[🇧🇩] Monitoring Bangladesh's Economy

[Saif]

Four-tier plan taken up to reform fragile financial sector

Bangladesh's total external-debt buildup touched US$78.067 billion as of last February, the finance minister apprised parliament Tuesday while outlining their new government's financial-reform recipe. To a question, Amir Khasru Mahmud Chowdhury said between the 2008-09 and 2025-26 fiscal yea

thefinancialexpress.com.bd

Four-tier plan taken up to reform fragile financial sector

FE REPORT

Published :
Apr 22, 2026 09:07
Updated :
Apr 22, 2026 09:07

Bangladesh's total external-debt buildup touched US$78.067 billion as of last February, the finance minister apprised parliament Tuesday while outlining their new government's financial-reform recipe.

To a question, Amir Khasru Mahmud Chowdhury said between the 2008-09 and 2025-26 fiscal years, the previous government had taken external loans amounting to $85.993 billion.

The government has taken a four-tier, targeted plan to reform the country's fragile financial sector and restore economic stability, the finance minister told the House in response to a question from Noakhali-5 MP Mohammad Fakhrul Islam.

"As part of this, a medium-term macroeconomic framework up to the 2028-29 fiscal year has been approved, coordinating monetary and fiscal policies," he said, adding that the strategy was finalised at a Coordination Council meeting held at the Finance Division on April 10.

The minister said, "To maintain macroeconomic stability, the policy interest rate has been kept at 10 per cent, which is having a positive impact on controlling inflation. Food inflation, which rose to 14.10 per cent in July 2024, declined to 8.24 per cent by the end of March 2026."

Regarding the country's foreign-exchange reserves, he said as of 15 April 2026, the total reserves stood over $34.87 billion, or $30,201.71 million according to IMF's BPM6 method.

He also notes that Bangladesh Bank would provide special support to importers and general businesses facing capital shortages due to the depreciation of the taka.

"To keep economic activities dynamic, the central bank has also taken separate action plans for distressed productive sectors."

Finance Minister Chowdhury further says the government is forming a "Capital Market Reform Commission" to restore investor confidence in the stock market. Plans are also in place to modernise the market system using blockchain technology and to develop a strong bond market.

He adds that to restore discipline in the financial sector, targets for money supply (M2) and private-sector credit growth for the 2026-27 fiscal year have been reset in line with economic growth.

The government is also launching an "Investment Gateway" to make it easier for expatriates to invest and is taking legal measures to protect investors.

In a statement made in response to a question from MP Shamsur Rahman Shimul Biswas, the minister told parliament that between the 2008-09 and 2025-26 fiscal years, the previous government had taken external loans amounting to $85.993 billion. During the same period, $22 billion in principal and $8.6 billion in interest were repaid.

Responding to a question from Brahmanbaria-2 MP RumeenFarhana, he said as of 2026, the outstanding external debts of the government stand at $78.067 billion.

"The Economic Relations Division repays foreign loans on behalf of the government. Each fiscal year, projections are made for total repayment costs, including both principal and interest, and the required amount is allocated in the national budget. Loan repayments are being made throughout the year according to schedule using these budgetary allocations," the minister adds.

The minister also faced criticism over the present government's bank-borrowing spree. RumeenFarhana strongly criticised what she described as the "uncontrolled" pace of the government's bank borrowing and the fragile state of revenue collection.

She expressed concern over the future of the economy, stating that within just 52 days of taking office, the new government borrowed Tk 445 billion from the banking system.

While raising a supplementary question, she criticised the current economic situation.

She said the budget target for bank borrowing in the current fiscal year was Tk 1.04 trillion, but by early April, it had already exceeded 108 per cent of the target, reaching Tk 1.12761 trillion.

Citing a Bangladesh Bank report, she also mentions that revenue collection is lagging behind the target by about Tk 75 billion. "To cover the deficit, the government is becoming overly dependent on bank borrowing."

She asks the finance minister whether the government has any specific plans to expand the tax base or increase revenue.

The finance minister replies that the large volume of borrowing is largely a continuation of liabilities left by the previous government, describing it as a "carryover."

He notes that the current government has been in office for only two months and argues that the borrowing figures should not be seen as its own performance.

He assures parliament that the government's core economic policy is to gradually reduce reliance on borrowing from domestic banks, and that this will be reflected in the upcoming budget.

The minister also observes that businesses in the country are currently facing an "existential crisis" and industries are struggling with multiple challenges.

"It takes some time to restore the tax-to-GDP ratio to its previous level." Although this ratio declined during previous governments, he expresses optimism that the current government will efficiently strengthen the economy once again.​

 

[Saif]

Govt takes initiative to launch PayPal to boost employment: PM

The premier informed that a master plan has been adopted to issue identity (ID) cards to 200,000 freelancers over the next five years

en.prothomalo.com

Govt takes initiative to launch PayPal to boost employment: PM

BSS
Published: 22 Apr 2026, 22: 31

Prime Minister Tarique Rahman spoke during the JS session on 22 April PMO

Prime Minister Tarique Rahman today said effective initiatives have been taken to introduce the much-anticipated online payment gateway PayPal to create large-scale employment through the expansion of information technology in the country.

