Bashundhara Paper Mills, a listed company on the stock exchanges, incurred a Tk249 crore loss in the first half of the current fiscal year due to raw material shortages and price hikes, as well as rising utility and borrowing costs.

In last fiscal year, it faced a blow with incurring loss of Tk330 crore.

During the July to December, Bashundhara Paper Mills reported a loss per share of Tk14.34, which was Tk5.84 at the same time of the previous fiscal year.

In H1 of FY25, it incurred a loss of Tk101 crore.

Explaining the sharp fall in earnings per share (EPS), the company said operating profitability declined due to raw material shortages, higher utility expenses, a steep increase in raw material prices, and rising borrowing costs following interest rate hikes.

"As a consequence, the company's EPS decreased significantly," it said.

According to its half-yearly financial statements, the company's revenue plunged by 72% to Tk113 crore in the first half (H1) of FY26, down from Tk410.47 crore in the same period of the previous fiscal year—a decline of about Tk297 crore.

The report showed that its finance cost soared by 31% to Tk204 crore. As of December, long-term loans of Bashundhara Paper Mills stood at Tk2,118 crore, and short-term borrowings Tk581.85 crore.

In the second quarter, its revenue plunged to Tk81 crore, and incurred a loss of Tk134.59 crore, which was Tk143.22 crore and Tk70 crore respectively.

The net operating cash flow per share increased to Tk6.90 during the July to December against Tk5.41 at the same time of the previous fiscal year while its net asset value per share declined to Tk43.52, which was Tk57.82 as of 30 June 2025, its report showed.

The company said cash flow improved primarily due to a decrease in payments made to suppliers and other operating creditors, which positively impacted the company's overall operating cash position.

India's budget for the fiscal year 2026-27 presented in parliament today (1 February) slashed developmental aid to Bangladesh by 50%, amid a sharp downturn in bilateral ties post-Sheikh Hasina's ouster from power.

This marks the steepest reduction in regional aid, triggered by a diplomatic freeze, allegations of attacks on minorities, and Dhaka's tilt toward Pakistan.

For the next fiscal beginning in April, the budget's allocation for Bangladesh has been pegged at Rs60 crore as against Rs120 crore for FY26. In fact, the revised estimate of the aid to Bangladesh in FY26 budget has been pegged at Rs34.48 crore as ties between the two sides remained frosty.

Bhutan was allocated the largest share of Rs2,288 crore as development aid in the budget for FY27 followed by Rs800 crore to Nepal and Rs550 crore each to the Maldives and Mauritius.

Bhutan remains the largest recipient of Indian aid and sees its allocation rise by Rs138 crore to Rs2,288 crore from Rs2,150 crore in the previous budget of FY26.

The aid for the Maldives saw a drop of Rs50 crore to Rs500 crore while the same to Mauritius saw a 10% rise. Myanmar's allocation falls 14% to Rs300 crore.

In continuation with India's warming up of relationship with Afghanistan, an allocation of Rs150 crore has been made in the new budget to that country. The allocation to Afghanistan for FY26 was Rs100 crore.

Sri Lanka has been allocated Rs400 crore and Rs300 crore was set aside for Myanmar in the budget for FY27. The aid for Afghanistan, Sri Lanka and Nepal saw a marginal increase in allocation.

In a break from the last few years, no allocation has been made in the new budget for the Chabahar port project in Iran. In the budget last year, an amount of Rs100 crore was set aside for the project and the amount increased to Rs400 crore in the revised estimate.

The budget allocated a total of Rs22,118 crore to the Ministry of External Affairs (MEA) as against the current fiscal's budget estimate of Rs20,516 crore and revised estimate of Rs21,742 crore.

The total overseas development partnership portfolio for FY26 was pegged at Rs6,997 crore, which is little over 31% of the allocation made to the MEA.

Out of the total allocation under the overseas development partnership portfolio, Rs4,548 crore has been earmarked for immediate neighbours.

The amount is expected to be spent towards implementation of a variety of initiatives ranging from large infrastructure projects such as hydroelectric plants, power transmission lines, housing, roads, bridges to small-scale grass-roots level community development projects, according to officials.

India's total foreign grants hit Rs5,685 crore in FY26, according to budget papers.

The Bangladesh Bank on the direction from a member of the central bank's board of directors has sent letters to banks, seeking information on agricultural loans of up to Tk10,000.

"As per an urgent direction of honourable member of the Bangladesh Bank's board of director [conveyed by director (ACD-1) sir], you are requested to send the total principal, interest/profit and outstanding figure (as on 31 December 2025) of the agricultural and rural loan/investments amounting up to Tk10,000," the letter said.

The letter, sent through email on Thursday after office hours, instructed banks to submit the information by 12 noon on Sunday.

Arief Hossain Khan, spokesperson and Executive Director of Bangladesh Bank, confirmed that the request for data on loans was made at the demand of a board member.

A senior official from the relevant BB's Agricultural Credit Department told The Business Standard, "I was ordered by a director to request information on agricultural loans below Tk10,000, and I sent emails to the banks accordingly."

When asked who the letter referred to as a member of the board, the official. Requesting anonymity, identified him as Rashed Al Mahmud Titumir.

Titumir is a professor at Dhaka University's Development Studies Department and chairperson of the private research organisation, Unnayan Onneshan.

Multiple attempts to contact Titumir for comment were unsuccessful.

Bangladesh Bank Governor Ahsan H Mansur told TBS: "I am not aware whether banks were asked for such data; I will look into the matter."

Several managing directors of several public and private banks said that while the Bangladesh Bank routinely seeks information, the process in this instance was unusual.

An MD of a private bank told TBS, "Typically, the central bank requests data in a standard procedure, but this time the request came by email on very short notice."

Sources say the normal protocol for requesting data from banks was not followed. Senior officials of the central bank or the Board did not discuss the request in any meetings. Usually, such requests are accompanied by a note presented by the relevant department to the executive director, deputy governor, or sometimes the governor. This process was not observed in this case.

An MD of a state-owned bank said, "Our bank has over 30,000 such borrowers, with nearly Tk50 crore currently outstanding. We already face difficulties in collecting repayments. If a political decision is imposed to waive these loans, it will be extremely challenging, as these are depositors' funds and cannot be written off arbitrarily."

An MD of a first-generation private bank, speaking on condition of anonymity, said: "If the practice of loan waivers continues, ignoring subsidies and other agricultural support, it is worth considering how much marginal farmers will actually benefit. Bangladesh Bank has long displayed such unprofessional behaviour, and especially since 5 August, its bias towards a particular political party has repeatedly emerged."

The interim government is preparing to finalise two significant trade agreements with the United States and Japan before the national polls, aimed at securing greater market access and protecting export revenue following its upcoming graduation from least developed country (LDC) status.

Speaking to The Daily Star yesterday, Commerce Secretary Mahbubur Rahman confirmed that the Economic Partnership Agreement (EPA) with Japan will be signed on February 6 in Tokyo, while discussions continue regarding the format of the US trade deal originally scheduled for February 9 in Washington.

Given that the 13th general election is set for February 12, leaving minimal working days, the US agreement may proceed virtually instead.

