Bangladesh Bank's new governor rolls out a to-do list focused on continued reforms to manage banking sector's distressed assets and reopen closed factories for economic pickup and job generation.

Bangladesh Bank will continue its reform programme to make banking services faster and more efficient for both the central bank and commercial banks, Governor Md Mostaqur Rahman told bankers Sunday.

He said the regulator would step up efforts to resolve distressed assets in the banking system--much of the money trapped in businesses and industries of embattled owners shut down amid political upheavals.

The governor made the remarks at his maiden meeting with the governing council of the Association of Bankers, Bangladesh (ABB), led by its chairman Mashrur Arefin, at the central bank headquarters.

Present at the conclave, close on the heels of reshuffle in the BB hierarchy, were 19 chief executives of commercial banks.

Mr. Arefin, managing director and chief executive officer of City Bank PLC and chairman of the ABB, billed the meeting constructive as the governor listened carefully to the concerns of bank executives while outlining his policy priorities.

"The governor was very cordial and chaired the meeting with humility and warmth," Mr Arefin told The Financial Express.

"He listened patiently to the views of all 19 CEOs and outlined several of his core priorities."

According to the leading banker, the business-tycoon-turned banking regulator emphasised the need to create a business- and manufacturing-friendly environment aimed at generating up to 10 million new jobs.

He also stressed the productive use of distressed assets arising from non-performing loans, including the reopening of closed factories.

The governor also highlighted the potential of a "one village, one product" initiative to promote entrepreneurship and exports.

Mr Arefin said citing the cheese produced in Ashtogram in Kishoreganj as a practical example, the new BB chief suggested that banks could help such locally specialised products reach global markets through district-based development initiatives.

The governor also made several commitments during discussion, according to ABB officials.

He quoted the central bank governor as saying that the executives should report any political pressure directly to him.

He also assured bankers that the central bank would respond more promptly to issues raised by ABB, with faster decisions aimed at reducing the cost of doing business.

The central bank also plans to move towards selective deregulation, beginning with allowing banks to negotiate rental and lease agreements independently within defined regulatory guidelines.

The governor also pledged efforts to facilitate the release of overdue funds related to export incentives, Export Development Fund (EDF) reimbursements and remittance incentives.

"We are professionals and we want the governor to succeed," Mr Arefin said, describing bank chief executives as key stakeholders in the reform process.

He added that bankers welcomed the governor's proposal for the central bank and commercial banks to jointly host a "Bangladesh Day" event for foreign correspondents and international lenders later this year.

ABB leaders also requested the central bank to expedite the release of remittance-related incentives and improve operational efficiency under the EDF.

Syed Mahbubur Rahman, managing director and chief executive officer of Mutual Trust Bank, who also attended the meeting, said bankers discussed the issue of lowering interest rates but stressed that borrowing costs alone would not revive investment.

"We argued that reducing interest rates is only one factor and it cannot revive the investment alone," Mr Rahman told the FE writer. "Reliable power and gas supply and other structural issues must be addressed to make business and investment more vibrant."

He said bankers also highlighted the importance of refinancing schemes, particularly for small and midsize enterprises, as a way of supporting entrepreneurs and stimulate economic activity.

The Bangladesh Bank plans to cut policy rate – a major shift from tight monetary policy after the appointment of new governor – aiming to reduce lending rate demanded by the business community.

Governor Md Mostaqur Rahman, who vowed to lower lending rates on his first day at office last week, has called a Monetary Policy Committee meeting for Wednesday, according to central bank sources.
The committee may propose a 50-basis-point cut to the policy rate from the existing 10%, as the new governor signalled on his first day in office, a senior Bangladesh Bank executive said.

However, economists and bankers said reducing rates while inflation remains elevated could reverse recent gains. They believe any cut should be limited and cautious if inflation is to be brought down.

Meanwhile, interest rates in the call money market and on all treasury bills and bonds fell below the 10% policy rate on Sunday, giving the central bank room to reduce the rate.

According to the Bangladesh Bank, the cut-off yields on 91-day, 182-day and 364-day treasury bills were 9.89%, 9.97% and 9.93% respectively, while the call money rate stood at 9.89% on Sunday.

The prospective shift in monetary policy comes as global energy markets face one of their gravest shocks in decades, following joint US and Israeli strikes on Iran and Tehran's retaliatory missile attacks, which could worsen inflationary pressures.

The Bangladesh Bank maintained a tight monetary policy during the interim government's tenure, raising the policy rate from 8.5% to 10% to contain inflation.

The latest monetary policy, announced by former governor Ahsan H Mansur just ahead of the February national election, kept the rate unchanged at 10% due to persistent inflation.

Under the tight stance, the central bank brought inflation down from double digits to single digits over the past year, although it remains above the desired level. The previous target was to reduce inflation to below 7%, but it is still above 8%.

According to Bangladesh Bank data, average inflation stood at 8.66% at the end of January, while lending rates ranged between 11% and 12%.

However, soon after taking office, Mostaqur Rahman, who is also a businessman, said he would prioritise reducing lending rates and supporting growth.

Speaking to The Business Standard, a senior central bank executive said inflation had not fallen to the expected level despite the tight policy.

He said the Bangladesh Bank is now considering easing its stance to support the supply side by injecting liquidity, arguing that increased production and supply could help ease inflationary pressures.

'Infrastructure problems must be resolved first'

Mutual Trust Bank Managing Director Syed Mahbubur Rahman said bankers also want lending rates to fall, but prevailing market realities make that difficult.

"At present, the government is the largest borrower. When the government is borrowing at 10% or more through treasury bills and bonds, it is extremely difficult for banks to reduce lending rates," he said.

