The government has raised the retail price of octane, petrol and kerosene prices by Tk5 per litre for June though diesel price remain unchanged.

The energy division said the June price was adjusted in line with the international oil market movements.

According to a notification issued by the Energy and Mineral Resources Division on sunday, the price of octane has been set at Tk145 per litre effective from 1 June, up from Tk140 per litre in the previous month.

Petrol prices have also been increased by Tk5 per litre to Tk140, while kerosene has risen by the same amount to Tk135 per litre.

However, the price of diesel, the country's most consumed fuel, has been retained at Tk115 per litre.

The government said the revised rates were determined in line with changes in global petroleum product prices.

Under the new pricing structure, octane remains the most expensive fuel in the domestic market, costing Tk5 more than petrol and Tk30 more than diesel.

The latest increase marks the first upward adjustment oil prices in recent months.

The revised fuel prices will come into effect from Monday (1 June).

The world risks facing a deeper food security crisis in 2026 and 2027 unless governments act quickly to cushion the impact of disruptions in the Strait of Hormuz, the head of the Food and Agriculture Organization (FAO) has warned.

“The decisions we make now will determine whether this remains a manageable shock, or evolves into a deeper global food security crisis in 2026 and 2027, and beyond,” FAO Director-General Qu Dongyu said at a special event on the Middle East crisis during Rome Nutrition Week in Italy from May 25 to May 28.

Describing the situation as “a systemic shock to the global agrifood system”, he said the biggest impacts may emerge months from now as farmers cut back on planting and fertiliser use because of rising production costs and supply chain constraints.

According to the FAO, severe disruptions in the Strait of Hormuz have already affected the movement of oil, liquefied natural gas, sulfur and fertilisers, driving up agricultural input costs and putting upward pressure on seed prices because of their dependence on fertilisers. As energy prices rise, agrifood systems become more expensive across all regions.

Input import-dependent countries, in particular, are facing rising bills, while vulnerable households are losing purchasing power as inflation erodes incomes, the UN agency said.

For many countries, especially in Africa and parts of Asia, these impacts are not occurring in isolation. They are compounding existing pressures from debt distress, climate shocks, conflict and constrained public finances.

Bangladesh meets most of its fertiliser requirements through imports, and Gulf nations such as Saudi Arabia and the United Arab Emirates are major suppliers.

In the fiscal year 2023-24, the country’s demand for urea was 27 lakh tonnes, of which more than 17 lakh tonnes had to be imported, according to Bangladesh Chemical Industries Corporation data.

As global prices of fuel and fertiliser -- especially urea -- have risen, Bangladesh is already feeling the strain.

The FAO chief said the actions taken now will be critical in determining whether the world can manage the shock caused by the situation in the Strait of Hormuz or face a far more serious food security crisis in the years to come.

“We must act early before humanitarian and economic costs rise,” the director-general said.

The warning comes days after the FAO cautioned that the closure of the strategic waterway could trigger a severe global food price crisis within six to 12 months if preventive measures are not taken.

FAO Chief Economist Maximo Torero earlier said the situation should not be seen as a temporary shipping problem but as the beginning of a broader agrifood shock that could spread through global food systems via higher energy costs, fertiliser shortages, lower crop yields and food inflation.

The impact is already visible. The FAO Food Price Index, which tracks monthly changes in the international prices of a basket of globally traded food commodities, rose for a third consecutive month in April, driven by high energy costs and turmoil linked to the conflict in the Middle East.

To reduce the risks, the FAO urged countries to avoid export restrictions on fertilisers and agricultural inputs, support farmers through focused assistance and ensure timely financing for food production.

The UN agency also called for greater diversification of trade routes, stronger regional integration, strategic reserves and more resilient agrifood systems to reduce dependence on critical trade chokepoints.

The FAO has warned that the situation could become even more challenging if a strong El Niño event materialises, disrupting rainfall patterns and agricultural production in several regions.

“We have a window to act, but that window is narrowing,” Qu said.

The FAO said traditional emergency packages centred exclusively on fertiliser-intensive systems may no longer be viable under current conditions.

“Countries should support adaptive strategies such as intercropping, improving nitrogen efficiency and promoting crops that are less dependent on synthetic fertilisers.”

It suggested prioritised support, saying resources should be directed towards the most vulnerable populations through well-designed social protection systems and rural support mechanisms.

Trading and official activities on the country’s two stock exchanges—the Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE)—will resume tomorrow (Monday) after a week-long Eid-ul-Azha holiday.

The bourses remained closed from May 25 to May 31, including weekly holidays, on the occasion of Eid-ul-Azha, one of the largest religious festivals for Muslims.

Trading hours will return to the regular schedule, beginning at 10:00 am and continuing until 2:30 pm, including a 10-minute post-closing session, according to DSE officials.

Before the Eid break, the market ended slightly higher on May 24 as bargain hunters picked up undervalued blue-chip stocks, although overall investor sentiment remained cautious.

The benchmark DSEX index gained 7.5 points, or 0.14 per cent, to close at 5,336.

The DSE30 Index, comprising blue-chip stocks, edged up 0.54 points to 2,030, while the DSE Shariah Index (DSES) advanced 5 points to 1,082.

The Chittagong Stock Exchange also closed in positive territory on the final trading day before the holiday. The CSE All Share Price Index (CASPI) rose 71 points to 14,909, while the Selective Categories Index (CSCX) gained 38 points to finish at 9,169.

Bangladesh Finance made a significant turnaround by securing a profit of Tk 225 million in 2025 from one of the highest losses - Tk 7.83 billion - in the country's non-bank financial institution (NBFI) sector a year earlier.

The achievement was mainly driven by strong recoveries from stressed loans, said Md. Kyser Hamid, managing director and CEO of the company.

The company recovered around Tk 1.77 billion in 2025 from stressed loans, he said, adding that loan rescheduling and lower provisions also contributed to the latest financial performance.

A year ago, Bangladesh Finance set aside money to maintain full provisions against defaulted loans and even stressed loans.

"Usually, provision is kept only for non-performing loans, but we allocated additional interest suspense and provisions against stressed loans in the past two years."

If any client fails to pay loan instalments for more than three consecutive months, their account gets suspended and the pending interest is not shown as income.

Bangladesh Finance kept provisions against investments of Tk 1.66 billion in 2023 and Tk 8.36 billion in 2024.

The CEO said the management had set aside more than what was necessary as interest suspense and kept higher provisions than required in 2023 and 2024, considering that the company might have to bear further financial shocks in the future.

These measures were taken to mitigate unforeseen credit risks, address potential losses early, prevent further deterioration and defaults, ensure adequate reserves, and safeguard overall financial health, he said.

With such precautionary measures already in place, aggressive efforts in 2025 to recover and reschedule defaulted loans enabled the company to reverse a substantial amount of provisions previously maintained.

Echoing Mr Hamid, Md. Sajjadur Rahman Bhuiyan, group chief financial officer, explained that after facing heavy provisioning in FY24, the company strategically focused on recovery in FY25.

"By deploying management to accelerate settlements and rescheduling major corporate loans, we successfully released substantial provisions, ultimately driving the company back to profitability."

Bangladesh Finance booked a provision write-back of Tk 2.13 billion, a dramatic reversal from the Tk 7.85 billion provision recorded in 2024, according to its auditor's opinion published on Sunday.Regional business directory

"The write-back significantly boosted the company's bottom line and marked a major improvement in asset quality management," said the auditor.