The anticipated US deal centres on duty-free market access for Bangladeshi garments manufactured using American cotton. Under the proposed terms, garment exporters who can demonstrate that 60-70 percent of their products are made with US-sourced materials such as cotton will be exempt from the 20 percent tariff on those components.

Secretary Rahman also suggested that the Donald Trump administration is considering reducing the reciprocal tariff rate from its current 20 percent level, though the exact reduction percentage remains undetermined. This concession follows months of bilateral negotiations.

Meanwhile, Commerce Adviser Sk Bashir Uddin and the ministry’s trade negotiation team are travelling to Tokyo this week to sign what will be Bangladesh’s first full-fledged trade agreement with a major partner.

The advisory council approved the EPA on January 22, establishing a framework for preferential trade benefits after Bangladesh transitions from LDC status in November.

“We are ready to sign the EPA with Japan on February 6, according to our previous announcement,” Rahman said.

The agreement provides substantial market access benefits. Once it comes into effect, Japan will grant duty-free entry to 7,379 products representing 97 percent of Bangladesh’s export basket, including key garment items. Bangladesh will reciprocate by offering duty-free access to 1,039 Japanese products, phased in over 18 years.

Beyond goods, the EPA includes provisions for trade in services. Bangladesh has committed to opening 97 sub-sectors across 12 service categories to Japan, while Japan will open 120 sub-sectors to Bangladesh. This framework is expected to encourage Japanese investment and facilitate technology transfer.

Japan currently stands as Bangladesh’s largest Asian export market, with shipments approaching $2 billion annually, predominantly driven by garment demand. Last month, Japan confirmed it would extend duty-free market access for Bangladesh for three additional years through 2029.

These trade agreements represent critical components of Bangladesh’s strategy to maintain export competitiveness after losing LDC privileges.

Research estimates suggest the country could face export losses of up to $8 billion annually once LDC-related benefits expire, making preferential trade arrangements with major partners essential for sustaining economic growth.

Bitcoin, the world’s largest cryptocurrency by market value, was down by 6.53 percent at $78,719.63 at ​12:48 p.m. ET (1748 GMT) on Saturday, continuing its decline from the ‌previous session.

On Friday, bitcoin fell to as low as $81,104, the lowest since November 21, while the US dollar gained after former Federal Reserve Governor Kevin Warsh was selected as the next Fed chair. Some investors and ‌traders are concerned he might tighten up on cash in the ​financial system.

Warsh has called for regime change at the central bank and wants, among other things, a smaller Fed balance sheet.

Bitcoin and other ‍cryptocurrencies have been regarded as beneficiaries of a large balance sheet, ‍having tended to rally while the Fed greased money markets with liquidity - a support for ‌speculative ‌assets.

Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin, said the Fed’s “bloated ‍balance sheet combined with heavy-handed bank regulation” had kept liquidity trapped on Wall Street instead ‌of ‌flowing to Main Street, helping fuel bubbles in assets such as bonds, crypto, metals and meme stocks.

Ether also fell 11.76 percent to $2,387.77 on Saturday afternoon. Cryptocurrencies have been struggling for direction since tumbling last year, having been left behind by big rallies in gold and stocks.

“Sometimes these ​price adjustments feed on themselves,” Jacobsen said, adding that Friday’s abrupt drop had reminded people of the risks. He said it was “possible, if not likely, that we see more ‍selling over the next few days.”

Cryptos are having a rough time in what was once hoped to be a golden era of flows and friendly regulation under President ​Donald Trump. Market-leading bitcoin has lost a third ‍of its value since striking record highs in October last year.

Private sector credit growth fell to a record low in December 2025 due to political uncertainty and an economic slowdown, signalling stagnant investment.

Last month, business credit growth dropped to 6.10 percent, the lowest in at least four years, down from 6.58 percent in November, according to Bangladesh Bank data.

The central bank had set a credit growth target of 7.2 percent for private businesses in December 2025 in its July–December 2025 monetary policy, after growth reached 6.5 percent by the end of June 2025.

Two leading bankers said loan demand remains weak because entrepreneurs are hesitant to make new investments or expand their businesses.

“All are waiting for a peaceful political transition. A free and fair election is needed for credit demand to pick up,” said Mati Ul Hasan, managing director of Mercantile Bank PLC.

He added that the weak loan demand has led to rising liquidity in the banking sector.

Ashikur Rahman, principal economist at the Policy Research Institute (PRI) of Bangladesh, said private credit growth has slowed as economic agents factor in the uncertainty surrounding the national elections scheduled for February 12.

“Since the political climate strongly affects investment decisions, entrepreneurs are delaying investments to see who will take power after the election and whether the process is seen as credible enough to bring political stability,” he added.

Mohammad Ali, managing director and CEO of Pubali Bank PLC, one of the oldest private banks, said private sector investment remains stagnant.

He added that the slow implementation of public development projects is another reason.

“All attention is on the election,” he said, adding that demand for long-term loans and capital machinery may increase in May-June after the election.

Bangladesh Bank said in its July-December 2025 policy that several factors may have slowed credit demand, including weaker borrowing from non-bank deposit corporations and other financial sectors amid ongoing uncertainties in the country, as well as the impact of a contractionary monetary policy.

The International Monetary Fund (IMF) said in its latest report on Bangladesh that unresolved banking issues would further limit credit, reduce investment, and slow growth. High non-performing loans and undercapitalisation in the banking sector restrict banks’ ability to provide credit for private sector development.

The Bangladesh Bank (BB) has asked banks to submit detailed information on agricultural and rural loans of up to Tk 10,000 so the data can be kept ready “for the next government”.

In a recent email from the central bank’s agriculture credit department, banks were instructed to provide comprehensive loan data following what officials described as an urgent directive from a BB board member.

“You are requested to send via email the data -- as of December 31, 2025 -- on agricultural and rural loans up to a maximum of Tk 10,000, including total principal, interest/profit, and outstanding balance,” according to the email seen by The Daily Star.

The central bank’s move to collect the information comes just days after Bangladesh Nationalist Party Chairman Tarique Rahman, on January 29, pledged to waive agricultural loans of up to Tk 10,000, including interest, and to introduce “farmer cards” if his party is voted into power.

Contacted, Arief Hossain Khan, executive director and spokesperson of Bangladesh Bank, told The Daily Star that a director had placed the matter before the board.

When asked about the reason, he said the central bank wants to be able to supply the information quickly if the next government takes any initiative regarding agricultural loans or the agricultural sector.

“It may be coincidental that the issue arose at the same time as a political party chief’s announcement on waiving agricultural loans,” he added.

Officials at the central bank said resentment has grown among agricultural loan departments of banks over the matter.

India has increased its defence budget by 15% to Rs 7.84 lakh crore for the 2026–27 financial year, as the country plans major procurement programmes, including contracts for Rafale fighter jets, submarines and unmanned aerial vehicles.

The allocation marks a sharp rise from Rs 6.81 lakh crore in the 2025–26 financial year.

Of the total outlay, the armed forces will receive Rs 2.19 lakh crore for modernisation under the capital budget, reflecting a 21.84% increase from Rs 1.80 lakh crore in the previous fiscal year.