He further explained that some banks are now offering up to 11% interest to mobilise deposits. "How can loans be offered at lower rates after borrowing at such high costs?"

He added, "Many say high lending rates are a major obstacle to investment. We also agree high rates are a barrier, but they are not the only or principal one."

He explained that when an investor decides to invest, the first considerations are gas, electricity and port facilities. "At present, shortages of gas, electricity and infrastructure are the main challenges for investment."

He suggested that to boost investment, infrastructure problems must be resolved first and the issue of lowering lending rates can then be addressed.

He hoped the new governor would continue the ongoing reform initiatives in the banking sector. If a firm message is not delivered at the outset, vested interests may try to return the sector to its previous state.

'Rate reduction should be cautiously limited'

Fahmida Khatun, executive director at Centre for Policy Dialogue, told TBS that bringing down inflation while simultaneously lowering interest rates would be highly challenging.

She said that during the Awami League government's tenure, inflation kept rising as interest rates were not increased to a rational level, allowing price pressures to intensify.

"The interim government took policy measures and raised interest rates, which helped contain inflation to some extent. However, in my view, if we are to bring inflation down to 5-6%, this policy stance needs to continue," she said.

She noted that there is some justification in the argument that lower rates are needed to stimulate credit growth. "Even if the central bank decides to reduce the policy rate at this stage, it should be done in a very limited and cautious manner," she added.

'Surge in credit demand could prompt BB to inject liquidity'

Mohammad A (Rumee) Ali, former deputy governor of Bangladesh Bank, said lending rates remain high due to elevated inflation and mounting default loans in the banking sector. He said lending rate reduction will make money easy creating more demand.

However, he warned that if rates are lowered without first containing inflation and ensuring productive use of credit, it could further fuel price pressures.

"Banks are constrained in their lending capacity because of high non-performing loans. A surge in credit demand could prompt the central bank to inject liquidity, increasing the risk of further inflation," said.

'Maintaining existing tight monetary stance more credible route'

Zahid Hussain, former lead economist at the World Bank's Dhaka Office, said easier credit and lower interest rates tend to boost import demand, placing added pressure on the taka.

Any depreciation of the currency then feeds directly, and often asymmetrically, into non-food inflation, he said.

Within this framework, he added, non-food inflation functions like core inflation. "It does not necessarily signal excess demand. Rather, it reflects how earlier food price shocks and exchange-rate pressures are transmitted across the economy."

Movements in the taka are quickly passed through to the prices of imported goods, energy, transport and other non-food items. Core-like indicators are therefore useful in tracking transmission effects, but they should not be read as evidence of overheating demand or expanded policy space.

He argued that maintaining the existing tight monetary stance, alongside exchange-rate stability and stronger competition in food markets, offers a more credible route to sustained disinflation than premature easing under the current inflation regime.

Business community gets priority to business oriented governor

Bangladesh Bank has appointed a new governor at a time when the banking sector faces a record 36% default loan ratio, sharply limiting lending capacity and disrupting normal operations.

Addressing the default crisis was not among the priorities he outlined on his first day in office. His appointment as a career businessman drew criticism within the industry over potential conflicts of interest. Of his 11 stated priorities, four focused on supporting the business community.

It is the first time a businessman with interests in garments and real estate has been made governor of Bangladesh Bank.

He himself had been a defaulter until two months ago, before obtaining loan rescheduling under a policy committee decision in December. He has also prioritised reopening closed industries to revive business activity.

With inflation still high, his focus on reopening factories has prompted speculation that loan rescheduling may be accelerated, as many closures stem from loan defaults.

A 10-year rescheduling package with a two-year grace period, introduced in September, faced strong resistance from banks, which questioned its effectiveness.

Of 1,500 applicants, only 300 received approval from the central bank's policy committee, and most of those cases remain unimplemented.

'Most banks unable to expand lending'

Speaking to TBS, a managing director of a private commercial bank, requesting anonymity, said the sector is in dire straits due to unusually high default loans.

Of 61 banks, no more than 12 are able to extend fresh credit. He said five banks have merged, around 10 are critically exposed, and another 20 remain vulnerable though not publicly identified.

Referring to large banks whose boards were reconstituted after the regime change, he said deposit inflow appears strong as confidence returned. In reality, however, capital has been eroded by default loans, restricting lending capacity.

Although liquidity has increased as deposits returned, most banks cannot expand credit without first rebuilding capital through lower defaults. In this context, the sector lacks the capacity to meet large corporate credit demand.

He warned that loan rescheduling promoted by Bangladesh Bank may not be recognised by global rating agencies or multilateral lenders.

The International Monetary Fund requires rescheduled loans to be classified as stressed assets alongside defaults, limiting any cosmetic improvement in ratios.

As a result, rescheduling alone may not lift the country's credit profile. He alleged that many firms seeking long-term rescheduling defaulted due to corruption and fund diversion.

Citing a major real estate group, he said inspections found fund diversion behind its default, despite a request for a 10-year rescheduling with a two-year grace period.

Many applicants, he added, have debt-to-equity ratios above 100% and would struggle without fresh equity. A grace period in such cases could strain banks' cash flows and deepen systemic weakness.

He also noted that the government faces a funding squeeze and is borrowing heavily from banks. Any policy rate cut to lower lending rates could spur credit demand, forcing the central bank to inject liquidity and heighten inflation risks.

Excess liquidity stood at Tk3.21 lakh crore at the end of last year, largely invested in treasury bills and bonds. Yet private sector credit growth remained at a historic low of 6%, reflecting weak expansion demand.

The Bangladesh Securities and Exchange Commission (BSEC) has initiated the formulation of rules to ensure legal protection for whistleblowers, aiming to encourage greater disclosure of information about the capital market.