Mr Hamid said continued recovery initiatives, disciplined risk management and supportive regulatory policies were expected to further improve the company's financial health and support sustainable long-term growth.

However, the auditor warned that Bangladesh Finance still faces serious financial vulnerabilities.

It pointed out that the company continued to operate with negative consolidated equity of Tk 5.47 billion as of December 2025.

The auditor noted that the financial statements had nevertheless been prepared on a going concern basis after the management provided justification that the company would be able to continue operations in the foreseeable future.

Bangladesh Finance said its management conducted a detailed assessment in line with Bangladesh Bank guidelines and International Accounting Standard (IAS) 1 to evaluate whether the company could continue as a going concern.

The assessment considered financial performance, liquidity conditions, asset quality and capital structure.

According to the company, its board believes the institution has adequate resources and recovery plans in place to continue operations despite the negative capital position.Wealth management advice

The company also highlighted a sharp improvement in its provision coverage ratio, which rose to 496.96 per cent at the end of 2025, indicating a strong cushion against potential future credit losses.

Capital adequacy indicators also improved during the year, although they remained below regulatory requirements.

The standalone capital adequacy ratio improved to negative 31.84 per cent from negative 33.81 per cent a year earlier, while the consolidated capital adequacy ratio stood at negative 24.29 per cent.

Meanwhile, net asset value per share also showed signs of recovery. Consolidated NAV per share improved to negative Tk 28.85 in 2025 from negative Tk 30.05 in the previous year.

To restore financial stability, the company has prepared a long-term capital management plan along with a seven-year financial projection and a liquidity management strategy aimed at rebuilding capital strength and improving liquidity conditions, said the auditor.

The management acknowledged that confidence in the financial sector remains weak but said ongoing restructuring initiatives and expected regulatory support would help stabilise the company further.

The auditor also confirmed that subsidiaries - Bangladesh Finance Securities and Bangladesh Finance Capital - received unmodified audit opinions for 2025.

Recovery continues in Q1, 2026

Bangladesh Finance sustained its recovery momentum in the first quarter of 2026, posting a 120 per cent year-on-year increase in consolidated profit to Tk 20.71 million.

The company said the performance in the January-March period resulted from capital gains from investments in securities and further reversal of provisions maintained against loans, leases and investments.

It has sustained its recovery at a time when the sector overall has been under pressure from rising non-performing loans, liquidity stress and weakening depositor confidence over the past several years.

Predictable policies, improving liquidity flows and rebuilding investor confidence dominates the upcoming national budget as Bangladesh navigates a challenging economic landscape marked by inflation, sluggish investment and financial-sector vulnerabilities.

Talking to The Financial Express, days before the new government's maiden budget lands in parliament, Dr Rashed Al Titumir also explains that the government's economic strategy is built around a five-year framework of "recovery, restoration and reconstruction for acceleration".

"The budget size remains relatively small compared to the size of our economy and the financing needs in health and education," he says, stressing the need to increase public spending to reduce high out-of-pocket healthcare expenditures and build a skilled workforce through the promotion of technical education.

Asked about amendments to the Bank Resolution Act and efforts to address the banking-sector crisis, Dr Titumir says the government has adopted a diversified approach and is seeking strategic international partners to strengthen financial institutions.

"Bangladesh must better integrate with international banking standards and explore opportunities in the global Islamic finance market to benefit depositors, trade financiers and the broader economy."Digital news subscription

The government is also focusing on improving liquidity flows within the financial system.

"We must ensure the flow of liquidity. This requires proper incentives to increase the velocity of money. Banks holding excess liquidity should play a greater role in supporting productive investment," he says.

While acknowledging the current stagflationary pressures, the professor of development economics emphasizes that the government is pursuing economic correction rather than financial repression.

"We do not want financial repression. Our objective is to correct distortions and ensure that investors have access to funds without facing excessive financing costs."

Dr Titumir stresses coordination between fiscal and monetary policies while maintaining the operational independence of the central bank, free from political intervention.

On relations with the IMF, he says Bangladesh would continue discussions with the Fund to ensure that future policy commitments reflect the country's economic realities.

Describing the previous Hasina administration as "debtholic," he argues that the government had accepted several IMF conditions under the bailout programme that may not fully align with Bangladesh's current economic context.Bangladesh investment guides

"We will continue negotiations based on our own policy priorities and development needs."

Emphasizing the urgency of restoring international confidence as a prime objective, he notes that Bangladesh's debt-risk rating by the IMF from low to medium was a "hemorrhage" for the country's ability to access concessional financing.

"Lower international ratings affect investment, financing costs and market access. Consistent policies, macroeconomic stability and stronger institutions are essential for rebuilding credibility."

The government is also seeking to position Bangladesh as a regional logistics and connectivity hub by attracting internationally reputed port and logistics operators.

"We want to build Bangladesh into a logistics hub and create a benchmark that attracts internationally reputed operators through an inclusive and competitive process."

He says the government has already initiated investment discussions with stakeholders from Singapore, Saudi Arabia, the UAE, Denmark and Japan, particularly regarding opportunities around the Chattogram Economic Corridor.

Projects may be implemented through public-private partnerships, although other investment models are also being explored to ensure trade and economic benefits for Bangladesh.Development strategy reports

Dr Titumir highlights the importance of multimodal transport systems and stronger regional connectivity with Nepal, Bhutan, China, Myanmar and ASEAN economies.

Regarding state-owned enterprises, he says public resources should be concentrated on essential public services such as education, healthcare and social protection.

The government is considering leasing closed factories under BJMC and BTMC through a transparent and competitive process, he adds.

The adviser strikes a note of optimism about restoring confidence in Bangladesh's capital market, noting that BNP-led governments had not experienced major stock- market scams.

"Investors have repeatedly suffered from market manipulation and weak enforcement. Restoring trust requires stronger governance and regulatory oversight," he says.

On evolving trade issues with the United States, Dr Titumir says Bangladesh remains committed to respecting international agreements while continuing consultations to protect its national interests.

"The US situation is evolving too as tariff issues go to Supreme Court."Currency exchange tools

There are issues that require consultation and dialogue.

Despite current challenges, Dr Titumir remains cautiously optimistic about Bangladesh's prospects.

"We are pursuing a strategy of recovery, restoration and reconstruction. With policy consistency, institutional reforms and renewed confidence, Bangladesh can unlock its growth potential and strengthen its position in the regional economy," he says.

Bangladesh's import policy in the making appears at odds with emerging trade requirements in the European Union and the United States as it proposes allowing apparel exporters to qualify for incentives with a minimum 30-percent local value addition.

Industry leaders say the EU's proposed Generalised Scheme of Preferences Plus (GSP+) framework will require "double transformation" for garment exports, which they estimate would translate into around 40-percent local value addition.Local trade insights

Similarly, exporters say recent US trade rules require at least 40-percent local value addition, failing which shipments could be treated as transshipments.

To qualify for the EU's proposed GSP+ framework, Bangladeshi garment exporters will need to comply with the double-transformation requirement, which industry leaders estimate would require around 40-percent local value addition - a level already achieved by many knitwear manufacturers, though.

However, woven-garment manufacturers, which typically have lower domestic value addition, may find it more difficult to retain duty-free access to the EU market following Bangladesh's graduation from least-developed-country (LDC) status in November 2026, according to trade economists and industry insiders.

The government, however, has also sought a deferral of the country's graduation process to leave the world's poor-country club.