He said this in response to a question from treasury bench lawmaker from Natore-4 Md Abdul Aziz in the Jatiya Sangsad (JS) here with Speaker Hafiz Uddin Ahmad, Bir Bikram, in the chair.

The premier informed that a master plan has been adopted to issue identity (ID) cards to 200,000 freelancers over the next five years and to train several thousand youths in advanced technologies.

Tarique Rahman said various organisations and departments under the Information and Communication Technology (ICT) Division have undertaken multiple plans and activities aimed at generating employment through the expansion of IT.

He said the Department of ICT will impart training to 1,000 individuals over five years to develop them as freelancers and provide ID cards to 200,000 freelancers during this period.

A total of 7,500 freelancers have already been issued ID cards and the programme is ongoing, he added.

The leader of the house said 2,400 people will be trained in advanced technologies such as artificial intelligence (AI), machine learning (ML), and virtual reality in 2026 through Bangladesh Hi-tech Park Authority.

To accelerate investment and employment, 83 services are currently being provided online, with plans to add 10 more services within the next year, he said.

The premier said a committee has already been formed to ensure the effective operation of hi-tech or software parks and ICT centers, and to take necessary steps for launching PayPal services in Bangladesh.

He said over the next five years, around 1,000 undergraduate and graduate students will receive IT training in 20 batches through Bangladesh Computer Council (BCC).

Initiatives have also been taken to provide training to 5,020 job-seekers and students in areas such as AI, mobile app development, Python programming, data analytics, and cyber security, including short courses as well as one-year diploma and postgraduate diploma programmes, he mentioned.

He said initiatives have also been taken to provide basic computer training to about 700 people with special needs to help them become self-reliant.

Additionally, around 700 women entrepreneurs will receive skills development training under the “Women in ICT Frontier Initiative” to create employment opportunities, he said.

Highlighting ongoing programmes, the prime minister said under IT training initiatives, 300 students from 15 universities are currently receiving training in the April 2026 session.

He also noted that training has been completed for 40 people with special needs in basic computer skills and for 20 women entrepreneurs in Wi-Fi-related skills development.​

 

[Saif]

Economists warn of inflation as Bangladesh ‘prints money’ to offset deficit

Economists and business leaders have expressed grave concern over the government’s recent move to borrow from the central bank by "printing money", warning that such "high-powered money" could further fuel inflation. Ashikur Rahman, principal economist at the Policy Research Institute of Ban

thefinancialexpress.com.bd

Economists warn of inflation as Bangladesh ‘prints money’ to offset deficit

bdnews24.com
Published :
Apr 23, 2026 22:45
Updated :
Apr 23, 2026 22:45

Economists and business leaders have expressed grave concern over the government’s recent move to borrow from the central bank by "printing money", warning that such "high-powered money" could further fuel inflation.

Ashikur Rahman, principal economist at the Policy Research Institute of Bangladesh (PRI), revealed on Thursday that the government borrowed Tk 200 billion from the Bangladesh Bank in March alone.

"This is fresh money being injected into the economy. Its direct impact will be felt by the common people through rising inflation," Ashikur said during a seminar.

Titled “Evolving Global Landscape for Trade and Growth”, the seminar was held at the PRI office in Banani.

The warning comes despite recent government data showing a slight dip in inflation.

Point-to-point inflation reportedly fell to 8.71 per cent in March, down from 9.13 per cent in February, official data showed.

Economists argued that using printed money to cover budget deficits and subsidies could reverse this trend, especially amidst an ongoing energy crisis.

The seminar, jointly organised by PRI and the Australian Government's Department of Foreign Affairs and Trade (DFAT), highlighted that Bangladesh's economic stability is under pressure from Middle East geopolitics, LDC graduation challenges, and global policy uncertainty.

Mahbubur Rahman, president of the International Chamber of Commerce, Bangladesh, called for reforms for the sake of the national economy, not merely to satisfy IMF conditions.​

 

[Saif]

Phasing out tax holidays

The decision of the National Board of Revenue (NBR) to phase out tax holidays has been a long time coming. For years, these incentives were promoted as tools to stimulate investment and industrial growth. However, their overall impact has been mixed at best. The NBR's latest move signals a clear sh

thefinancialexpress.com.bd

Phasing out tax holidays

FE
Published :
Apr 24, 2026 00:23
Updated :
Apr 24, 2026 00:23

The decision of the National Board of Revenue (NBR) to phase out tax holidays has been a long time coming. For years, these incentives were promoted as tools to stimulate investment and industrial growth. However, their overall impact has been mixed at best. The NBR's latest move signals a clear shift towards a more uniform, compliance-driven tax regime, with an emphasis on broadening the tax base and strengthening revenue mobilisation. Instead of relying on exemptions to attract investors, the government now appears committed to ensuring that all businesses contribute to the national exchequer.

