the opening of letters of credit (LCs) to import capital machinery increased by 24 percent year-on-year, reaching $1,079 million, according to Bangladesh Bank (BB) data.

This is the highest level in two years.

The rebound comes after three years of decline and sluggish private-sector credit growth, which stood at 6.10 percent in December, among the lowest in recent years.

“Businesses took such decisions hoping that the situation will improve after a political government comes to power following the election. This has triggered investment decisions as it takes months to bring machinery,” said Mir Nasir Hossain, former president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI).

He added that a major portion of the machinery may have been imported for BMRE (Balancing, Modernisation, Rehabilitation and Expansion), as new factories are not being set up amid the ongoing gas crisis.

BB data show that LC openings for machinery imports in the leather, pharmaceutical, packaging, and other sectors rose during the July-November period of FY26.

By contrast, imports of capital goods for the textiles and garment sector, the country’s main export earner, continued to decline.

Md Fazlul Hoque, former president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), expressed hope that the trend would reverse as the newly elected government took office yesterday.

Despite the increase in LC openings, settlements for machinery imports fell 16 percent year-on-year to $904 million during July-December. Openings and settlements of intermediate goods also declined, according to BB data.

M Masrur Reaz, chairman of Policy Exchange Bangladesh, said businesses began regaining confidence after the interim government announced parliamentary elections on August 5 last year.

He said the Election Commission’s announcement of the poll date in the second week of December gave the private sector further clarity. “Since then, some orders for the import of capital machinery have started to be placed,” he said.

Reaz described the election as a key milestone in restoring confidence. “A political and elected government has come to power, and it will be in power for five years. It gives predictability, which is important for businesses.”

“The sustainability of the confidence boost will depend on government actions and the carrying out of reforms,” said the economist.​

 

[Saif]

ADP spending teeters to 21 per cent in seven months

Implementation of the Annual Development Programme (ADP) has slowed to one of its weakest levels in two decades, with only 21 percent of the allocation spent in the first seven months of the 2025-26 fiscal year. Data released on Wednesday by the Implementation Monitoring and Evaluation Division sh

thefinancialexpress.com.bd

ADP spending teeters to 21 per cent in seven months

bdnews24.com
Published :
Feb 19, 2026 00:36
Updated :
Feb 19, 2026 00:36

Implementation of the Annual Development Programme (ADP) has slowed to one of its weakest levels in two decades, with only 21 percent of the allocation spent in the first seven months of the 2025-26 fiscal year.

Data released on Wednesday by the Implementation Monitoring and Evaluation Division shows 21.18 percent of the ADP was utilised between July and January, slightly lower than 21.52 percent in the same period a year earlier despite last year’s political turmoil.

The rate also trails the previous three fiscal years -- 27.11 percent in 2023-24, 28.16 percent in 2022-23, and 30.21 percent in 2021-22.

In absolute terms, spending stood at Tk 505.56 billion, down from Tk 598.76 billion in the corresponding period of FY2024-25.

Monthly expenditure showed marginal improvement, with 3.64 percent spent in January compared with 3.55 percent in the same month last year.

A new government has taken office amid the slow pace of implementation.

Wednesday was its first working day, but there has been no clear indication yet on how development work will be accelerated.

Due to the slow spending, the government has reduced the ADP allocation by Tk 300 billion in the revised programme, cutting 13.04 percent of the total.

After taking power following the political change in July, the interim government set the ADP at Tk 2.30 trillion for the current fiscal year, scaling back policies of the previous administration.

By January, the revised ADP was reduced to Tk 2 trillion.

The largest cuts were made in the health and education sectors.

Health allocations dropped by 73 percent, while secondary and higher education saw a 55 percent cut.

ADP spending is usually low at the start of a fiscal year and increases later.

But in July 2024, anti-government protests, curfews, and shutdowns disrupted development work.

After the Awami League government’s fall in August 2024, many contractors linked to the previous administration went into hiding.