"We proposed lowering the threshold to 20 per cent," says BKMEA President Mohammad Hatem, in reference to the draft Import Policy Order 2026-2029.

He argues that high-value products, particularly those made from man-made fibres (MMF), would struggle to meet the proposed 30-percent threshold, as raw material costs for such products are significantly higher than those of cotton-based items.Capital market software

"If the government does not revise the provision, it will discourage local industrialisation and efforts to increase domestic value addition in export-oriented apparel production," he predicts.

Hatem also raises concern over a proposed restriction on knit fabrics import in the draft policy. Referring to Commerce Ministry Additional Secretary Abdur Rahim Khan, he says the ministry had indicated that the issue would be addressed in the final version of the policy.

A recent Ministry of Commerce document states that following Bangladesh's graduation from the LDC status, exports to key destinations such as the EU, the United Kingdom, the United States, Japan and other markets will no longer enjoy duty-free access.

To maintain export competitiveness and safeguard market share, the ministry, in collaboration with stakeholders, has already initiated negotiations on free-trade agreements (FTAs), comprehensive economic partnership agreements (CEPAs), bilateral and multilateral trade agreements, and other preferential trade arrangements with major trading partners.

According to the document, maintaining duty-free market access after graduation will require major export-oriented sectors to raise local value addition to above 40-50 per cent. In some cases, compliance with product-specific rules (PSRs), including double-transformation requirements, will be necessary.

The policy on the anvil further notes eligibility for GSP+ preferences may require a minimum value addition of 40 per cent. Exports to countries such as Australia and Canada, which currently enjoy duty-free access, are already required to meet a value-addition threshold of at least 50 per cent.

"In nearly all recent trade negotiations, the requirement for double transformation as a condition for granting duty-free access to Bangladeshi exports has been strongly emphasised," the document reads.Economic trend data

It also highlights that Bangladesh has offered commitments in ongoing negotiations under which garments produced using yarn and fabrics originating from importing countries would be eligible for preferential tariff treatment in proportion to the share of such inputs used in production.

"Accordingly, if Bangladesh's garment industry, particularly knitwear manufacturers, becomes increasingly dependent on imported yarn, securing duty-free market access in the future may become significantly more challenging," the document forewarns.

Seeking anonymity, an apparel-sector leader says the government may consider cash support only for new product categories with 20-percent value addition, which could help diversify export offerings.

"The new items could include sportswear, wedding wear and tech wear, which may require imported fabrics and accessories. Once we start producing such products, the local industry will gradually develop around them," the exporter says.

BKMEA Executive President Fazlee Shamim Ehsan mentions that a recent US court decision put the implementation of the reciprocal-tariff policy on hold, meaning it is currently not applicable to Bangladesh or other countries.Local trade insights

According to the draft Import Policy Order, RMG exporters will be required to maintain a 30-percent value-addition threshold for children's garments, up from the current 15 per cent.

Knitwear and woven garment exports will also be required to attain 30-percent value addition, compared to the existing requirement of 20 per cent.

Exporters of underwear and other specialised garments made from synthetic fibres may face a minimum 40-percent value-addition requirement. Footwear exports, including both leather and non-leather products, may be subject to 30-percent threshold, while ship exports could face 40 per cent, and wooden furniture exporters 50 per cent.

Under the proposed policy, exporters who fail to meet the prescribed value-addition requirements will not be eligible for cash incentives or duty benefits on imported raw materials.

The Ministry of Commerce held a stakeholder consultation on the draft policy on May 22, bringing together industry representatives ahead of its finalisation.

An incremental assistance package announced by the Asian Development Bank (ADB) would fetch Bangladesh US$5.0 billion over next five years and increase the subsequent annual aid by 20 per cent.

The announcement came Monday when ADB President Masato Kanda met Prime Minister Tarique Rahman in Dhaka discussing Bangladesh's development priorities.

Such a bounteous financing commitment comes while the release of remaining sums from an as-much IMF lending package for the country stalls under conditions the new government feels unpalatable in the current context. City & Local Guides

The Integrated Growth Network Development Initiative presented by Mr. Kanda during his visit is designed to expand investment, create jobs, improve connectivity, and promote more balanced regional growth.

"The five-year package is expected to amount to about $1.0 billion a year and will be strategically integrated into ADB's enhanced annual sovereign commitment envelope for Bangladesh," the ADB Dhaka office says in a statement.

And the Manila-based development financier plans to increase its annual sovereign commitments for Bangladesh by 20 per cent from about $2.0 billion to about $2.4 billion annually over the medium term.

The higher annual envelope is hoped to support Bangladesh's development priorities, including investment-led growth, job creation, economic diversification, stronger governance, and a smooth transition from least-developed country (LDC) status.

The ADB president says: "Bangladesh is entering a critical new phase. ADB will help the country protect hard-won stability, unlock new sources of growth, and build a more diversified and resilient economy that delivers better jobs and wider opportunity."Wealth management advice

Marking Masato Kanda's visit, the ADB signed about $1.4 billion in loans as part of the 2026 annual-commitment programme.

The Asian Bank support is scaled up by $250 million to help in financing gaps linked to the economic impact of the Middle East conflict, which is adding pressure to Bangladesh's economy by way of driving up the cost of fuels, liquefied natural gas, fertilisers, and shipping.

These strains come as inflation remains high and the banking sector remains under stress.

The ADB will work with the government and development partners to track the situation and bring in additional financing and private investment, and help Bangladesh build a more resilient economy through more diverse energy sources and exports, and stronger institutions.

Also will it provide $2.0 million in technical assistance to support the preparation and implementation of Bangladesh's medium-term development framework and align ADB's forthcoming country-partnership strategy with government priorities.

Mr. Kanda also met Finance and Planning Minister Amir Khosru Mahmud Chowdhury, with discussions focused on Bangladesh's reform agenda, macroeconomic pressures, external- financing needs, and ADB's support for government's growth and resilience priorities.Local trade insights

The ADB chief met with key private-sector leaders discussing the opportunities and constraints shaping investment.

Also, the Bank is working with the government to mobilise additional private capital by deepening capital markets, preparing bankable projects, and attracting cofinancing and private investment.

The ADB is a leading multilateral development bank supporting sustainable, inclusive, and resilient growth across Asia and the Pacific.

Working with its members and partners to solve complex challenges together, the Asian Bank harnesses innovative financial tools and strategic partnerships to transform lives, build quality infrastructure, and safeguard the planet.

India has scrapped customs duties on cotton imports for five months, the government said on Saturday, as it seeks to boost supplies of contamination-free natural fibre for textile exporters amid strong overseas demand for yarn.

The easing of import restrictions by the world’s second-largest cotton producer is likely to lend support to global prices but is unlikely to trigger a surge in purchases as the rupee’s depreciation has made imported cotton slightly more expensive than domestic supplies.The current 11 percent import duty will be suspended until October 30, the government said in a statement.

India’s textile sector, like others, is under pressure from rising input costs as supply chains are disrupted by the Iran war.The measure is expected to support domestic producers, particularly small and medium-sized firms, by improving cotton availability, the government said.

However, industry officials said Indian cotton is currently the cheapest in the world and that ample supplies from this year’s crop are available domestically, which is likely to limit imports.

“At current price levels, imports are not economically attractive,” Vinay Kotak, president of the Cotton Association of India, told Reuters.“Export-oriented mills need contamination-free cotton and, to meet that requirement, around 600,000 bales could be imported during the duty-free import window.”