Market insiders say that these rules to protect whistleblowers and provide incentives are being introduced for the first time in the capital market's history.

In addition to providing protection, the draft rules propose that whistleblowers who provide information will receive 25% of the penalties as an incentive if the capital market regulator imposes fines on any capital market stakeholders.

To formulate the rules, the regulator published draft rules namely "Capital Market Related Information Disclosure and Whistleblower Protection Rules, 2026" in its website and sought public opinions within two weeks, by 15 March.

The draft rules define a whistleblower as any person associated with the board of directors, an executive member, trustee board member, auditor, or lawyer of any market intermediary registered with the BSEC, or of any listed company, mutual fund, alternative investment fund, or special purpose vehicle (SPV).

Protection of whistleblowers

The draft rules state that if a whistleblower discloses information, their identity shall not be revealed without their consent, unless disclosure is required by law.

If the whistleblower is an employee, no disciplinary or punitive action shall be taken against them under these rules for providing such information.

This includes demotion, unfavorable transfer, forced retirement, dismissal, reprimand, discriminatory treatment, or any other action that could cause overall, legal, or financial harm.

Any information disclosed by a whistleblower shall not be used as evidence in any legal proceeding. A whistleblower shall not be compelled to testify in any case arising from the disclosed information, nor shall any question be permitted during proceedings that may reveal their identity.

If any book, document, or record submitted as evidence contains details that could identify the whistleblower, appropriate measures must be taken to ensure that such information remains confidential when presented before the court.

Incentives

The draft rules state that if any monetary penalty or fine is recovered based on information provided by a whistleblower, the appropriate authority may, at its discretion, award the whistleblower a financial incentive or honorarium.

The Commission will determine, through periodic orders, the conditions, amount, and procedures for granting such incentives. However, the reward will not exceed 25% of the realised fine and, in any case, will be capped at Tk10 crore.

Treasury bill yields for all three tenures fell below the policy rate today (1 March) as liquidity in the banking sector improved significantly.

The yields on 91-day, 182-day, and 364-day treasury bills dropped to 9.90%, 9.98%, and 9.93%, respectively, according to the latest auction results. Just a week earlier, the yields stood above 10%, with the 91-day bill at 10.02%, the 182-day bill at 10.11%, and the 364-day bill at 10.07%.

Treasury bills are short-term government debt instruments issued for periods ranging from 91 days to 364 days.
The decline reflects a surge in liquidity across the banking system. Call money rates have also dropped by around 40 basis points between January and March this year.

Mohammad Ezazul Islam, director general of the Bangladesh Institute of Bank Management, said the fall in yields was mainly driven by two factors.

"The central bank has been purchasing foreign exchange reserves from commercial banks through auctions. As a result, liquidity has flowed back into the banking system," he said.

According to Bangladesh Bank data, the central bank has purchased $5.39 billion from commercial banks through auctions so far in the current fiscal year.

Ezazul Islam added that slower private sector credit growth was another major reason behind the increased liquidity.

Bangladesh Bank's latest data shows private sector credit growth stood at 6.03% in January.

A deputy managing director of a private bank said the "excess liquidity" in the banking sector has pushed treasury bill yields lower, noting that central bank dollar purchases have injected additional funds into the banking channel.

He also said deposit growth has strengthened liquidity conditions, as rising deposits increase banks' available funds.

Another deputy managing director said government borrowing demand has declined recently, partly due to slow implementation of the Annual Development Programme (ADP), further contributing to the fall in treasury bill yields.

The Centre for Policy Dialogue (CPD) has urged the newly elected government to immediately scrap the reciprocal trade agreement signed with the United States by the previous interim administration, terming it grossly discriminatory and detrimental to Bangladesh's economic sovereignty.

The think tank also called for a complete departure from the traditional business as usual bureaucratic approach, unveiling a comprehensive 13-sector policy roadmap to guide the government's executive and legislative decisions over the first 180 days and the next five years.

The recommendations were presented today (28 February) at a media briefing titled "New government's economic and social sector policy and administrative decisions: 180 days and beyond," held at the CPD office in Dhaka.
CPD research director Khondaker Golam Moazzem presented the extensive analysis, emphasising that the new administration must adopt knowledge-based decision-making and deeply decentralise power to overcome systemic inefficiencies.

Taking a firm stance on recent international negotiations, the CPD warned that the US trade agreement severely jeopardises Bangladesh's smooth transition strategy (STS) for LDC graduation.

According to the think tank, the agreement's clauses completely restrict Bangladesh's independence in terms of trade and investment with third countries. It forces Bangladesh to comply with US border measures and restricts the imposition of digital service taxes.

CPD raises concerns over power overcapacity, pushes for 'no new fossil' fuel policy
The CPD strongly advised the government to withdraw from this agreement before notifications are exchanged and also urged a review of the Economic Partnership Agreement (EPA) with Japan, as it controversially allows duty-free imports of LNG, thereby delaying the country's renewable energy transition.

Beyond trade, the CPD's analysis spanned critical macroeconomic areas, including resource mobilisation, the business environment, and foreign direct investment (FDI). With the country's tax-to-GDP ratio plunging to a South Asian low of 6.8%, the think tank recommended forming a tax ombudsman, consolidating the current eight VAT slabs into a three-tier structure, and eliminating tax incentives for high-emission fossil fuel power producers.

To attract FDI and ease the cost of doing business, CPD proposed enacting a Single Digital Interface Act to legally bind ministries to integrate their databases. They also suggested translating the government's pledges of 48-hour company registration and 30-day profit repatriation into enforceable legal standards, alongside establishing specialised commercial courts for rapid dispute resolution.