The new authorities also began reviewing projects, which slowed development activities throughout the year.

Several projects were also suspended for political reasons, pushing implementation rates to one of the lowest levels in two decades.

By the end of FY2024-25, 67.85 percent of the revised ADP allocation had been spent, almost 13 percentage points lower than the previous year.

In 2023-24, the ADP implementation rate was 80.63 percent.

Data from FY2004-05 and onwards shows no previous year with such a low implementation rate as 2025-26.​

 

[Saif]

Overcoming tax reform challenges

The Bangladesh Nationalist Party (BNP) has taken the helm of the country at a time when the economy is caught on the horns of a fiscal dilemma. On the one hand, the new government has a plethora of election pledges to keep in areas such as infrastructure development, social welfare, education and h

thefinancialexpress.com.bd

Overcoming tax reform challenges

Atiqul Kabir Tuhin
Published :
Feb 19, 2026 01:03
Updated :
Feb 19, 2026 01:03

The Bangladesh Nationalist Party (BNP) has taken the helm of the country at a time when the economy is caught on the horns of a fiscal dilemma. On the one hand, the new government has a plethora of election pledges to keep in areas such as infrastructure development, social welfare, education and healthcare sectors. On the other hand, limitations in revenue generation could seriously constrain its spending capacity.

For example, the government's pledge to provide "Family Card" to all women across the country, disbursing Tk 2,500 monthly, would require a substantial amount of funding. If the government intends to finance this scheme without relying on high-interest or conditional foreign loans, it must mobilise significant amount of revenue. Conversely, if the government is forced to tighten its belt due to revenue deficit, some of the ambitious plans may have to be compromised.

Navigating this will require bold leadership to follow through on the deep structural reforms in the revenue department initiated by the previous administration. Chief among them is the separation of tax policy from tax administration, alongside comprehensive reforms to make the tax regime more efficient, equitable, transparent and simple.

For decades, the country's tax-to-GDP ratio has remained among the lowest in the world. Data from the World Bank show that in 2021 Bangladesh's Tax-to-GDP ratio stood at just 7.6 per cent. In contrast, India collected around 11-12 per cent of GDP in taxes, Vietnam more than 16 per cent. In more developed nations, specifically those within the Organisation for Economic Co-operation and Development (OECD), the tax-to-GDP ratio typically averages between 25 per cent and 30 per cent, providing them with the fiscal space to deliver better public services.

The size of Bangladesh's economy is growing, but revenue collection is not increasing at a pace commensurate with GDP growth. The latest data suggests that the tax-to-GDP ratio is declining, rather than improving. According to the Centre for Policy Dialogue (CPD), the ratio has fallen further to 6.6 per cent in FY2024-25, highlighting a widening gap between revenue target and achievement.

Successive governments have set ambitious targets for raising the tax-to-GDP ratio. However, the governments have always fallen short fulfilling the target. A research report by IDLC Finance Limited noted that in the FY2024 budget the tax-to-GDP target was fixed at 9.6 per cent. Meanwhile, under the $4.7 billion loan agreement with the International Monetary Fund (IMF), Bangladesh has committed to increasing the ratio by at least 0.5 percentage points in both FY2023-24 and FY2024-25. However, the ratio has been on a reverse gear, declining further. This underlines a bitter truth: revenue growth target will remain elusive without a comprehensive overhaul of the existing tax structure.

Widening the tax base, bringing informal businesses into the net, cracking down on evasion and ending unjustified exemptions are some crucial steps to boost revenue mobilisation. Currently, there are over 10 million TIN holders, but only about one-third file returns regularly. Many affluent individuals lead lavish lifestyles yet evade taxes by reporting little or no income on their income tax returns. To increase compliance, the NBR has made it mandatory to show proof of tax return submission when availing 45 services. But yet, tax evasion remains reportedly rampant among many professionals and businesses.