The cotton is likely to be sourced from Australia, Brazil, the United States and Africa, which have surpluses, industry officials said.India last year allowed duty-free cotton imports from mid-August through the end of December, helping drive imports to a record 4.7 million bales in the current marketing year, which began last October 1.Cotton is largely grown in rain-fed areas in India, and any disruption to monsoon rains from an El Nino weather pattern could reduce output from the new crop being planted from June and boost import demand, said a New-Delhi-based dealer with a global trade house. “In that scenario, the government could extend the duty-free import window beyond October, as it did last year,” he said.

Canada’s economy posted a surprise contraction in the first quarter versus the year before, making it two straight ‌quarters of annualised decline - which some economists call a technical recession - as the country struggles with US tariff uncertainty.

Gross domestic product declined at an annualised rate of 0.1 percent in the first quarter, Statistics Canada said on Friday, compared with a downwardly revised contraction of 1 percent in the fourth quarter of last year.

Analysts ​polled by Reuters and the Bank of Canada had predicted first-quarter growth of a robust 1.5 percent. On a quarterly basis, ​first-quarter GDP was unchanged against a decline in the fourth quarter of last year.

Canada’s economy has largely withstood trade uncertainty and tariff impacts for more than a year, but the knock-on effects of tariffs have sapped investments, hiring and ​expenditure, and driven up prices.

The upcoming review of the North American free trade deal and the crude price ​shock due to the Middle East war have added more layers of uncertainty.

The last two times Canada was in a technical recession were during the start of the pandemic in 2020 and during the oil shock in the beginning of 2015.

At that time there were two consecutive quarters of decline, both on ​an annualized basis and quarterly basis, StatsCan said. Economists were divided on whether Canada is in a recession or not.

“The trade-induced contraction in ​GDP last quarter meant the economy tipped into a technical recession at the start of the year,” said a note from Capital Economics, though rising ‌oil and gas activity mean the economy likely rebounded in April.

Randall Bartlett, deputy chief economist with Desjardins Group, said the group is not prepared to call the data a recession as the weakness in the Canadian economy was not widespread.

BANK OF CANADA SEES GROWTH OF 1.2% THIS YEAR

The BoC has said growth this year is likely to be at 1.2 percent, down from 1.7 percent last year. It will update its projections in ​July.

The first-quarter GDP was negatively ​impacted by a high level ⁠of imports into the country, but that was largely offset by a high accumulation of inventories, the statistics agency said.

Household spending grew, especially in financial services and food, but this was again mostly canceled ​out by a decline in business and government investments.

Business capital investment fell 0.7 percent, its fifth consecutive ​quarterly decline, StatsCan said.

On ⁠a monthly basis, GDP in March declined by 0.1 percent, against an estimate of flat growth.

An advance estimate from StatsCan showed that growth in April was likely to be 0.4 percent, highlighting a strong start to the second quarter.

Money markets are pricing in a rate hike of 25 basis ⁠points in ​December, even as most economists have called for no change in interest rates all ​through the year.

The Canadian dollar weakened after the GDP data and was trading down 0.28 percent to C$1.3819 to the US dollar, or 72.36 US cents. Yields on the ​two-year government bonds slipped further and were down 7.7 basis points at 2.430 percent.

Inflation in the euro zone’s four largest economies hovered ​above the European Central Bank’s 2 percent target for a third straight month in May, preliminary data showed ‌on Friday, as a rise in fuel costs triggered by the Iran war began to feed through to other prices.

Readings from France, Italy, Spain and Germany are likely to cement the case for a rate hike from the European Central Bank next month and stoke some worries about whether high inflation ​is beginning to take root in the euro zone.

Both Spain and Italy reported strong increases in the ​price of transport and entertainment activities, a likely sign of the knock-on effect of higher fuel costs. Measures of underlying inflation rose both in Italy, to 1.8 percent from 1.6 percent, and in Spain, to 2.9 percent ​from 2.8 percent. France saw a 4.1 percent jump in the cost of fresh food and a slight increase in services inflation.

“We ​are not at the peak yet,” said Nadia Gharbi, a senior economist at Pictet Wealth Management, who expects euro zone inflation to rise until August. “A lot will depend on the situation in the Middle East and we have as a baseline that the situation will ​normalise by the end of June.”

Hopes of a deal to end the war between the United States and Iran ​have pushed oil prices down substantially since the end of April, with a barrel of Brent crude selling for $92 versus $118 back then. Still, ‌prices remain well above the around $70 a barrel level seen just before the war.

A RELATIVELY MILD INFLATION WAVE

Headline inflation was more of a mixed bag. National gauges of price growth rose in France, to 2.8 percent from 2.5 percent, and in Italy, to 3.2 percent from 2.7 percent, but remained stable in Spain at 3.2 percent and fell to 2.6 percent from 2.9 percent in Germany, which implemented ​a fuel discount for May ​and June as part of a package to cushion the impact of higher petrol prices.

“Today’s inflation numbers should not be read as a sign that the inflation wave is already over before it actually started ​but rather as a confirmation that this is a relatively mild inflation wave,” said ​ING’s economist Carsten Brzeski.

All three indexes posted both weekly and monthly gains, with the S&P 500 recording its ninth straight weekly gain, it’s longest streak since December of 2023. Euro zone-wide data due on Tuesday is expected to put headline inflation at 3.3 percent in May, with a core gauge excluding energy, food, alcohol and tobacco at 2.4 percent.

“This information so far hints at a further rise in headline inflation, and some increase in ​core inflation,” JPMorgan economist Raphael Brun-Aguerre said in a note.

France continued ​to see deflation in manufacturing prices, strengthening the view that the current inflation shock should be smaller than the one that followed the Covid pandemic ​and Russia’s invasion of Ukraine in 2022, according to Bersingeco economist Sylvain Bersinger.

Sri Lanka raised fuel prices by up to six percent on Sunday, in line with IMF plans to recover energy costs and phase out subsidies to stabilise the economy.

Petrol was raised to 434 rupees ($1.33), up from 410, while diesel increased to 407 rupees a litre from 392, the state-run Ceylon Petroleum Corporation said.

The price hike came days after the International Monetary Fund released a $695 million instalment of a $2.9 billion bailout loan, agreed in early 2023 to stabilise the cash-strapped South Asian nation.

The IMF wants Sri Lanka to ensure cost recovery for both fuel and electricity tariffs, which have been subsidised by the government since the start of the conflict in the Middle East in February.

President Anura Kumara Dissanayake, in a letter to the IMF made public by the Washington-based international lender, said fuel subsidies will be phased out by September.

Since the United States and Israel began attacking Iran on February 28, triggering a global energy crisis, Sri Lanka has raised petrol and diesel prices by about 48 percent. Electricity has increased by a third.

The Strait of Hormuz, a key waterway through which about 20 percent of global oil exports pass in peacetime, has been effectively closed by Iran.

Sri Lanka imports all its oil and also buys coal for electricity generation.

Colombo has warned that the fighting in the Middle East, and any prolonged conflict, could seriously undermine its efforts to emerge from the economic meltdown of 2022.

Sri Lanka defaulted on its $46 billion foreign debt in 2022 after running out of foreign exchange. Since then, Colombo has been drawing down the IMF bailout loan to stabilise the country.

Just four years after entering mobile phone manufacturing, RFL is now expanding into local production of telecom service-related equipment, including routers and vehicle tracking devices (VTDs), under its Proton brand.