New cenbank governor appointment a 'weak step' by govt: CPD
Turning to the power and energy sector, the CPD heavily criticised the government's ambitious target to generate 35 GW of electricity by 2030.

"There is no need to fix the BNP's distant target of 35 gigawatts for 2030. Because within that target, we again see an indication of promoting fossil fuels. Therefore, we believe that instead of sticking to the 35-gigawatt target, it would be better to move towards a more realistic goal – as CPD had suggested – that reaching 30 gigawatts by 2040 would be sufficient. We think the new government should proceed with such a target in mind," said Dr Golam Moazzem.

Instead of expanding domestic coal extraction and building new inland LNG terminals, the government was advised to adopt a strict 'no new fossil fuel-based power generation' policy.

The think tank recommended shifting focus toward domestic gas exploration through Bapex, expanding the national rooftop solar programme, and inserting 'No Electricity, No Pay' clauses in all future power purchase agreements to eliminate the heavy burden of unconditional capacity charges.

On the social front, the CPD addressed pressing issues surrounding labor rights, child labour, and international migration.

CPD calls for tax justice, FDI reform
Addressing the alarming rise in child labour, which currently traps 3.5 million children, Golam Moazzem proposed utilising the newly planned Family Card scheme to provide conditional cash transfers to vulnerable households, strictly tied to withdrawing their children from hazardous work and sending them back to school.

To protect outbound migrant workers from rampant extortion, the government was urged to dismantle entrenched recruitment syndicates, mandate digital financial transactions for all recruitment fees, and transform Technical Training Centres (TTCs) into dedicated overseas placement hubs aligned with global market demands.

Golam Moazzem said true accountability cannot be achieved if the government operates solely on the "one leg" of the executive branch. He strongly advocated for parliamentary reforms.

CPD recommended ensuring that opposition MPs lead key parliamentary standing committees, such as the Public Accounts Committee, and reforming the Prime Minister's Question Time to be ballot-based rather than executive-controlled.

Bangladesh’s economy grew 3.49 percent in the fiscal year 2024-25 (FY25), the slowest expansion in at least three years, owing to weaker performances in the agriculture and services sectors.

The growth is lower than the provisional estimate of 3.97 percent made previously by Bangladesh Bureau of Statistics (BBS), which released the finalised data on gross domestic product (GDP) yesterday.

In FY24, the economy grew 4.22 percent, said the national statistical office.

The data shows that only the industrial sector posted faster growth in FY25 than in the prior year.

Between July 2024 and June 2025, the country’s factory output rose 3.71 percent, up 0.20 percentage points from FY24.

Agriculture, the second-largest employing sector, grew just 2.42 percent, down from 3.30 percent a year earlier.

Services, the biggest contributor to GDP, expanded 4.35 percent, easing from 5.09 percent in FY24.

The size of the economy reached $456 billion, up from $450 billion a year earlier. Per capita income edged up to $2,769 from $2,738.

Sluggish growth is expected to continue into the current fiscal year. The International Monetary Fund projects 4.7 percent expansion in FY26, the World Bank 4.6 percent, and the Asian Development Bank (ADB) 4.7 percent -- all below Bangladesh’s pre-pandemic trend.

The ADB trimmed its projection from 5 percent in September, citing weak investment ahead of the general election and slower export growth.

Economists said the FY25 slowdown is owed to a combination of deep-rooted internal weaknesses and persistent external shocks.

“This is certainly due to both internal and external factors,” said Prof Selim Raihan, executive director of the South Asian Network on Economic Modeling (Sanem). “One of the biggest reasons was the political transition. Because of that, and the related developments in the banking sector, business confidence dropped sharply.”

He noted that the erosion of confidence discouraged fresh investment while banks turned cautious on lending. “Credit growth declined considerably. Altogether, this reflects a downward shift in investment.”

Exports also underperformed, even weakened, he said. “Only remittances have performed somewhat consistently.”

Describing the macroeconomic picture as unusual, the Sanem executive director noted, “The economy is depressed, while inflation remains high.”

High inflation has eroded purchasing power, weakening consumer demand across all components of GDP – household consumption, public spending, investment and exports, he explained.

Although a new government has taken office, Raihan warned that FY26 may follow a similar pattern and that recent turbulence at the Bangladesh Bank could further dampen investor sentiment. “I do not expect a major surge in investment at this moment.”

The economist noted that public spending has remained subdued.

“February has already ended, and only about four months remain in the fiscal year. It is unlikely that public spending will pick up significantly within this period,” Raihan said.

“Even if investor confidence begins to return, it will take time for that to be reflected in actual economic indicators,” he added.

Md Deen Islam, a professor of economics at the University of Dhaka, said businesses and investors may delay commitments until they see how policy priorities evolve.

Such caution, he warned, could weigh on short-term activity. “That can slow economic activity in the short run, even if the government implements sound policies.”

He stressed that clarity and stability will be critical going forward.

“To support stronger growth, policy clarity, macroeconomic stability, and investor confidence will be essential. This means steady fiscal management, predictable regulatory frameworks, and efforts to improve credit flow and export performance,” he said.

“If these areas are strengthened, growth could accelerate in the medium term. Conversely, if uncertainty persists, growth may remain subdued despite changes in political leadership,” he added.

To revive growth, Islam stressed the need to restore macroeconomic stability and rebuild investor confidence.

There are tentative signs of a pickup. The economy expanded 4.5 percent in the first quarter of FY26, up sharply from 2.58 percent in the same period a year earlier, driven mainly by industrial and agricultural activity.