It is alleged that to evade taxes, businesses often maintain two sets of ledger books: one for the tax authorities showing minimal profits, and another for internal use recording actual earnings. This practice of underreporting income and overstating expenses is often facilitated by administrative weaknesses and, more nefariously, the collusion of corrupt officials who facilitate evasion in exchange for kickbacks. Such a system punishes genuine taxpayers, demotivating the honest while rewarding the tax dodger.

Addressing this does not mean simply raising tax rates, which often only further burdens those already in the system. Instead, the solution lies in expansion and digitization of tax collection. Nearly 40 per cent of the Bangladesh economy operates in the informal sector, largely untouched by the tax net. Small business owners often avoid the system not to evade tax, but out of a legitimate fear of complex paperwork and harassment by officials. A simplified tax regime, say, a flat one-percent VAT and a one-page return submitted via a mobile app for small enterprises could bring millions into the fold. The success stories of India and Indonesia prove that when the state makes tax submission process simple and hassle-free, people are more likely to comply.

Besides, in this digital era, technology must form the backbone of efforts to modernise tax collection. In the retail sector, absence of sales receipts creates opportunities for VAT evasion. Introducing mandatory e-invoicing, QR-coded receipts and integrated point-of-sale (POS) systems can ensure that each transaction is automatically recorded in a central database. Linking these systems to tax authority servers in real time would drastically reduce the scope for underreporting sales. Furthermore, the implementation of AI-based cross-checking could allow the NBR to match tax filings against electricity bills, bank transactions, and foreign travel records, a method that has seen great success in South Korea and Singapore.

Ultimately, the BNP's success in revitalising the economy depends on its ability to build a bridge of trust. If citizens believe their hard-earned money is merely lining the pockets of the corrupt, they will continue to hide it. If they see a transparent, technology-driven system where tax revenue clearly translates into better schools, safer roads and functional hospitals, they will participate willingly. So, for the new government, fixing the tax system is not just a fiscal necessity; this could be a stepping stone for a sustainable, development-oriented economy.​

 

[Saif]

Remittances reach $1.81b in 16 days, forex reserves rise to $34.53b

In the first 16 days of February, the country received 1.807 billion US dollars in remittances, which is 21 per cent more compared to the same period last year. Meanwhile, due to the increase in remittances, Bangladesh Bank is purchasing dollars from banks. As a result, the total foreign...

en.prothomalo.com

Remittances reach $1.81b in 16 days, forex reserves rise to $34.53b

Staff Correspondent Dhaka
Published: 18 Feb 2026, 15: 34

In the first 16 days of February, the country received 1.807 billion US dollars in remittances, which is 21 per cent more compared to the same period last year.

Meanwhile, due to the increase in remittances, Bangladesh Bank is purchasing dollars from banks. As a result, the total foreign currency reserves have increased to 34.53 billion dollars.

Bangladesh Bank provided this information yesterday, Tuesday.

According to the Central Bank's data, from 1 to 16 February in 2025, the remittance was 1.49 billion dollars.

During the same period this year, it increased to 1.807 billion dollars. Out of this, 152 million dollars alone came on 16 February.

As of Tuesday, the total foreign currency reserves at Bangladesh Bank increased to 34.53 billion dollars, which, according to the IMF''s BPM6 calculation method, stands at 29.85 billion dollars.

On 7 February, the reserves were 34.06 billion dollars, which according to the IMF''s BPM6 calculation method was 29.47 billion dollars.

In anticipation of the election, expatriates are remitting an average of 112.5 million dollars per day this month. Expatriate income or remittances have increased over the past two months around the election.

In the first month of this year, in January, remittances amounted to 3.17 billion dollars. In the previous month, December, 3.22 billion dollars were received.

Before that, in the five months preceding them, remittances were less than 3 billion dollars.

Several bank officials said that generally, more remittances come before the two Eids in the country.

Recently, remittances have increased primarily due to the upcoming election.

The highest remittances come from places where there is a larger Bangladeshi population.

Funds are often raised abroad for many candidates, which come into the country under the name of remittances.​