PRAN-RFL Group, one of the country’s largest conglomerates, has received preliminary approval from the Bangladesh Telecommunication Regulatory Commission (BTRC) to locally manufacture and assemble the products under its electronics arm, RFL Electronics Limited.

According to official documents reviewed by The Daily Star, the regulator has also decided to conduct an on-site inspection of the company’s manufacturing facilities before issuing a temporary enlistment certificate for telecommunication service-related equipment.

On May 3, RFL Electronics presented its manufacturing roadmap to BTRC officials, who found the proposal “primarily satisfactory,” according to meeting documents.

RFL started manufacturing Proton mobile phones in late 2022.

Industry observers say the initiative highlights a transformation within Bangladesh’s industrial sector, where local companies traditionally focused on plastic goods and household appliances are increasingly investing in technology hardware and smart devices.

The telecom equipment segment is seen as particularly promising given rising domestic demand for internet connectivity, digital services and smart monitoring solutions.

Vehicle tracking devices are witnessing increasing demand amid the rapid expansion of logistics, ride-sharing, e-commerce delivery and fleet management services in Bangladesh.

Businesses are increasingly using tracking systems to improve operational efficiency and security.

Demand for routers is also growing steadily as broadband internet penetration expands across urban and semi-urban areas. Industry estimates suggest Bangladesh now has around 1.4 crore Wi-Fi users, creating a sizable market for networking devices.

Market analysts say Bangladesh’s router market is expected to continue growing through the end of the decade, driven by remote work, digitalisation and rising household internet usage.

The market currently includes more than 200 models across different price ranges and consumer segments.

International brands such as TP-Link, Xiaomi and Huawei dominate much of the consumer market, while brands like Tenda remain popular because of affordability and strong signal coverage.

India’s foreign exchange reserves fell to a more than one-year low of $681.4 ​billion in the week ended May 22, from $688.89 billion ‌a week earlier, the Reserve Bank of India (RBI) data showed on Friday.

The $7.5 billion decline was largely due to a $4.5 ​billion fall in the value of the ​central bank’s gold holdings, week-on-week.

The value of the RBI’s foreign currency assets also shrunk by ​nearly $3 billion to $543 billion.

Changes in foreign currency assets, expressed ​in dollar terms, include the effect of appreciation or depreciation of other currencies in the reserves.

The RBI has been selling ​dollars to defend the beleaguered rupee, which has ​declined 4 percent since the US-Iran war began, as surging energy ‌prices sparked capital outflows and clouded India’s macroeconomic outlook.

In the week to which the data pertains, the rupee slid to a record low of 96.96 per dollar ​before being shored ​up by firm RBI intervention over multiple trading sessions, including likely on Friday.

It ended the ​session at 95 per dollar, up ​0.7 percent week-on-week. Foreign exchange reserves include India’s Reserve Tranche position in the International Monetary Fund.

The banking sector on the Dhaka bourse yesterday experienced a mixed response from investors following the central bank's latest stringent directives on dividend distribution.

The Bangladesh Bank has directed that commercial banks must maintain a minimum paid-up capital of Tk2,000 crore to declare any cash dividends. The policy, aimed at strengthening the sector's capital base, is expected to significantly restrict cash payouts for most listed lenders.

Under the new framework, which is set to take effect from 31 December 2026, even banks meeting the capital threshold and other regulatory requirements will be allowed to pay a maximum of 50% of declared dividends in cash.Market data shows an immediate impact: out of 36 listed banks, 12 declined, 14 remained unchanged, and five advanced as investors assessed the implications of the new directive

Currently, the room for cash dividend distribution appears extremely limited. Only BRAC Bank meets the Tk2,000 crore paid-up capital requirement while also being in a position to offer cash returns. Although National Bank has adequate capital, its elevated non-performing loan burden continues to constrain dividend eligibility under the new rules.

A senior analyst of a brokerage firm noted that banks below the Tk2,000 crore threshold will need to raise equity—either through rights issues or repeat public offerings—if they aim to comply with the requirement by 2026.

The market reaction was reflected in price movements across key players. NCC Bank led the decliners with a 2.67% fall, followed by Dutch-Bangla Bank down 2.01% and Dhaka Bank slipping 1.77%.

Other notable losers included Eastern Bank, NRB Commercial Bank, and Southeast Bank, all declining more than 1%.

On the gainers' side, ICB Islamic Bank surged 3.85%, while One Bank and BRAC Bank rose 2.67% and 1.05% respectively.

Trading in five other listed banks remained suspended due to ongoing merger proceedings involving Sammilito Islami Bank.Commenting on the policy shift, Mashrur Arefin, managing director and CEO of City Bank, said the regulation may help prevent weaker banks from eroding capital through excessive cash payouts, but warned that a blanket approach could be counterproductive.

He argued that treating strong and weak banks alike could weaken investor confidence in well-managed institutions.Instead, Mashrur Arefin suggested using the Capital Adequacy Ratio (CAR) as a more effective benchmark, noting that banks maintaining CAR levels of 17–18%, well above the 12.5% regulatory minimum, should have greater flexibility in rewarding shareholders.Market analysts echoed similar concerns, suggesting that a more sophisticated approach would involve linking dividend approvals to a bank's broader financial health indicators rather than just a fixed capital amount.

While they acknowledged the move as a step toward long-term financial stability, they cautioned that restricting cash dividends from otherwise strong banks could reduce the sector's appeal to institutional investors.

The government's proposed 0.20% source tax on retail shopkeepers -- designed to net an additional Tk6,000 crore annually -- relies on a collection mechanism that experts and corporate leaders warn will directly inflate consumer prices through compounded supply chain costs.

Rather than targeting retailers directly, the National Board of Revenue (NBR) plans to shift the entire administrative and financial burden onto wholesale distributors and dealers, creating a compliance chain that might ultimately push up the retail prices of daily necessities.

The inflationary pressure begins at the point of distribution.

Under the proposed framework, green-lit by Finance Minister Amir Khosru Mahmud Chowdhury for the upcoming national budget, a consumer goods manufacturer does not pay this tax; instead, their network of local dealers must calculate and collect a levy of Tk2 for every Tk1,000 worth of product value at the exact moment goods are supplied to a retail shop, a senior revenue official told The Business Standard.

For a distributor managing a vast network -- such as Pran-RFL Group's 22,000 dealers or Nestlé Bangladesh's supply lines -- this would require an immediate overhaul of billing systems to calculate micro-levies across hundreds of thousands of daily item deliveries, severely driving up corporate operational and logistical costs.

The mechanism further compounds because the tax applies at each independent distribution point.

If a small, informal grocer sources fast-moving consumer goods, packaged foods, and pharmaceuticals from multiple corporate distributors, the 0.20% tax would be deducted transaction-by-transaction by every single supplying dealer.

These automated deductions would be processed via a digital application linked to the government's "A-Challan" system, which would route the money from the dealer straight to the state treasury, tracking the small shopkeeper via their mobile number and sending them quarterly SMS updates.

The primary catalyst for consumer price hikes lies in the informal nature of Bangladesh's retail sector.

Business representatives point out that the vast majority of the country's estimated one crore small shopkeepers operate completely without Tax Identification Numbers (TIN) or formal accounting software.

Because these micro-traders cannot easily navigate the formal tax system to claim year-end refunds from the NBR -- which is only permissible if they register a formal TIN and file comprehensive tax returns -- they will view the Tk2 deduction per Tk1,000 as a direct, unrecoverable cut to their profit margins.