Under capital expenditure, Rs 63,733 crore has been earmarked for aircraft and aero engines, while Rs 25,023 crore has been allocated for strengthening the naval fleet.

In another boost to the defence sector, Finance Minister Nirmala Sitharaman, while presenting the budget in parliament, announced an exemption of basic customs duty on imported raw materials used in manufacturing aircraft parts for maintenance, repair and overhaul activities in defence units.

Bangladesh's leading textile companies reported a noticeable slowdown in business during the October–December quarter of FY26, as falling yarn prices, weak global demand and rising production costs combined to erode both revenue and profitability across the sector.

Financial statements show that most giant spinners and textile manufacturers posted year-on-year declines in revenue during the quarter. Malek Spinning's revenue fell 6% to Tk673 crore, while Square Textiles saw a sharper 14% drop to Tk580 crore. Envoy Textiles' turnover declined by 10% to Tk412 crore, Shasha Denims' revenue slipped 4% to Tk328 crore, Matin Spinning recorded a 2% fall to Tk215 crore, and Fareast Knitting's revenue dropped 7% to Tk201 crore.

The pressure on the top line was reflected more severely in profits, highlighting how declining yarn prices compressed margins yarn. Malek Spinning's profit dropped 37% to Tk31.85 crore, while Square Textiles suffered one of the steepest falls, with profit plunging 93% to Tk2.77 crore. Shasha Denims' profit declined 65% to Tk3.95 crore, Matin Spinning's fell 36% to Tk9.91 crore, and Fareast Knitting saw profit collapse by 99% to just Tk0.10 crore. Envoy Textiles stood out as an exception, posting a marginal 1% increase in profit to Tk35 crore despite lower revenue.

Company disclosures indicate that the sharp fall in yarn prices was a key driver behind the weaker performance. Square Textiles said its net profit declined significantly due to a notable drop in yarn prices alongside higher finance costs. With selling prices falling faster than input costs, mills struggled to protect their margins even when production volumes remained stable.

Malek Spinning also cited margin pressure in its quarterly statement, noting that the cost of goods sold rose in the second quarter as sales prices declined compared to raw material prices, while factory overheads increased. The company added that export demand weakened during the period, contributing to lower sales and gross profit, which ultimately dragged down net earnings.

Envoy Textiles painted a mixed picture. While its fabric exports increased by 12% during the quarter, cotton yarn exports plunged by 65%, weighing on overall revenue. Speaking to The Business Standard, company secretary Saiful Islam Chowdhury said the firm has gradually shifted away from exporting yarn as more output is consumed internally. Yarn exports, which once accounted for around 40% of total production, have now fallen to about 20%, reflecting changes in business strategy amid volatile prices.

Shasha Denims attributed its profit decline mainly to a sharp rise in the cost of goods sold combined with lower selling prices, which significantly compressed gross margins. The company said earnings were partially supported by consistent profit contributions from associate companies, preventing an even steeper fall in net profit.

Matin Spinning's results also underscored the impact of weaker yarn prices. The company said revenue declined despite higher sales volume because the average selling price per kilogram dropped from $3.68 to $3.47. Although cost efficiencies helped improve its gross profit margin, the lower price environment still weighed on overall performance.

Industry insiders say the challenges facing textile mills go beyond price fluctuations. Production costs have risen by around 30% over the past two years due to higher gas prices, wage hikes and irregular gas supply, making it difficult for mills to compete with imported yarn. According to data from the National Board of Revenue, cotton yarn imports surged 39% in 2024 to $2.28 billion, while fabric imports by knitwear factories jumped 38% to $2.59 billion, intensifying competition for local producers.

Mill owners also point to reduced government incentives for using local yarn, with cash incentives cut sharply and long delays in disbursement further discouraging garment exporters from sourcing domestically. At the same time, higher gas tariffs, stricter bank loan conditions and allegations of illegal yarn imports have added to the sector's woes.

While the government is considering higher tariffs on yarn imports to protect local spinners, industry leaders warn that without addressing structural cost pressures and restoring competitiveness, falling yarn prices will continue to squeeze revenues and profits in the months ahead.

In the first three months of the 2025–26 fiscal year, 35.33% – or Tk31,800 crore – of the government's operating expenditure was spent on servicing debt interest.

This was the single largest item of spending, covering interest payments on both domestic and external debt. Notably, interest payments also account for the largest allocation within the operating budget.

For the current fiscal year, the government has adopted a budget of Tk7.9 lakh crore in total expenditure, of which Tk5.4 lakh crore has been allocated to the operating budget. Of this operating budget, 22% – or Tk1.22 lakh crore – has been earmarked for interest payments, including Tk1 lakh crore for domestic debt interest and Tk22,000 crore for foreign debt interest.

These figures were highlighted in the Government Finance Statistics report for the first three months (July to September) of the 2025–26 fiscal year, published by the Office of the Comptroller General of Accounts.

According to the report, the government spent a total of Tk90,000 crore during the first three months. Of this, Tk16,900 crore was spent on salaries, allowances and pensions for government employees. In addition, Tk5,300 crore was spent on goods and services, Tk15,800 crore on subsidies, Tk8,400 crore on grants, and Tk8,700 crore on social safety net programmes. Expenditure in other sectors amounted to Tk3,100 crore. The government also spent Tk12,600 crore on the acquisition of non-financial assets.

Meanwhile, data from the Implementation Monitoring and Evaluation Division (IMED) of the Planning Commission show that development expenditure during the first three months of the fiscal year stood at Tk12,158 crore.

During this period, the government earned total revenue of Tk1,17,800 crore. Of this, Tk92,100 crore came from tax revenue collected by the National Board of Revenue (NBR) and other taxes. Grants amounted to Tk700 crore, while non-tax revenue and other income totalled Tk25,000 crore.

The report states that the government did not need to borrow to meet operating expenditure during the first three months of the fiscal year. After covering operating expenditure and spending on non-financial asset acquisition from total revenue, the government had a surplus of Tk15,200 crore. Even after meeting development expenditure, a surplus of Tk3,042 crore remained in government accounts.

An official from the Finance Division, speaking on condition of anonymity, said the surplus appeared mainly because development expenditure was low. Under the current government, fewer new projects have been taken up, and spending on ongoing projects has also been limited.

The official added that in the first three months of the current fiscal year, the National Board of Revenue collected more than 20% higher revenue compared to the same period of the previous fiscal year, but development spending did not increase accordingly.

When asked about the issue, Towfiqul Islam Khan, Additional Director (Research) at the private research organisation Centre for Policy Dialogue (CPD), told The Business Standard, "Allocations for interest servicing and salaries and allowances are always fixed in the budget, as interest on past borrowing must be paid. As a result, there is little scope to adjust these expenditures. Because spending in other areas that was expected at the start of the fiscal year did not take place, a large share of expenditure appears to have gone towards interest payments."

He noted that it would not be possible to exit this situation quickly.