Bangladesh’s foreign debt servicing crossed the amount of loans it received from international lenders in the first seven months of the ongoing fiscal year (FY) 2025-26 amid the slow pace of foreign-funded projects executed under the Annual Development Programme (ADP).

The country repaid $2.67 billion in the first seven months of the current fiscal year, according to data released by the Economic Relations Division (ERD) of the finance ministry.

Meanwhile, foreign loan disbursement dipped 33 percent year on year to $2.4 billion during July-January of this fiscal year, which an economist said is a warning sign.

“The fact that debt servicing has exceeded fresh foreign loan inflows is a warning sign,” said Ashikur Rahman, principal economist at the Policy Research Institute (PRI) of Bangladesh.

“It indicates that Bangladesh is now transferring more resources outward than it is receiving, which tightens both fiscal and external liquidity conditions,” he said.

“This reflects not only maturing debt obligations but also weak project implementation, slower disbursements, and limited export dynamism. While it is not yet a crisis, it reduces policy space and highlights the urgency of strengthening revenue mobilisation, export competitiveness, and a prudent external borrowing strategy.”

Data by the Implementation Monitoring and Evaluation Division under the Ministry of Planning showed that in the July-January period of this fiscal year, the implementation of foreign-funded ADP was 36 percent, marginally higher than in the same period a year ago.

During this period, commitment by foreign lenders, namely the World Bank and the Asian Development Bank, as well as Russia, China, Japan, and India, declined 3 percent year on year to $2.27 billion.

The decline in both commitment and disbursement against a spike in the repayment of foreign loans comes at a time when revenue collection has continued to fall short of the target, and government borrowing from the banking system has risen.

Tax collection by the National Board of Revenue, the main generator of revenue for the state, increased 13 percent in the July-January period of this FY from a year ago. However, the NBR missed its target by 27 percent, a shortfall of Tk 60,110 crore, for the period, according to provisional data.

During the period, the government’s net borrowing from the banking sector crossed Tk 48,800 crore, nearly five times the Tk 10,558 crore it borrowed in the same period a year earlier, according to Bangladesh Bank’s provisional data.

“The borrowing for debt repayment increased significantly,” said Towfiqul Islam Khan, additional director (Research) at the Centre for Policy Dialogue (CPD), in a paper on macroeconomic benchmarks for the new government presented at a briefing of Citizen’s Platform for SDGs.

He said the government’s fiscal space -- the ability to provide resources for a desired purpose without jeopardising the sustainability of its financial position or the stability of the economy, and the ability to spend for unforeseen events -- is diminishing.

Bangladesh’s foreign debt repayment has been increasing for the last several years. It paid $7 billion to multilateral and bilateral lenders in FY25, up from $6 billion a year ago.

Rahman said structural economic reforms are no longer optional.

“Enhancing Bangladesh’s international competitiveness, diversifying exports, improving the investment climate, and mobilising domestic resources more effectively are fundamental to building a stable and resilient economic architecture,” he said.

“Without these reforms, external vulnerabilities will continue to resurface, constraining growth and macroeconomic stability.”

Government authorities prepare to compensate the small investors in the five distressed private banks merged into Sammilito Islami Bank late last year, officials say.

Instructed by the high-ups of the new government, the Financial Institutions Division (FID) is now calculating how much money needed to compensate the investors who bought shares of the five banks from the stock market, they add.

Officials at the FID have prepared a preliminary list of the small investors who have been affected by the merger of the five banks, which had been extensively looted allegedly during the Awami League regime.

The mode of payment, whether the small investors will be compensated on the prices of shares on the last trading day or at face value, however, is yet to be finalised.

The FID will soon place the matter to Finance and Planning Minister Amir Khosru Mahmud Chowdhury for a decision and take further approval from the top of the government for securing funds to disburse the compensations.

A senior FID official has told The Financial Express they earlier placed the matter to then finance adviser Dr Salehuddin Ahmed, but he left office before giving a final decision.

The official also says soon after assuming office, the new finance and planning minister expressed interest in settling the issue shortly.

In this regard, he asked FID officials to submit a proposal detailing the number of shareholders eligible for compensation and the amount of money to be needed for the payoff.

"We will place the proposal to the minister soon as our paperwork is almost completed," says the official.

A Finance Division official familiar with the developments has told The Financial Express the finance minister is of the opinion that the share value of a company cannot be zero in any way.

He says the finance minister is convinced that the small investors who bought shares of the banks from the stock market had no role in the board of directors and management of the board, and thus, they had no responsibility for the deterioration in the financial health of the banks.

The official says the small investors bought the shares of the banks based on the financial statements, which showed the banks were making profit.

Thus, these small investors are eligible for compensation as the government itself has taken over the banks, the official says, noting that the matter of compensation may be finalised next week.

In November last year, the government formed Sammilito Islami Bank by merging five financially distressed Islamic banks under the Bank Resolution Ordinance 2025.

The five banks are First Security Islami Bank, Social Islami Bank, Global Islami Bank, Union Bank, and EXIM Bank.

The government allocated some Tk 200 billion as capital in favour of Sammilito Islami Bank from the exchequer.

Moreover, the central bank has released some Tk 120 billion from the deposit-insurance trust fund, from where each depositor is given Tk 0.2 million as compensation.

However, the small investors have yet to be given any compensation as then Bangladesh Bank governor Dr Ahsan H Mansur declared the share prices of the merged banks as zero and the stock-market regulator stopped the trading in the shares on the bourses.

Bangladesh's economy is expected to grow by 4.5 per cent this fiscal year, a little below earlier projections by Oxford Economics, as it believes the second-quarter growth ending December slowed alongside poor export growth in key markets.