To insulate themselves from this multi-layered revenue deduction, small shopkeepers are highly likely to treat the source tax as an immediate overhead expense, say experts.

To cover the cost, retailers may adjust the final shelf prices of everyday goods upward.

Consequently, ordinary shoppers will absorb the final financial impact at the counter through pricier fast-moving consumer goods, food items, furniture, steel, cement, and essential medicines.

The revenue board plans to aggressively roll out this system in its first phase to target 50 lakh retailers, aiming to formalise an economy where currently only 15 lakh individuals effectively pay taxes out of 1.3 crore TIN holders.

Oil futures fell more than 2 percent on Friday, closing out their steepest ​weekly decline since early April as traders awaited word that the US, Israel and Iran had reached agreement on a ceasefire.

Brent crude ‌futures for July, which expired on Friday, settled at $92.05 a barrel, down $1.66, or 1.8 percent. WTI US oil futures finished at $87.36 a barrel, down $1.54 or 1.7 percent.

“Obviously, the market thinks the ceasefire will be all easy-peasy and is done and dusted,” said John Kilduff, partner with Again Capital.

The three-month war between the US and Iran has been marked ​by frequent chatter of an impending end to the conflict that would open the crucial Strait of Hormuz, used to ​transit one-fifth of the world’s oil and gas supply. Even with both sides suggesting an agreement was forthcoming, their characterisations of the deal were still somewhat different.

Iran’s Fars news agency said the agreement - which it has not decided yet to approve - ​required Iran to open the strait without restrictions but the Islamic Republic would reopen the waterway “according to its own pre-determined arrangements.”

Iran has said ​after the conflict that it would regulate traffic through the strait, charging fees to transit.

US President Donald Trump has said called again on Iran to immediately re-open the strait. The closure of the waterway has driven energy prices sharply higher worldwide. Recent sessions have been volatile, with swings by as much as $6 for both ​benchmarks on conflicting signals over a potential reopening of the strait.

“The questions are when are we going to open the strait? I wonder ​when are we going to hit the bottoms of the tanks,” Kilduff said. “I’m surprised prices aren’t higher.”

Brent has plunged by about 11 percent this week, its steepest ‌weekly decline ⁠in seven weeks. WTI has dropped by more than 9 percent for its biggest weekly loss in six. Both benchmarks hit their lowest price since mid-April.

“While oil flows through the Strait of Hormuz remain restricted and oil inventories keep falling, the market focus remains on the possibility of a deal between the US and Iran,” said UBS analyst Giovanni Staunovo.

President Trump has long treated the stock market like his personal scoreboard, but his latest financial disclosure suggests something far more active.

“The price drop could be forcing some market players to close ​their long positions.”

The US and Iran reached ​a tentative agreement on Thursday ⁠to extend a ceasefire and lift restrictions on shipping through the Strait of Hormuz, sources told Reuters.

Traffic through the maritime chokepoint remains a small fraction of levels before the conflict. Analysts at ING said a reopening ​of the waterway would offer some immediate relief to the oil market, but a recovery is ​still uncertain.

Japan, which relies ⁠heavily on oil from the Middle East, last month registered a 66 percentdop in crude oil imports compared with April last year.

Commerzbank raised its Brent forecasts to $90 a barrel by the end of September and $85 by the end of the year, based on a scenario in which the ⁠strait remains ​closed to normal shipping for another two months.

US crude, gasoline and distillate stockpiles fell ​last week, the Energy Information Administration said on Thursday, as demand from refiners and consumers rose, while exports fell by 1.16 million barrels per day to 4.4 million ​bpd.

The government has officially decided to opt out of the existing loan agreement signed between the International Monetary Fund (IMF) and the erstwhile Awami League administration, moving instead to negotiate a fresh $5 billion credit package under modified terms.

This major policy shift was confirmed during a high-profile virtual meeting held on 21 May, between a Bangladeshi delegation led by Finance and Planning Minister Amir Khosru Mahmud Chowdhury and an IMF team headed by its Deputy Managing Director Nigel Clarke.

According to an official press release issued today (25 May) by the Ministry of Finance, the digital session focused on Bangladesh's macroeconomic stability, the progress of ongoing IMF programmes, and future institutional cooperation.

During the discussions, the finance minister recalled the fruitful talks held during the latest IMF-World Bank Annual Meetings in Washington DC, noting that the government had since reviewed the reform packages internally.

While the minister reiterated that the current administration remains fully committed to macroeconomic stability and structural overhauls, he explicitly noted that the existing IMF programme had been formulated under a completely different economic and policy context.

He explained that subsequent domestic developments, political economy considerations, and global uncertainties have created severe implementation challenges for certain structural reforms.

The minister emphasised that the government does not want to retreat from economic reforms entirely. Instead, the administration aims to execute a realistic, well-sequenced reform agenda that aligns closely with the ground realities of the country, the release added.

In light of these points, the virtual meeting focused heavily on launching a brand-new IMF credit facility under the newly elected government. The alternative framework proposes a realistic three-year timeline incorporating attainable, priority reforms structured around practical sequencing.

IMF's Nigel Clarke welcomed Bangladesh's updated reform initiatives and its proposal for a new facility, expressing hope for a continued close and constructive engagement between the lender and the state.

Both sides reached a consensus on the necessity of a realistic, implementation-focused loan package, agreeing to fast-track the preparatory activities.

Concurrently, high-level ministry sources revealed that the decision to exit the ongoing package stems from a prolonged gridlock over stringent conditionalities.

The global lender has been putting mounting pressure on Dhaka to implement a uniform 15% VAT rate, eliminate tax exemptions, and replace universal state subsidies on electricity and fertiliser with targeted cash transfers.

Furthermore, international development partners have expressed dissatisfaction with the new government's recent amendment to the bank resolution framework under the Bank Resolution Act, 2026, viewing it as a regressive step for transparency.

The finance minister has publicly asserted that as an elected government accountable to the public, the administration cannot comply with donor demands that run counter to public interest or the BNP government's election manifesto.

High-level financial bureaucrats maintain that an active IMF programme remains vital as an essential institutional seal of approval, which is critical to unlocking an estimated $3 billion to $4 billion in parallel annual budget assistance from the World Bank and the Asian Development Bank.

An IMF mission is expected to arrive in Dhaka this July or August to finalise the specific volume, timeline, and terms of the new alternative framework.

As people return to the capital after the Eid holidays, the Dhaka-Mawa-Bhanga Expressway is greeting travellers not with its usual green surroundings and fresh earthy air, but with an unmistakable stench: rotting rawhides.

After sacrificing cattle on Eid day, many people have dumped hides along the highway this year as prices continued their long decline.

Images of discarded hides, hides buried in the ground, and rawhides thrown into rivers first made national headlines in 2017, when tanneries began relocating from Dhaka’s Hazaribagh area to the Savar Tannery Estate. Nearly a decade later, the same scenes continue to recur with little sign of improvement.

The relocation from Hazaribagh, on the banks of the Buriganga river, came after years of delays by tannery owners and repeated government deadlines. International buyers had increasingly raised concerns about the industry’s environmental record. At Savar, tanners were supposed to receive a fully functional central effluent treatment plant (CETP), but the facility remains underperforming almost a decade after the move.

The Eid-ul-Azha season provides around 50-60 percent of the rawhide local tanneries need for production throughout the year. Proceeds from the sale of sacrificial animal hides traditionally go to charities, madrasas and orphanages.