"If the government can increase revenue collection and avoid high-interest borrowing, pressure from debt servicing could ease. However, in recent fiscal years, borrowing has been used to finance operating expenditure. Ideally, borrowing should be directed towards sectors where the resulting asset creation generates returns greater than the loan principal and interest," he said.

Towfiqul added that there was a time when deficit budgets were not a major concern, but that framework has now broken down. As a result, Bangladesh faces rising debt risks, and the budget structure itself has come under strain. An elected government, he said, must undertake a deep review of the situation and take informed decisions.

The weakening dollar, which hit a four-year low last week against major global currencies amid rising tensions between the US and Europe over Greenland, is expected to help Bangladesh contain inflation and ease its debt servicing burden, giving the central bank more flexibility in monetary policy.

However, it could dampen export earnings and remittance values unless gains in competitiveness and productivity offset the impact, according to market insiders.

The dollar's downturn is expected to appreciate the taka, as the euro and pound were among currencies that surged against the greenback this month. Eleven of the 19 emerging market currencies tracked by Oxford Economics also gained more than 1%.

Bangladesh Bank has been buying dollars at over Tk122 from the market for the past six months to contain volatility and support remitters and exporters, indicating that appreciation pressure is already present.

Against this backdrop, the central bank is expected to maintain a tight monetary stance for the second half of FY26, with the policy rate likely to remain unchanged at 10% when the monetary policy statement is announced next week.

A further fall in the global dollar price would help Bangladesh Bank reap the benefits of lower import costs, which would ease inflationary pressure and narrow the trade deficit, market insiders said.

Inflation has already begun to ease, falling to single digits from double digits, while the external balance remained comfortable. The financial account recorded a surplus of more than $1.2 billion during July-November of FY26, according to central bank data.

'Mixed but broadly supportive effects'

The US Federal Reserve is expected to lower interest rates amid mounting pressure from Donald Trump, a move that could weaken the dollar further as investors chase higher returns outside US Treasuries.

Explaining the impact on Bangladesh, a former Fed official, speaking on condition of anonymity, told The Business Standard that a weaker dollar would have mixed but broadly supportive effects on the economy.

"On the positive side, Bangladesh's large stock of dollar-denominated external debt, both public and private, would become cheaper to service in local-currency terms, easing fiscal pressure and balance-sheet stress," the official said.

Central bank data show total external debt stood at $113.20 billion at the end of FY25. The ratio of foreign exchange reserves to total debt rose to 23.60% from 20.80% a year earlier.

"Import costs for fuel, fertiliser, food grains, and capital machinery would also decline, helping contain inflation and narrow the trade deficit. For a country like Bangladesh, where imported inputs play a major role in domestic price formation, a softer dollar can translate relatively quickly into lower cost-push inflation, giving the central bank more flexibility in monetary policy," said the Fed official.

On the downside, export and remittance channels are more complex. Garment exports are largely dollar-invoiced, meaning a weaker dollar could reduce taka earnings unless higher volumes or price adjustments compensate, he said.

"Competitiveness will depend on peer currencies," added the official. "If the euro, pound or major Asian currencies strengthen, Bangladesh could gain market share. If competitor currencies weaken more sharply, export margins may come under pressure."

Remittances, mostly earned in dollars, could also convert into fewer taka, potentially weighing on household consumption, he explained.

"Overall, a weaker dollar would likely ease short-term macroeconomic pressures for Bangladesh, but longer-term growth will still depend on productivity gains, export diversification and careful exchange rate management," said the official.

'Overall gains outweigh losses'

Echoing this view, Md Ezazul Islam, director general of the Bangladesh Institute of Bank Management, said Bangladesh would gain more than it would lose from a weaker dollar.

He said the government would need to increase imports from the US as part of efforts to reduce tariffs, and a softer dollar would lower costs, offering significant relief.

In November last year, a consortium of Bangladesh's top three soy crushing companies – Meghna Group, City Group and Delta Agro – committed to buying $1 billion worth of US soybeans over the following 12 months.

Ezazul said the taka could strengthen further, allowing the central bank to buy more dollars and rebuild reserves.

Reserves rebuild amid stable dollar rate

Bangladesh Bank Governor Ahsan H Mansur recently told The Business Standard that reserves could reach $35 billion to $36 billion by June next year, based on official projections.

The central bank has already rebuilt more than $8 billion in reserves, mainly through market purchases at over Tk122, taking total reserves to $28 billion under IMF calculations.

Ezazul, also a former executive director of Bangladesh Bank, said the dollar rate had remained stable at Tk122.30 despite large-scale purchases, largely due to global dollar weakness.

"This signals that the central bank could gain naturally from further dollar softening in the coming months," he said. He added that exporters could also benefit, as Europe remains Bangladesh's largest export market and the euro has already strengthened against the dollar.

Lower import costs would help offset exporters' currency losses from a stronger taka, he said, although Bangladesh Bank may face income losses as much of its reserves are invested in US Treasuries.

On monetary policy, Ezazul said the central bank's tight stance was appropriate, as inflation would ease naturally if global prices fell amid a weaker dollar. "This is not the right time to cut the policy rate due to political uncertainty," he added.

Bangladeshis living abroad sent home a record $3.17 billion in remittances in January this year, posting a 45 percent year-on-year jump.

Bankers credited this surge to various factors, including the national election scheduled to be held on February 12.

They said relatives of candidates normally send money for election campaigning.

Moreover, Ramadan, the holy month of fasting for Muslims, is set to begin a few days after the national polls, when migrant workers typically send more money home compared to other months.

They also added that more expatriates are now using formal banking channels, while informal routes have siphoned off less money since the political changeover in August 2024.

Cumulatively, remittance inflows in the first seven months of the current fiscal year (July–January) stood at $19.44 billion, up from $15.96 billion during the same period of the previous fiscal year, representing a year-on-year growth of 21.8 percent.

The main reason for restoring the lottery system in primary share allocation is to boost turnover in the secondary market against the backdrop of a persistent investor exodus.

The IPO lottery system was removed in April 2021 after it was repeatedly accused of depriving retail investors of IPO shares. The Bangladesh Securities and Exchange Commission (BSEC) replaced it with the pro-rata allotment system, which enabled share allocation to every valid applicant in proportion to the quantities applied for.

"We have observed that IPO shares were mostly exhausted by high net worth individuals [under the pro-rata system]. They have more money. They applied for more shares and they got more," said BSEC spokesperson Abul Kalam.

According to the market watchdog, the very objective behind removing the lottery system could not be achieved. Instead, enthusiasm surrounding new listings faded as retail investors received only nominal numbers of shares.

The BSEC brought back the lottery system even though the taskforce assigned to suggest capital market reforms made no recommendation on IPO share distribution.

"Out of 200 public opinions that we received [on the revised rules], 171 voted for the lottery system," said Kalam.

"We did not recommend bringing back the lottery system in IPO," said Md Moniruzzaman, managing director and CEO of Prime Bank Securities Ltd, adding that IPO hunters might have pushed for the return of the system.

"They might have given votes in the public opinion. It is true the lottery system encouraged participation with the hope for higher profits," said Moniruzzaman, who was in a focus group responsible for assisting the taskforce.

Under the pro-rata system, the IPO share pool was divided into different investor categories with predefined quotas for each.