However, the growth in fiscal year 2025-26 picks up above 3.49-percent mark determined for the past fiscal year by final official count.

Founded in 1981, Oxford Economics is a global economic advisory firm providing forecasting and analytical services covering more than 200 countries and a wide range of industries and cities.

"We've downgraded our GDP-growth forecast for Bangladesh to 4.5 per cent in FY2025-26 from 4.7 per cent previously," it said Thursday.

The agency predicts activity should continue to recover in FY2026-27, albeit at a relatively moderate pace of 5.7 per cent year on year.

Following a slowdown in FY2024-25, economic momentum improved temporarily in the third quarter of 2025, supported by stronger activity in manufacturing and construction.

However, it says trade data indicate a renewed loss of momentum in the fourth quarter ending December, with goods exports to the United States and Germany falling by 4.1 per cent and 12.8 per cent year on year, respectively.

Inflation remained stubbornly high, with price pressures intensifying since October despite the fact the central bank has been pursuing a tight monetary stance.

Consumer prices rose 8.6 per cent year on year in January.

"Although wage growth remained broadly stable at around 8.0 per cent, stronger remittance inflows provided some support to household incomes."

The Oxford Economics says February's general election, which delivered a decisive victory for the Bangladesh Nationalist Party (BNP), along with the passage of a constitutional reform referendum, could support business confidence.

The firm expects the new administration to maintain its reform agenda through continued engagement with the International Monetary Fund.

"A peaceful transition of power and policy continuity are expected to provide near-term support to economic sentiment," says Oxford Economics report.

However, the outlook for consumer spending remains uneven as wage increases continue to lag behind inflation, eroding real incomes.

Private investment is also likely to remain constrained by restrictive monetary policy.

Bangladesh Bank has kept policy rates unchanged, maintaining a tight stance aimed at containing inflation and rebuilding foreign-exchange reserves.

The restrictive policy environment has helped stabilise reserves, which have risen to about $30 billion, from roughly $17 billion in 2024, marking progress under the IMF-supported reform programme.

The central bank has indicated that inflation needs to fall below 7.0 per cent before policy easing can be considered.

External risks remain significant.

While lower US tariffs could support exports in the near term, the gradual erosion of trade preferences associated with Bangladesh's graduation from least-developed-country status poses a challenge to medium-term export prospects.

Some export orders may be front-loaded ahead of the transition.

Meanwhile, the country's economy expanded by 3.49 per cent in fiscal year 2024-25, as tight monetary policy and restrained government spending weighed on activity, while inflationary pressures remained elevated, says Bangladesh Bureau of Statistics (BBS).

According to final estimates released Thursday by the statistical bureau, gross domestic product (GDP ) reached US$456 billion, with growth slowing from 4.22 per cent in FY2023-24 and falling short of the provisional estimate of 3.97 per cent.

The weak performance followed an unprecedented mass uprising in July-August 2024 that disrupted economic activity and forced the temporary closure of many factories during the fiscal year.

Sluggish consumer demand and subdued private investment also damped growth, reflecting persistently high inflation and prolonged political uncertainty during the period under review.

"The disappointing end to the year largely reflected a self-inflicted drag from consumption and investment following higher inflation and political uncertainty," says Dr Zahid Hussain, an independent economist, about the deceleration reasons.

He adds that the contraction in public spending is expected to reverse by FY2027 as political uncertainty has been eased following polls just held this month.

The slowdown in output occurred alongside continued price pressures.

External projections had been more optimistic.

Global agency S&P Global Ratings forecast growth of 3.97 per cent for the year, while Moody's had projected around 4.5 per cent before revising its outlook downward.

Sectoral data show uneven performance across the economy.

Agricultural output expanded by 2.82 per cent, up 0.63-percentage points from a year earlier.

Industrial growth slowed to 3.35 per cent, down 0.63-percentage points, while the services sector contracted by 4.35 per cent, 0.16-percentage points lower than in the previous year.

Expenditure-based measures indicate weakening macroeconomic fundamentals.

The three main components of GDP -- investment, domestic savings and national savings -- all declined compared to the previous fiscal year.

Total investment fell to 28.54 per cent of GDP, from 30.70 per cent a year earlier.

Domestic savings declined to 21.98 per cent, from 23.96 per cent, while national savings, which include remittance income, dropped to 27.67 per cent from 28.42 per cent despite the fact that after the August 05, 2024 uprising the remittances were robust.

Per-capita income under the final estimate stood at $2,769, reflecting the slower pace of economic expansion.

The country's private sector credit growth plummeted to an all-time low of 6.03% in January, as prolonged political instability and a high-interest-rate regime forced businesses to stall expansion plans and led banks to adopt a highly cautious lending stance.

According to the latest data from the Bangladesh Bank, credit growth edged down from 6.1% in December, continuing a sharp decline from the 10.13% recorded in July 2024.

Although a brief spike to 6.58% occurred in November, analysts attribute this to loan restructuring ahead of the 12 February national election rather than genuine new investment in productive sectors.

In its monetary policy statement for January-June 2026, the central bank attributed the slowdown to tight monetary conditions, rising government borrowing to finance the budget deficit and subdued demand for loans amid continued uncertainty surrounding new investment decisions.

The decline has been steady over recent months, with growth recorded at 6.29% in September, 6.35% in August, 6.52% in July, 6.40% in June, 7.17% in May and 7.5% in April. In contrast, private sector credit growth stood at 10.13% in July 2024 before falling sharply following the political transition in August that year.

Economists say prolonged political uncertainty, weak business confidence and structural weaknesses in banks have discouraged investment, prompting many businesses to postpone expansion plans despite the BNP securing a landslide victory in the February election.