For years, the government has fixed prices at which small traders are meant to buy hides from the public. Yet those rates have done little to change the overall picture.

Apart from official prices largely remaining on paper and the CETP incomplete, at least half a dozen other factors help explain why rawhides continue to rot each year.

They include a surge of rawhide supply arriving within a few days of Eid-ul-Azha, weak demand, a tannery sector struggling with environmental compliance, softer global demand for leather, cash shortages across the supply chain, poor preservation practices that reduce quality, and allegations of price manipulation by a small group of tannery owners.

Md Shaheen Ahamed, chairman of the Bangladesh Tanners Association, said the leather sector has been in decline since the relocation of tanneries to Savar.

There are now more than 115 operational tanneries in Savar estate, but only five hold Leather Working Group (LWG) certification.

The LWG is a global body that sets environmental and compliance standards for the leather sector. Certification is required for access to markets in Europe, the United States and parts of developed Asia.

Most local tanneries do not have this certification, due mainly to compliance issues and the underperforming CETP.

Ahmed said the industry cannot grow while it fails to meet international environmental and quality standards.

With most tanneries lacking certification, rawhide demand remains weak this year as usual, according to small and medium traders.

Md Anwar Hossain, a rawhide trader in the Posta area of Dhaka, said demand from tanneries is currently low.

He said the prices traders can offer are dictated by what tanneries are willing to pay.

“That is just how the chain works. An official price does not change that,” Hossain said, adding that markets do not move simply because the government puts out a number.

Tipu Sultan, general secretary of the Bangladesh Hide and Skin Merchants’ Association, said rawhide collection this year is around 20 percent below expectations, and trading has not followed the government’s price announcement.

In his view, the core problem is cash.

He said businesses do not have sufficient working capital to buy at the government fixed rates during the peak collection period.

Mohammed Abu Eusuf, professor of development studies at Dhaka University, said Bangladesh’s leather sector is trapped in a cycle of low prices, weak demand and missed export potential.

He said the country stays in the loop because the compliance and governance problems have not been addressed.

Government price-setting has not been effectively enforced, he said, leaving seasonal traders to absorb losses. Unless the sector generates stronger demand and meets international environmental standards, conditions are unlikely to change.

He noted that tanneries with LWG certification are picking up solid export orders. However, much of the industry is excluded from such opportunities because the Savar Tannery Estate remains non-compliant, leaving most leather produced there tied to lower-priced markets, including China.

Md Mizanur Rahman, professor and director of the Institute of Leather Engineering and Technology at Dhaka University, traced the pressure on rawhide prices back to 2012, when international buyers began enforcing stricter environmental and compliance requirements.

Before that, Bangladeshi tanneries exported wet blue leather with fewer restrictions. As buyers in Europe and North America tightened standards, access to those markets increasingly depended on certification and environmental performance.

Rahman said the government moved tanneries from Hazaribagh to Savar to address environmental concerns, but the CETP has not delivered the level of compliance required by global buyers. As a result, many tanneries have shifted towards lower-priced markets, limiting what they can pay for rawhides.

The main driver of falling rawhide prices is weak tannery demand, not a cartel, Rahman said. “If there were strong demand, prices would naturally rise.”

Md Abdur Rahim Khan, additional secretary and head of the Export Wing at the Ministry of Commerce, said price issues in the rawhide market are mainly linked to quality, handling and coordination across the supply chain rather than administrative factors.

He said that during Eid-ul-Azha, large-scale slaughtering by unskilled butchers often leads to torn or damaged hides, reducing their value even when salt is applied.

He added that salt-treated hides generally receive government-fixed prices, but unsalted or poorly handled hides do not fetch expected rates.

Commerce Minister Khandakar Abdul Muktadir said the decline in rawhide prices in recent years is mainly due to structural problems within the industry.

He said the relocation of tanneries from Hazaribagh was the right decision, but the process was poorly managed, leaving many tanneries unable to restart operations properly.

He pointed out that the CETP at Savar, designed for a capacity of 25,000 cubic metres, is currently operating at only 14,000 to 17,000 cubic metres, around 60 percent of capacity.

According to the commerce minister, this shortfall, combined with limited processing and compliance infrastructure, has weakened overall efficiency in the sector.

Muktadir said compliance has become essential for accessing better international prices, measured through the LWG certification.

“Without this certification, factories are considered non-compliant and are excluded from reputable international buyers, including those purchasing finished leather goods and crust leather.”

He added that compared with the Hazaribagh period, there are now fewer processors and manufacturers. As a result, the sector cannot absorb the large volume of hides generated during Eid-ul-Azha, creating a supply and demand imbalance and pushing prices down.

He explained that while CETP capacity constraints prevent immediate full-scale processing, there is no major issue if leather is processed gradually over six to eight months.

The minister said an Italian company is studying the CETP to identify technical solutions for its underperformance. A report is expected in June or early July, after which corrective steps will be taken to restore full 25,000 cubic metre capacity.

Besides, individual effluent treatment plants will become mandatory for large tanneries, with government support through technical assistance and loans, said Muktadir.

The National Board of Revenue is considering raising the specific tax – a form of value-added tax (VAT) – on mild steel (MS) products and related items by around 10% at the production stage, according to sources at the Ministry of Finance.

The proposed change may be included in the Finance Bill accompanying the upcoming national budget. A similar increase in the specific tax on these products was introduced in the previous budget as well.

Industry stakeholders have warned that any further tax hike could dampen demand at a time when the steel sector is already struggling with weak market conditions. They said economic slowdown has reduced infrastructure and construction activities across government, private and individual projects, leading to a sharp fall in demand for steel rods.

Infograph: TBS
Infograph: TBS

According to sources at the NBR, the specific tax on MS products manufactured from re-rollable scrap currently stands at Tk1,700 per tonne, which may be increased by Tk170.

The specific tax on billets and ingots produced from meltable scrap may rise by Tk150 from the current Tk1,500 per tonne. For MS products manufactured from billets or ingots, the tax may increase by Tk160 per tonne. In the case of ingots or billets produced from meltable scrap and MS products manufactured from those ingots or billets, the increase may be Tk220 per tonne.

A senior NBR official, speaking to The Business Standard on condition of anonymity, said the specific tax at the local production stage for MS rods should be higher than the current rate.

"After reviewing the matter, we are preparing a proposal for a reasonable increase in VAT," the official said.

However, Md Shahidullah, managing director of Metrocem Group, believes the current economic climate is not suitable for raising VAT.

Explaining his concerns, he said demand for steel and related construction materials had fallen sharply as infrastructure development activities slowed across the country. "In some cases, we are now forced to sell products below production cost just to stay in business."

"If additional VAT is imposed on these products in such a situation, demand may decline further, which will increase pressure on us," he said.

Industry insiders said steel rod prices were selling between Tk80,000 and Tk85,000 per tonne until March this year, but prices have risen since the outbreak of the conflict in the Middle East.

Shahidullah said rod prices currently range between Tk85,000 and Tk92,000 per tonne.

NBR officials, however, argued that an increase of Tk150 to Tk200 per tonne due to higher VAT would not significantly affect prices.

According to the Bangladesh Steel Manufacturers Association (BSMA), there are around 200 steel mills operating in the country, including approximately 40 large industrial enterprises. The sector's total installed production capacity is about 120 lakh tonnes annually.