The main categories were general investors (including retail and local individuals), non-resident Bangladeshis (NRBs), and eligible investors (institutional or qualified investors). The total number of shares allocated to each category was fixed as a proportion of the IPO size.

That meant if the eligible or institutional portion was oversubscribed, each applicant in this segment received shares in proportion to the amount applied for.

"The pro-rata system prefers big investors," said Kalam.

Another reason for removing the lottery system earlier was to curb investors' speculative behaviour.

The lottery-based IPO process encouraged short-term speculation, with investors applying mainly to gain quick listing profits rather than long-term investment returns.

However, the BSEC took into consideration the steep decline in the number of BO accounts since the repeal of the lottery system.

"There were nearly 3 million BO accounts in the market when the lottery system was in place. Now it has fallen to 1.6 million. Market turnover has also declined. We believe the reintroduction of the lottery system will bring back the festive mood [around listings] and increase turnover," said the BSEC spokesperson.

When retail investors make profits from IPO shares, they reinvest a portion of those profits in the secondary market, Kalam added.

Lottery-driven IPOs used to witness excessive oversubscription-sometimes hundreds of times the required amount-creating operational and settlement pressure in the IPO process.

According to Kalam, this will not happen now as BO account opening has become more tightly regulated. Investors must have a bank account and a bank certificate in their own name before opening a BO account. Opening a bank account requires a national ID card.

"Fake accounts can no longer be used to apply for IPO shares," said the BSEC spokesperson.

The regulator has also eliminated, under the revised IPO rules, the minimum requirement of Tk 50,000 investment in the secondary market for each BO account.

"We have brought back the lottery system to ensure more shares for general investors. We believe this will increase investor participation in the market," Kalam added.

Chief Adviser Prof Muhammad Yunus Sunday directed opening free-trade agreement (FTA) negotiations with the European Union forthwith to safeguard Bangladesh's trade preferences in its largest export market as the current duty-free access is set to expire.

The head of interim government stressed the urgency during a courtesy call by Nuria Lopez, Chairperson of the European Chamber of Commerce in Bangladesh (EuroCham), at the state guesthouse Jamuna in Dhaka.

Michael Miller, European Union's Ambassador in Bangladesh, took part in the meeting and discussion.

They discussed the need to accelerate European investment in Bangladesh, how to ensure smooth trade relations between Bangladesh and the EU, and the need for further reforms to improve the country's business climate.

They also discussed the upcoming elections and the deployment of international observers to monitor the polls.

Professor Yunus mentions that the Interim Government has recently concluded an Economic Partnership Agreement (EPA) with Japan, paving the way for duty-free access for more than 7,300 Bangladeshi products to the world's fourth-largest economy.

Bangladesh is preparing to hold similar negotiations with other countries, including the European Union, to ensure continued duty-free access for its products -- particularly readymade garments -- to the EU market for the foreseeable future, he told the EU side.

"The EPA with Japan has opened doors for us. It gives renewed hope for our exports. We definitely hope to sign an FTA with the EU to expand our market," the Chief Adviser said.

The EuroCham chairperson, Nuria Lopez, said Bangladesh needs to begin FTA negotiations urgently, as the country may lose its existing trade preferences in the EU -- its largest export destination -- after graduating from least-developed country (LDC) status.

She notes that an FTA would attract more European investment to Bangladesh, create jobs, and boost exports to advanced Western markets.

Lopez points out that India is signing an FTA with the EU, while Vietnam already has such an agreement, allowing both middle-income countries preferential access to the European market.

"We are advocating for an FTA. I will go to Europe to encourage private companies to invest in Bangladesh," she told the meet.

EU Ambassador Michael Miller said that the commercial relationship with Bangladesh would evolve after graduation but not before 2029.

He underlines EU's strong interest in bringing European investment and technology to Bangladesh -- an important market with a population of nearly 200 million. He also expresses EU readiness to organise an EU-Bangladesh Business Forum in 2026.

"We are looking for early political signals that EU companies will be encouraged to come and will enjoy a level playing field," he said during the

trade discussion.

The Chief Adviser also emphasised the relocation of factories to Bangladesh, noting that European firms can take advantage of the country's large pool of skilled labour at competitive costs.

"We are building a free-trade zone. Our aim is to turn Bangladesh into a manufacturing hub for global businesses. We want more European investment in Bangladesh," he told the EU side.

Professor Yunus expressed satisfaction over the EU decision to deploy a large contingent of election observers to Bangladesh for the upcoming general election and referendum.

"It is important that EU election observers are here. It is a huge vote of confidence in revitalising our democracy," he said, adding that the overall picture of the election campaign is "very positive."

Lamiya Morshed, SDG Coordinator and Senior Secretary of the government, was also present at the meeting.

Merchandise exports earned Bangladesh US$48.28 billion in the last fiscal year (2024-25) and the EU accounted for 44.29 per cent or $19.71 billion.

Bangladesh's exports are destined to face up to 12-percent duty after LDC graduation and its transition period till 2029.

Despite political and economic uncertainty, most listed pharmaceutical companies reported strong revenue and profit growth in the October–December quarter and the first half of the fiscal year.

Analysts said higher sales, lower costs, easing finance expenses, efficient working capital management, stable demand, steady exchange rates, and operational efficiency drove the improved performance.

Renata PLC, one of the country's leading drug manufacturers, reported 25% year-on-year profit growth in the first half of the fiscal year. Consolidated profit rose to Tk156.26 crore in July–December from Tk125.08 crore a year earlier, while EPS increased to Tk13.58 from Tk10.83. Consolidated revenue grew 6.56% to Tk2,223.84 crore.

Pharmaceutical product revenue, accounting for 80.7% of total revenue, rose 10% year-on-year, driven entirely by higher sales volumes, while the animal health segment remained flat. Export revenue, including subsidiary income, declined 10.1%, and contract manufacturing revenue fell 28.4%.

Export income rose 8.2% in the first quarter of FY26 but dropped 23.4% in the second quarter after export-bound inventory was damaged in a fire at Dhaka airport on October 19, 2025, leading to deferred orders. Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) increased 20.6% due to operational efficiency, while financing costs fell 7.3% following capital restructuring.

Square Pharmaceuticals, the country's largest drug maker, also posted strong growth. In the first half of the fiscal year, consolidated revenue rose 15% year-on-year to Tk4,338 crore, while net profit increased 16% to Tk1,467 crore, with EPS reaching Tk16.56. In the October–December quarter alone, revenue grew 9% to Tk2,179 crore and net profit rose 10% to Tk727 crore, reflecting sustained domestic demand despite rising sector-wide costs.

The results include contributions from foreign subsidiary Square Pharmaceuticals Kenya EPZ Ltd, local subsidiary Square Lifesciences Ltd, and associate companies Square Textiles, Square Fashions, and Square Hospitals, underscoring the group's diversified operations.

Advanced Chemical Industries (ACI) reported an 18% year-on-year increase in consolidated revenue to Tk7,794 crore in the first half of the fiscal year, up from Tk6,619 crore a year earlier. The company posted a consolidated net profit of Tk30 crore, reversing a net loss of Tk64 crore in the same period last year.