This policy direction was reaffirmed during a recent pre-budget discussion where the NBR Chairman made it clear that there are no plans to introduce new tax holidays for any industry. His remarks came in response to demands from business leaders, including a proposal for a 15-year corporate tax holiday for the semiconductor sector to encourage both domestic and foreign investment. The government's stance reflects a broader intention to move away from a culture of tax exemptions and towards a system where tax compliance is universal, regardless of the applicable rate. But industry groups continue to advocate for extended incentives, arguing that tax holidays remain an important tool for nurturing emerging sectors and attracting capital in a competitive global environment. This highlights a growing policy divide between the goals of revenue mobilisation and investment promotion.

Tax holidays, by design, are temporary incentives that reduce or eliminate corporate income taxes for a certain period -- typically five to ten years -- to encourage investment in certain sectors. In Bangladesh, such incentives have historically been offered to industries including pharmaceuticals, textiles, IT services and agricultural machinery. In some cases, businesses have enjoyed full tax exemptions in the initial years, followed by gradually reduced rates. Additional benefits have also been extended to healthcare providers operating outside major urban centres like Dhaka and Chattogram. Proponents argue that these incentives can stimulate economic activity, encourage entrepreneurship and help develop priority sectors. However, critics question their effectiveness, noting that tax holidays often shift the timing of investments rather than generating genuinely new economic activity. More importantly, they can result in significant revenue losses for the government and create opportunities for misuse, such as profit shifting to tax-exempt entities.

From the NBR's perspective, these concerns are increasingly difficult to ignore. The continuation of generous tax exemptions not only constrains public revenue but also complicates tax administration and undermines fairness within the system. By phasing out such incentives, the government aims to create a level playing field where businesses compete on the basis of efficiency and innovation rather than preferential tax treatment. That said, the transition away from tax holidays should be approached with caution. While their shortcomings are evident, these incentives have played a role in supporting industrial growth and attracting investment, though not in the most efficient manner. Moving forward, a balanced approach is essential -- one that combines a predictable and transparent tax regime with targeted, performance-based incentives where necessary.​

 

[Saif]

Bank consolidation imperative: why the Resolution Law matters for stability

The unanimous passage of the Bank Resolution Bill 2026 in Bangladesh's Jatiya Sangsad comes at a critical juncture for the country's financial sector. Mounting stress in several weak banks reflected in high non-performing loans (NPLs), governance lapses, and capital shortfalls has eroded depositor

thefinancialexpress.com.bd

Industries grow, planning lags

Shiabur Rahman
Published :
Apr 24, 2026 00:17
Updated :
Apr 24, 2026 00:17

The industrial sector of Bangladesh has proved itself to be the greatest contributor to its economic development over the recent decades. The country has diversified its focus from agricultural activities towards industrial performance, and the proportion of the contribution of the industrial sector to GDP was estimated to be approximately 34 to 37 per cent for the 2024-2025 fiscal year. There exists a gap or rather a weakness in the process of industrialisation in Bangladesh.

Industrialisation has taken place in an almost unplanned and uneven way here. Factories and other industrial units have been set up wherever space is found. The impact of this kind of industrialisation is evident in the degradation of agricultural land. Given the land shortage in the country, this development has been causing concern for sustainable development in the country.

Also equally alarming is the concentration of industries in Dhaka and Chattogram. These two zones have become the centers of industrialisation, capturing investments, infrastructure development and labour market. While there are definite economic benefits that can accrue from clustering, like proximity to markets, ports and infrastructures, this trend has also led to a number of problems. Urban congestion, pollution, high cost of land use and pressure on city infrastructure are some of the hallmarks of such cities, while other areas have not received their share of developments.

In an effort to tackle the problems associated with clustering, the government decided to pursue the path of planned industrialisation by setting up Export Processing Zones (EPZs) and Special Economic Zones (SEZs). This was aimed at offering investors infrastructure facilities and a business-friendly environment to encourage investment.

It theoretically provides an opportunity to make industries decentralised and reduce the burden of development from cities such as Dhaka and Chattogram. But practically the outcome has not always been positive and many of these areas have found it difficult to meet the expected levels of investment at first. One of the major obstacles to success has been the lack of effective communication and transportation network connections between the industrial zones and the larger market and port areas.

Another barrier to industrial decentralisation is that there is no shift in the concentration of regulatory bodies and important services to other places than Dhaka. Even when there is development in other regions through industrial zones, companies face problems due to their Dhaka-centric nature.

The problems encountered by individual projects reflect these trends. For instance, the Savar Tannery Estate was conceived as a relocation of tanneries from the heavily polluted Hazaribagh, providing an organised and eco-friendly environment. Though the shift was successful, the project suffered from inefficient waste disposal and a lack of other infrastructure. Therefore, it has been unable to meet its intended goals.

This example shows that there is a consistent trend where designs are never followed up with timely implementation and coordination. Unless such issues are sorted out, the industrial zones will not realise their full potential.

What is needed is a more cohesive and proactive industrialisation strategy. The first step should be ensuring that better land-use planning takes place to avoid the arbitrary conversion of arable land into industrial sites. The development of the necessary infrastructure to match the industrialisation and the decentralisation and digitalisation of licensing processes are also critically important.

The industrial sector of the country has certainly developed to a large extent, but the future prosperity of this sector rests largely upon how successfully it can tackle the problems it is facing.​