Newly appointed central bank Governor Md Mostaqur Rahman has indicated that policy support will be introduced to revive private sector lending and restore economic momentum.

On his first day in office, he said lending rates would be gradually reduced to encourage investment and that reopening closed factories and business establishments would be essential to revitalise economic activity – signalling a possible shift away from the prolonged contractionary monetary stance.

Bankers, however, say high borrowing costs are only part of the challenge. Syed Mahbubur Rahman, managing director of Mutual Trust Bank, told TBS that banks are currently extending loans at even around 11% interest while paying similar rates on deposits, leaving minimal margins.

He noted that although high lending rates remain a constraint, investors prioritise reliable infrastructure – including gas, electricity and port facilities – before financing considerations.

Persistent energy shortages and infrastructure bottlenecks, he said, have prevented both existing businesses from expanding and new investors from entering the market.

A major factor behind the credit slowdown has been increased government borrowing from banks. During July-December of the 2025-26 fiscal year, net credit to the government reached Tk50,782 crore, equivalent to 43% of the revised annual target of Tk1.18 lakh crore.

Net government borrowing from the banking system rose 32.8% by December 2025, effectively crowding out private borrowers in an already tight liquidity environment.

Banks are simultaneously struggling with soaring non-performing loans, which climbed to a record Tk6.44 lakh crore at the end of September 2025 – roughly one-third of total outstanding loans.

Elevated default levels have weakened bank capital positions, increased provisioning requirements and made lenders more cautious in approving new credit.

Liquidity pressures and slow deposit growth have further constrained lending capacity. In an effort to curb inflation, the central bank earlier raised its policy rate to 10%, pushing commercial lending rates close to 15% and discouraging businesses, particularly small and medium-sized enterprises, from taking fresh loans.

The effects of weak credit expansion are increasingly visible across the economy. Imports of capital machinery have declined, signalling slower industrial growth, while reduced investment has dampened money circulation. Many factories are operating below capacity, consumer demand remains subdued and private sector job creation has slowed.

The central bank had set a target of 9.8% private sector credit growth for July-December 2025, but actual performance fell significantly short.

Experts warned that if lending growth fails to recover, industrial output could weaken further, private investment may remain stagnant and employment recovery could face prolonged delays.

Escalating hostilities involving Iran, the United States and Israel have triggered fresh concerns over Bangladesh's energy security, with economists and business leaders warning of potential fuel supply disruptions and sharp spikes in global energy prices.

Analysts said the latest US strikes on Iranian targets and Tehran's retaliatory attacks on American military bases across the Middle East could disrupt shipments of crude oil and liquefied natural gas (LNG) from Bangladesh's principal suppliers — Saudi Arabia, the United Arab Emirates and Qatar.

If the confrontation escalates or becomes prolonged, they cautioned, the economic fallout for Bangladesh could surpass the shock experienced during the Russia-Ukraine War, exposing the country to risks in fuel supply stability, foreign exchange reserves and inflation management.

Particular anxiety centres on the Strait of Hormuz, a critical maritime chokepoint through which roughly 40% of global oil and gas shipments pass. Bangladesh's imports of LNG, LPG and crude oil transit this route, meaning any disruption could immediately affect domestic energy availability.

Markets react to tensions

Energy markets have already reacted to rising tensions. Global oil prices increased by about 2% amid fears of military escalation, while international forecasts suggest crude prices could climb to $80 per barrel or higher, with some projections warning of prices reaching $110 if the conflict intensifies.

Azam J Chowdhury, chairman of East Coast Group, told TBS that retaliatory strikes across the Middle East could halt fuel loading operations at regional refineries, effectively suspending supplies of oil, gas, LNG and LPG.

He noted that Bangladesh lacks the capacity to refine crude oil sourced from alternative producers, making it dependent on Middle Eastern suppliers. In the event of prolonged disruption, the country may be forced to import refined fuel from the spot market at significantly higher prices, he warned.

Azam added that LNG shipments from Qatar could also face interruption following missile attacks in the region, warning that Bangladesh, which imports around 12 to 13 LNG cargoes monthly, could face serious economic consequences.

He urged the government to immediately secure alternative supply arrangements, including agreements with global suppliers such as Malaysia's Petronas, and increase imports of refined petroleum products from international markets.

Risks to industry and inflation

Mahmud Hasan Khan, president of the Bangladesh Garment Manufacturers and Exporters Association, said rising fuel prices would increase electricity generation costs and worsen existing gas and power shortages, further disrupting industrial production.

Higher energy costs, he warned, would raise the cost of doing business, weaken export competitiveness and potentially fuel inflationary pressures that could trigger labour unrest across industrial sectors.

Centre for Policy Dialogue Executive Director Fahmida Khatun said supply disruptions would increase import costs and place additional strain on Bangladesh's foreign exchange reserves.

She stressed the urgency of identifying alternative fuel sources, noting that global commodity prices – including edible oil, sugar, wheat and fertiliser – could also rise as a result of the conflict.

Zahid Hussain, former lead economist at the World Bank's Dhaka Office, warned that continued conflict could destabilise global commodity markets, disrupt international shipping and logistics networks and heighten investment uncertainty.

He warned that Bangladesh could face three major risks – volatility in global commodity markets, disruptions to international trade and logistics, and heightened uncertainty discouraging investment decisions.

Energy expert Professor Shamsul Alam said higher global fuel prices would inevitably increase production costs across all sectors, pushing up commodity prices and placing additional pressure on consumers.

The Centre for Policy Dialogue (CPD) has urged the newly elected government to immediately scrap the reciprocal trade agreement signed with the United States by the previous interim administration, terming it grossly discriminatory and detrimental to Bangladesh's economic sovereignty.