ACI said gross profit growth outpaced operating expenses due to strong performance across key segments, though borrowing costs rose amid higher interest rates and increased funding needs for working capital and strategic investments.

Navana Pharmaceuticals recorded a sharp turnaround in the October-December quarter, driven by higher sales, improved margins, lower finance costs, and stronger operating cash flows. Diluted EPS rose 65% year-on-year to Tk1.65 from Tk1.

The ACME Laboratories posted 15.75% year-on-year revenue growth in the October–December quarter, with EPS rising to Tk3.10 from Tk2.86. For the July-December period, EPS increased to Tk6.11 from Tk5.47.

Beacon Pharmaceuticals reported a 29.32% increase in earnings in the October–December quarter, while six-month EPS rose to Tk4.73 from Tk3.47 a year earlier.

The International Monetary Fund (IMF) has cautioned Bangladesh against providing unsecured liquidity injections to weak banks, stressing the need for a tight monetary policy stance and credible banking sector reforms to restore financial stability.

The caution came as the IMF Executive Board concluded its 2025 Article IV Consultation with Bangladesh on Monday (26 January), with the authorities consenting to the publication of the staff report, according to a statement released yesterday (30 January).

The IMF noted that Bangladesh's economic growth has slowed in recent years while inflation has remained elevated.

GDP growth fell to 3.7% in FY25 from 4.2% in FY24 and 5.8% in FY23, reflecting production disruptions during the 2024 uprising, a tighter policy mix and weak investment.

Inflation eased from double-digit levels earlier in FY25 but remained high at 8.2% year-on-year in October.

IMF observed that Bangladesh's tax revenue-to-GDP ratio declined sharply in FY25, although the fiscal deficit was contained due to under-execution of capital and social spending.

Foreign exchange reserves have started to recover, supported by improvements in the current account balance.

Looking ahead, the IMF projected a gradual economic recovery, provided reforms are implemented.

Growth is expected to rebound to 4.7% in FY26 and rise to around 6% over the medium term, supported by higher revenue mobilisation and measures to address financial sector weaknesses.

Inflation, however, is projected to remain elevated at 8.9% in FY26 before easing to about 6% in FY27.

Executive directors acknowledged the interim authorities' efforts to stabilise the economy following the 2024 uprising and ahead of national elections.

However, they warned that Bangladesh continues to face mounting macroeconomic and financial challenges, including weak revenue mobilisation, banking sector vulnerabilities, incomplete implementation of the new exchange rate framework and persistently high inflation.

Directors noted uneven programme performance and said decisive and sustained policy actions would be required to restore macroeconomic and financial stability.

They stressed that full ownership of the reform programme by the next administration would be critical, alongside early engagement with IMF staff and efforts to secure stakeholder support.

On the banking sector, the IMF highlighted the urgent need for a credible reform strategy aligned with international standards.

Directors said such a strategy should include clear estimates of undercapitalisation, define the scope of fiscal support and outline legally robust restructuring and resolution plans.

They encouraged the authorities to conduct asset quality reviews for all systemic and state-owned banks, strengthen risk-based supervision and improve governance and balance sheet transparency.

In this context, the IMF cautioned against unsecured liquidity injections into weak banks, warning that such measures could undermine financial stability.

The IMF also stressed that maintaining a tight policy mix remains necessary to continue rebuilding foreign exchange reserves and reducing inflation.

Directors stressed the importance of full and consistent implementation of exchange rate reforms, along with greater exchange rate flexibility.

Monetary policy, they said, should remain appropriately tight until inflation is firmly on a downward trajectory, while efforts to modernise the monetary policy framework should continue.

On fiscal policy, directors urged ambitious reforms to boost revenue. They encouraged bold tax policy measures, simplification of the tax system and stronger tax administration and compliance.

The IMF also underscored the need to rationalise subsidies, prioritise growth-enhancing investment and improve public financial and investment management, while strengthening social safety nets to support inclusive growth.

The institution further noted that improving the financial viability of energy sector state-owned enterprises would be important for reducing fiscal risks.

Beyond macroeconomic management, the IMF stressed the importance of comprehensive structural reforms as Bangladesh prepares to graduate from least developed country status.

Directors highlighted the need to enhance governance and transparency, strengthen anti-corruption and AML/CFT frameworks and safeguard central bank autonomy.

They also supported policies aimed at job creation, particularly for young people, export diversification and continued improvements in macroeconomic statistics.

The IMF said continued implementation of reforms under the Resilience and Sustainability Facility arrangement could help Bangladesh build climate resilience and mobilise climate finance.

Bangladesh's recent shift from a manual to an online value-added tax refund system, promoted by the National Board of Revenue as a move towards transparency and efficiency, has instead created new complications for businesses, leaving around Tk1,500 crore in refunds effectively stuck.

When the NBR introduced the online VAT refund module, it said businesses would be able to apply digitally and receive reimbursements directly into their bank accounts with ease, drawing praise for the initiative from various quarters.

However, business owners now say the reality is different, with the new system proving more restrictive in many cases than the old manual process.

Under the previous system, companies could apply for full refunds of excess VAT and related duties, although the process often took time. But under the new online system, businesses can apply only for partial refunds, while additional conditions such as audits have complicated the process further.

As a result, refunds worth tens or even hundreds of crores of taka are effectively stuck, according to business representatives. They also complain that while newly created refunds can be claimed through the system, older outstanding amounts are not being reimbursed.

Officials at field-level NBR offices have acknowledged the problem, saying there is no immediate solution. This has increased concern among businesses and weakened their confidence in the online system, they added.

Concerns have also been raised about the automation of customs bond management.

Although businesses are required to comply with the automated process, the NBR has not yet developed adequate service capacity, traders say. This has led to delays in obtaining utility permissions and, in some cases, increased harassment.

On 7 January, the NBR announced that VAT refunds would be credited directly to companies' bank accounts once applications were submitted online. It also claimed the new module would ensure faster processing through a fully transparent system.

But businesses say they began to encounter serious problems soon after the system went live.

Partial refunds, blocked claims

Confidence Group, one of the country's leading conglomerates, has around Tk140 crore in VAT refunds recorded – money it says was over-collected by the government and already claimed by the company for reimbursement.

Company officials said under the new system, they can claim only the 2% advance tax deducted at the import stage, but not the 15% VAT or supplementary duty (SD).

Salman Karim, a director of Confidence Group, told The Business Standard, "Under the manual system, after calculation, refunds for VAT, advance tax or SD could be claimed and eventually paid, though it took time."

"In the new online VAT refund module, there is no option to claim anything other than the 2% advance tax. This makes recovery of the much larger amounts of VAT and SD uncertain," he said.

He added that even when the government holds money owed to a company, it cannot be adjusted against the company's VAT liabilities under the new system.

"If I am entitled to Tk40 as a refund, the new system is giving me only Tk2," he said, describing the change as an increased financial burden rather than a simplification.

This situation is not limited to the Confidence Group, as a similar picture is seen in the case of other companies as well.