Under normal market conditions, annual demand for various steel products – including MS rods, sheets, beams, angles and plates – exceeds 60 lakh tonnes. MS rods, or rebars, account for the largest share of the market and are widely used in the construction sector.

Industry stakeholders said demand for steel rods has fallen by nearly one-third due to a slowdown in real estate and private construction activities, high interest rates and broader economic uncertainty.

In 2015, Bangladesh and Vietnam shared the same S&P sovereign credit rating: BB–. A decade on, Vietnam stands at BB+, one notch from investment grade. Bangladesh has fallen to B+, its banking sector near the bottom of global risk rankings, and Fitch issued a negative outlook just days ago. This is not a sudden crisis. It is the accumulated cost of a decade of governance failures that Bangladesh's policymakers refused to confront while headline growth numbers held up.

Rating record

The table below tracks S&P's sovereign rating trajectory for all five countries over the past decade.

The divergence is unambiguous. Vietnam earned two upgrades from the same starting point; Bangladesh suffered one downgrade. Uzbekistan, unrated until 2019, has already surpassed Bangladesh. Kyrgyzstan – smaller, poorer and landlocked – debuted at B+ in March 2025, level with Bangladesh today despite having no prior rating. Cambodia, which Bangladesh should outrank on every structural metric, sits on exactly the same shelf. Bangladesh and Vietnam were rated identically in 2015. Today they are four notches apart – and the gap is widening.

How a decade was squandered

Three structural failures drove the decline. Forex reserves collapsed from $48 billion in August 2021 to below $20 billion in 2024, compounded by the revelation that headline figures had been inflated for years through inclusion of illiquid instruments. The banking sector failure was deeper: S&P places Bangladesh in Group 9 out of 10 on its Banking Industry Country Risk Assessment.

When Fitch downgraded Bangladesh in May 2024, NPLs stood at 9%; by December 2025 they had reached 30.6% as regulatory forbearance unwound. This is not a banking sector with a problem – it is a banking sector whose problem has finally been measured. A fiscal system generating tax revenue of just 7-8% of GDP provided no cushion, and the interest-revenue ratio hit 29% by end-2025, more than double the B-rated peer median. The student-led uprising of mid-2024, the fall of the Hasina government, and political uncertainty over elections compounded every structural vulnerability.

What peers did differently

Vietnam held to one strategy: export-led industrialisation with consistent macroeconomic management. The China-plus-one manufacturing shift found Vietnam ready; S&P upgraded it twice in six years. Bangladesh had the same garment base and labour cost advantage – and let the window close. Uzbekistan debuted at BB– in 2019 and has since climbed to BB: it brought Franklin Templeton in to manage Uzbekistan National Investment Fund, listed the fund on the London Stock Exchange in May 2026, raised $604 million with four times oversubscription, and made state enterprise governance internationally legible. Kyrgyzstan – smaller and poorer than Bangladesh, unrated until 2025 – raised $700 million in a debut Eurobond with three times oversubscription months after receiving its first rating. Both countries demonstrated institutional credibility and immediately accessed international capital markets. Bangladesh cannot.

Fitch warning of May 2026

On May 13, 2026, Fitch revised Bangladesh's outlook from stable to negative, affirming B+. The proximate trigger is the Middle East conflict – nearly half of Bangladesh's remittances originate there, and crude oil accounts for 15% of imports. But the conflict is the match, not the fuel: limited reform progress is eroding Bangladesh's capacity to absorb shocks.

Revenue fell when the IMF programme required it to rise. Constitutional reform is stagnant. Reserves at $29.5 billion sit below the B-rated median. A negative outlook shifts the burden of proof – Bangladesh must now demonstrate improvement, not merely avoid further deterioration. The three most likely triggers for an unscheduled downgrade to B are a fracture in the IMF programme, reserves falling below three months of import cover, or a major bank failure. At B – Pakistan's cohort – most institutional mandates prohibit exposure to Bangladesh sovereign instruments.

Three scenarios

The base case without decisive action is a downgrade to B within 12 to 18 months. The second scenario – the negative outlook resolved without a downgrade – requires the conflict to de-escalate, reserves to hold above four months of cover, the IMF programme to stay on track, and NPLs to show credible improvement. Every condition must hold simultaneously. The upgrade path toward BB– is a 2028 to 2030 horizon at the earliest, requiring sustained reserve improvement, measurable NPL reduction, and tax revenue approaching 10% of GDP.

What a rating downgrade actually means

Rating downgrades are not abstract. Their consequences are concrete, immediate, and compound across every layer of the economy. Six transmission channels matter most for Bangladesh.

Borrowing costs rise system-wide. Treasury bill yields reached 12% by late 2024 – up from under 7% two years earlier – as investors demanded a higher premium to hold government paper. Higher yields feed the fiscal deficit, which feeds more borrowing, which feeds higher yields still: a self-reinforcing spiral that a further downgrade accelerates.

Trade finance becomes costlier and harder to access. Bangladesh's garment export economy runs on letters of credit. LC confirmation charges levied by foreign correspondent banks are directly linked to the sovereign rating. Exporters operating on 3 to 5% margins absorb those charges or lose orders to competitors whose banks carry no such premium. A move to B would make this materially worse.

FDI dries up. FDI fell 8.8% in FY2024; Standard Chartered Bank Bangladesh's CEO attributed the decline explicitly to rating downgrades reducing risk-adjusted returns. A B rating places Bangladesh alongside Pakistan – no multinational building a medium-term Asia investment case allocates to a B-rated country when BB-rated alternatives exist.

Portfolio capital exits in advance. Many institutional mandates prohibit exposure below BB–. Bangladesh crossed that threshold in 2024. Portfolio investment was already a $111 million net outflow in FY2024. The Fitch negative outlook will have triggered repositioning across mandated investors before any formal rating action occurs.

The sovereign-bank nexus tightens. Public sector credit growth surged to 24% by October 2025 against private sector growth of just 6%. As the sovereign's rating falls, state-owned banks' access to foreign credit lines weakens and their funding costs rise. A sovereign downgrade cascades through the entire banking system the government owns.

LDC graduation compounds the risk. Bangladesh is supposed to graduate from Least Developed Country status in November 2026, losing preferential tariff access that partly underpins its EU garment market. That graduation was designed for a Bangladesh growing at 6 to 7%. Fitch forecasts 3.7% for FY2026. The combination of LDC graduation and rating deterioration creates a double vulnerability with no coherent plan to manage both simultaneously.

A downgrade is not just a signal – it is a tax on every borrower in Bangladesh, from the government to the garment exporter to the bank issuing a Letter of Credit, eventually every individual in Bangladesh.

Conclusion

Bangladesh's rating decline is not irreversible – but it is accelerating. The economic fundamentals remain: a large remittance base, a competitive garment sector, a young labour force. What has been absent is the institutional commitment to make those fundamentals credible to external investors. The rating agencies are explicit about what recovery requires: reserves above the B-rated median, NPLs measurably reduced, tax revenue approaching 10 percent of GDP, and reform continuity through a post-election government. What is absent is not knowledge of what to do. The Fitch negative outlook of May 2026 is a final warning that the window is closing – and that the next action, if nothing changes, will not be an affirmation.

Ershad Hossain, director, Putnam Capital Advisory Pte Ltd, Singapore

This commentary is prepared for informational purposes only and does not constitute investment advice. Putnam Capital Advisory Pte Ltd is a Singapore-incorporated advisory firm active in Bangladesh's capital markets.