A senior official from Meghna Group, another major conglomerate, told TBS on condition of anonymity that the group previously claimed Tk74 crore in VAT and advance tax refunds under the manual system.

"However, after the online system was introduced, we were told to abandon previous claims and apply afresh under the new system," the official said. "But now, apart from advance tax, no VAT refund can be claimed."

"Instead of simplifying the process, it has been made more difficult," he added, noting that audits, which were not mandatory under existing VAT law, are now required, along with other strict conditions that make refunds nearly impossible.

Large sums outstanding

According to NBR sources, businesses are owed around Tk1,500 crore in VAT refunds nationwide. Data from the Dhaka South VAT Commissionerate alone shows refund claims of about Tk211 crore from at least 25 companies.

These companies will now have to submit new applications online, but will be able to claim only a small portion of their dues, according to officials.

Commissioners at two Dhaka VAT commissionerates confirmed that only partial VAT claims are being allowed under the new system. One commissioner, speaking anonymously, said, "The NBR can better explain why this has been done."

Asked about the issue at a press conference on 25 November, NBR Chairman Abdur Rahman Khan said the process would gradually become easier.

However, officials within the relevant departments said there is no plan to refund VAT and supplementary duty under the new system.

Syed Mushfequr Rahman, a member (VAT audit) at NBR, told The Business Standard, "Under the new system, advance tax can be claimed. If, after calculation, someone is entitled to VAT, they can apply for a rebate as per the law."

A senior NBR official, speaking on condition of anonymity, said commissionerates in the past approved refunds without proper scrutiny, leading to suspected irregularities. "This system has been introduced to prevent such irregularities," he said, adding that VAT refunds would no longer be given, though rebates could be claimed where applicable.

'Cutting off the head for a headache'

Business leaders say that until 2023, refunds could be claimed for VAT, supplementary duty and advance tax collected, and were eventually paid, sometimes after two or three years. In 2023, claims for supplementary duty were stopped. With the launch of the online system, they say, VAT refunds have also effectively been blocked.

A senior executive at a large local business said, "When the government is owed money, it collects it immediately. But when it owes us, it creates excuses. The new system is a clear example of that."

Businesses also say officials have been instructed to verify refund applications against a 24-point checklist, making refunds virtually impossible for many firms.

Tax experts have also criticised the NBR's approach.

A leading chartered accountant and tax expert, speaking on condition of anonymity, told TBS, "The NBR is legally obliged to provide VAT refunds.

"If some companies obtained refunds through irregular means in the past, the NBR should strengthen its capacity to detect and prevent such abuse. Cutting off refunds altogether is not a solution. You do not cure a headache by cutting off the head," the expert said.

Of the 110,774 green buildings recognised worldwide, HAMS Garments Ltd has secured a top position, scoring 108 out of 110 points under the latest certification.

The factory owners said they had to spend less than Tk2 crore additionally to obtain recognition as a top green factory.

Although the factory does not receive higher prices from foreign buyers for green production, Shafiqur Rahman, managing director of HAMS, told The Business Standard that the recognition helps keep the company "in buyers' good books." "It is a prestigious achievement," he said.

Ananta Ahmed, managing director of 360 TSL, which works on green buildings in Bangladesh and provided technical support to HAMS for the certification, told TBS that globally, about 30 buildings have scored more than 100 points, of which nine are in Bangladesh. Notably, all of the top five such facilities are located in Bangladesh.

Explaining why HAMS scored higher than others, Ananta said the factory successfully met the criteria it had targeted within the stipulated timeframe, which helped it secure the score.

He added that the factory missed two points mainly because it could not meet the outside water-saving criteria. "There was not enough space outside the factory area to fulfil that requirement," he said.

Ananta said the main criteria for green certification include comparisons with set benchmarks on water consumption and how much energy use is reduced through energy-efficient technologies.

He said the indoor environment of the factory or building is also assessed, along with the percentage of open space outside the factory building maintained as green areas.

He added that scoring also considers, if crops are grown in green spaces, how irrigation is managed and what types of fertilisers or pesticides are used there.

He further said that the amount of carbon emissions generated by workers' commuting to and from the factory is also taken into consideration.

"Bangladesh enjoys a comparative advantage in this regard," Ananta said, noting that many workers commute on foot, which keeps carbon emissions lower and helps raise scores.

He added that areas such as location and transportation planning, site selection and management, policies and procedures, audits, training and human development, preventive maintenance systems, procurement strategy, product and material selection, and operational discipline and documentation do not require extra costs, yet together account for around half of the total score.

The factory owner said the facility, which employs about 7,000 workers, had to spend nearly Tk2 crore additionally to achieve the highest score.

Shafiqur Rahman told TBS, "The use of environmentally friendly technologies has reduced water consumption by 30% and energy use by 20% at the factory."

For the achievement, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) accorded a special reception to HAMS Garments Ltd yesterday.

Speaking at the event, BGMEA Senior Vice President Inamul Haque Khan said HAMS Garments Ltd set a new world record by scoring 108 out of 110 under the US Green Building Council (USGBC) LEED Platinum certification.

"The achievement is not just about numbers but represents the highest score among green factories worldwide," he said.

"The success has taken the prestige and capability of the 'Made in Bangladesh' brand to a new height globally and has created a global benchmark for Bangladesh's garment sector," he added.

The Dhaka International Trade Fair (DITF), the country's flagship trade showcase, closed after a month today (31 January) with sales of nearly Tk400 crore, underscoring steady domestic demand despite pressure from inflation and a slowing economy, according to the Export Promotion Bureau.

At the closing ceremony held at the Bangladesh–China Friendship Exhibition Centre in Purbachal, Narayanganj, the EPB said domestic transactions at this year's fair amounted to Tk393 crore – up 3.42% compared to 2025.

Based on data received from 329 participating local and foreign companies, the EPB reported that potential export orders secured during the fair stood at $17.98 million, equivalent to Tk224.26 crore.

Sectors attracting export orders included diversified jute products, electrical and electronics goods, home appliances, cosmetics, hygiene products, processed food, handloom, household items, home textiles, nakshi kantha and fabrics. Export orders were received from Afghanistan, Singapore, Hong Kong, Indonesia, India, Pakistan, Malaysia and Turkey.

A total of 329 enterprises participated in the fair, including 11 companies from six countries—India, Turkey, Singapore, Indonesia, Hong Kong and Malaysia—besides Bangladesh.

Products and services on display and sale covered cottage, micro, small, medium and large industries, including garments, leather goods, jute and jute products, agricultural and agro-processed goods, furniture, electrical and electronic items, cosmetics, home décor, toys, stationery, crockery, handicrafts, plastic and melamine products, herbal and toiletry items, imitation jewellery, real estate products and services, fast food and various other services.

At the closing ceremony, awards were presented to the best pavilions, stalls and enterprises across different categories.

A total of 40 institutions were recognised based on criteria such as construction and architectural design, interior decoration, product display, customer service and satisfaction, compliance with allotment conditions, cleanliness and health standards, digital contents, contribution as exporters and manufacturers, and innovation.

To promote export diversification and enhance exporters' capacity, eight seminars were organised as sideline events under a seminar series led by the EPB, in collaboration with the Ministry of Commerce, government trade promotion bodies (BSCIC, SME Foundation and JDPC), product-based trade associations (BPGMEA, BGAPMEA, BFPIA and BanglaCraft), and development partners including the World Bank, GIZ, FCDO and BSI.

The EPB said an Export Enclave was set up at the fair to showcase the capabilities of seven leading export sectors, keeping foreign buyers and local visitors in focus.

Facilities such as a Senior Citizen Corner, mother and child care centre, and a children's park were arranged to make the fair more comfortable and enjoyable for visitors of all ages.

Several voluntary organisations conducted health awareness campaigns during the fair. To ensure security, CCTV surveillance, deployment of law enforcement agencies and fire service units were in place.

The Directorate of National Consumers' Rights Protection carried out regular drives throughout the month to ensure food quality and prevent consumer harassment, the EPB added.

Commerce Adviser Sk Bashir Uddin formally declared the fair closed, with Commerce Secretary Mahbubur Rahman presiding over the closing ceremony.

Bangladesh is set to seek a binding 12-year transition period to safeguard its export-oriented economy from post-LDC-graduation trade challenges in a high-stakes strategy to be placed at the upcoming WTO ministerial meet.

Officials say the government has finalized a comprehensive Position Paper for placing at the 14th World Trade Organisation (WTO) Ministerial Conference (MC14) will be held in Cameroon on March 26-29.

The Position Paper outlines a strategy that balances the prestige of "Developing Nation" status with the pragmatic needs to shield its around U$50billion export economy from the "graduation shock."

"The four-day global trade summit…in Yaoundé will mark Bangladesh's final Ministerial appearance as a Least-Developed Country (LDC) ahead of its scheduled graduation on November 24, 2026," says one trade official.

The Bangladesh delegation, led by the Ministry of Commerce and supported by the ERD or Economic Relations Division, is expected to fly to Cameroon with a clear mandate: 'No agreement is better than a bad agreement that compromises the livelihood of millions of garment workers and small-scale farmers'.

According to the finalised position paper, Dhaka will lead the LDC group in demanding a structured graduation "Support Package".Online newspaper reader

The centerpiece of this strategy is the extension of LDC-specific Special and Differential Treatment (S&DT) for 12 years to ensure a sustainable transition into the developing-country club.

While MC13 (Abu Dhabi) secured a 3-year grace period for certain LDC supports, Bangladesh is pushing for a more robust 12-year horizon for Duty-Free Quota-Free (DFQF) market access.

"Graduation should be a reward for development, not a penalty for success," a senior official at the commerce ministry involved in drafting the paper told The Financial Express.

"Without a decade-long transition, our RMG sector-contributing over 80 per cent to national exports-could face an immediate tariff hike of 12 per cent in major markets, eroding competitiveness against regional peers," he notes.

"If a star performer like Bangladesh faces a trade crisis after graduation, it sends the wrong signal to every other LDC. Our success is, ultimately, the WTO's success."

Graduation implies a jump in tariffs from 0 per cent to nearly 9.0-12 per cent in the EU and 16-18 per cent in Canada, according a source.

Bangladesh's position is to negotiate Rules of Origin (RoO) that allow for more flexibility, moving away from "double transformation" requirements to maintain competitiveness.

The strategy involves leveraging the G-90 coalition to ensure that developed partners (EU, UK, China, Japan) honor their 3-year post-graduation grace periods (2026-2029) and push for these to be made permanent under GSP+ or similar schemes.Banking services comparison

Dhaka is seeking an extension of the TRIPS (Trade-Related Aspects of Intellectual Property Rights) waiver until 2034. The TRIPS is a non-negotiable priority. Under current LDC rules, Bangladesh can produce patented medicines without licences.

Losing TRIPS waiver in 2026 would force the U$3.0-billion domestic generic drug industry to enforce expensive patent regimes, potentially hiking local medicine prices and halting export to other LDCs.

Current WTO drafts suggest members with a global marine catch share of over 0.8 per cent (which includes Bangladesh) must face stricter subsidy disciplines.

The position paper argues for permanent S&DT for graduating LDCs to protect the livelihoods of artisanal/small-scale fishers who rely on government social-safety nets.

Currently, there are around 20 million artisanal fishers across the country.

Bangladesh will insist that subsidies for "overfished stocks" must be protected for at least 7-10 years for graduated LDCs.

As a Net Food Importing Developing Country (NFIDC), Bangladesh's position focuses on securing a "Permanent Solution" that allows the government to buy food at administered prices for stockholding without violating WTO subsidy caps and advocating for exemptions that prevent other nations from banning food exports to LDCs/NFIDCs during global crises.Newspaper subscription

The global moratorium on customs duties for electronic transmissions is set to expire at MC14.

Bangladesh is currently in a "wait and see" mode. While it benefits from the moratorium for its ICT/freelancing sector, the paper highlights the need to balance the growth of the about U$2.0-billion IT sector against potential fiscal revenue losses.

Bangladesh is likely to support a temporary extension of the moratorium but will demand Technical Assistance and a "Work Programme" that helps developing nations in building internal VAT/GST systems to capture digital trade value.

Beyond issue-specific demands, Bangladesh is expected to use MC14 to push for broader institutional reform at the WTO-most notably the restoration of the Dispute Settlement System and Appellate Body.

Here, the official position rests on some primary pillars. These pillars are support for the immediate restoration of a functional two-tier dispute-settlement system, which has been hampered by a lack of appointments to its appellate body, full alignment with G-90 proposals aimed at making development provisions more "precise, effective, and operational" rather than merely aspirational and rejecting any mandate that forces differentiation among developing member-states.Online newspaper reader

The position paper argues that without a functioning appellate mechanism, smaller economies are increasingly exposed to unilateral trade measures, arbitrary tariffs and protectionist policies by major powers.

For Bangladesh, a rules-based system with enforceable outcomes is essential as it transitions from preference-dependent status to full competition under WTO disciplines.

Domestically, the government has already operationalised its Smooth Transition Strategy (STS), consisting of five foundational pillars and 157 concrete actions.

The strategy aims to improve logistics through the National Logistics Policy 2025 and implement the Customs Single- Window system to lower the cost of doing business, which is currently seen as a bottleneck for post-LDC competitiveness.

Experts suggest the Yaoundé conference will be a "defining moment" for Bangladesh to leverage its influence as a leader of the LDC group to secure international legal guarantees.

There are 166 members under the WTO of which 75 per cent are developing countries and LDCs.

After takeover by the current interim government, local business community has called for a three-to-six-year deferral of the country's planned graduation from LDC status in November 2026, citing mounting economic headwinds and weak industrial preparedness.

Trade bodies warn that the loss of duty-free, quota-free market access, expiry of the TRIPS waiver for pharmaceuticals and the withdrawal of export subsidies could significantly erode export competitiveness.

With inflation, energy constraints and high interest rates already straining businesses, stakeholders argue the current timeline risks compounding shocks to the private sector.

While economists stress the need for long-term efficiency-driven reforms, businesses maintain that a temporary extension is critical to protecting exports and ensuring a smoother transition.