The think tank also called for a complete departure from the traditional business as usual bureaucratic approach, unveiling a comprehensive 13-sector policy roadmap to guide the government's executive and legislative decisions over the first 180 days and the next five years.

The recommendations were presented today (28 February) at a media briefing titled "New government's economic and social sector policy and administrative decisions: 180 days and beyond," held at the CPD office in Dhaka.

CPD research director Khondaker Golam Moazzem presented the extensive analysis, emphasising that the new administration must adopt knowledge-based decision-making and deeply decentralise power to overcome systemic inefficiencies.

Taking a firm stance on recent international negotiations, the CPD warned that the US trade agreement severely jeopardises Bangladesh's smooth transition strategy (STS) for LDC graduation.

According to the think tank, the agreement's clauses completely restrict Bangladesh's independence in terms of trade and investment with third countries. It forces Bangladesh to comply with US border measures and restricts the imposition of digital service taxes.

The CPD strongly advised the government to withdraw from this agreement before notifications are exchanged and also urged a review of the Economic Partnership Agreement (EPA) with Japan, as it controversially allows duty-free imports of LNG, thereby delaying the country's renewable energy transition.

Beyond trade, the CPD's analysis spanned critical macroeconomic areas, including resource mobilisation, the business environment, and foreign direct investment (FDI). With the country's tax-to-GDP ratio plunging to a South Asian low of 6.8%, the think tank recommended forming a tax ombudsman, consolidating the current eight VAT slabs into a three-tier structure, and eliminating tax incentives for high-emission fossil fuel power producers.

To attract FDI and ease the cost of doing business, CPD proposed enacting a Single Digital Interface Act to legally bind ministries to integrate their databases. They also suggested translating the government's pledges of 48-hour company registration and 30-day profit repatriation into enforceable legal standards, alongside establishing specialised commercial courts for rapid dispute resolution.

Turning to the power and energy sector, the CPD heavily criticised the government's ambitious target to generate 35 GW of electricity by 2030.

"There is no need to fix the BNP's distant target of 35 gigawatts for 2030. Because within that target, we again see an indication of promoting fossil fuels. Therefore, we believe that instead of sticking to the 35-gigawatt target, it would be better to move towards a more realistic goal – as CPD had suggested – that reaching 30 gigawatts by 2040 would be sufficient. We think the new government should proceed with such a target in mind," said Dr Golam Moazzem.

Instead of expanding domestic coal extraction and building new inland LNG terminals, the government was advised to adopt a strict 'no new fossil fuel-based power generation' policy.

The think tank recommended shifting focus toward domestic gas exploration through Bapex, expanding the national rooftop solar programme, and inserting 'No Electricity, No Pay' clauses in all future power purchase agreements to eliminate the heavy burden of unconditional capacity charges.

On the social front, the CPD addressed pressing issues surrounding labor rights, child labour, and international migration.

CPD calls for tax justice, FDI reform

Addressing the alarming rise in child labour, which currently traps 3.5 million children, Golam Moazzem proposed utilising the newly planned Family Card scheme to provide conditional cash transfers to vulnerable households, strictly tied to withdrawing their children from hazardous work and sending them back to school.

To protect outbound migrant workers from rampant extortion, the government was urged to dismantle entrenched recruitment syndicates, mandate digital financial transactions for all recruitment fees, and transform Technical Training Centres (TTCs) into dedicated overseas placement hubs aligned with global market demands.

Golam Moazzem said true accountability cannot be achieved if the government operates solely on the "one leg" of the executive branch. He strongly advocated for parliamentary reforms.

CPD recommended ensuring that opposition MPs lead key parliamentary standing committees, such as the Public Accounts Committee, and reforming the Prime Minister's Question Time to be ballot-based rather than executive-controlled.

Centre for Policy Dialogue (CPD) today (28 February) urged major reforms in tax collection, business climate, trade deals and foreign investment management, warning that without evidence-based decisions and strong accountability, Bangladesh's post-election economic transition could be at risk.

CPD said Bangladesh must urgently overhaul its revenue system, ease the cost of doing business, review recently signed trade agreements and strengthen foreign direct investment (FDI) facilitation to ensure sustainable growth and smooth graduation from Least Developed Country (LDC) status.

Presenting the study titled 'New Government's Priorities in Addressing Socio-economic Challenges: Introducing Knowledge-based Decision Making in the Executive and Legislative Process' at its Dhanmondi office, CPD Research Director Dr Khondaker Golam Moazzem highlighted structural weaknesses in Sections 3, 4, 5 and 6 of the report covering revenue mobilisation, business environment, trade policy and FDI.

Tax-GDP Ratio

CPD said Bangladesh's tax-to-GDP ratio has fallen to approximately 6.8%, the lowest in South Asia, significantly weakening fiscal capacity at a time of rising development needs.

The newly elected government has pledged to raise the ratio to 10% in the medium term and 15% by 2035. But CPD cautioned that revenue sustainability would remain uncertain without prioritising tax justice and plugging systemic leakages.

The study identified 'leaking revenue' as the weakest area across all decision-making indicators.

To address regressivity and inefficiency, CPD recommended consolidating the current eight VAT slabs into a simplified three-tier structure: standard, reduced and zero rates, with a long-term transition toward a two-tier system.

It also proposed eliminating tax exemptions for non-essential services, including exclusive clubs and stock market-related entities, and phasing out tax cut incentives for fossil fuel-based power producers.

Mandatory digital tax return submission, establishment of a digital tax dispute resolution system within 30–45 days and performance-based corporate tax incentives were among the key recommendations.

CPD further suggested linking revenue gains from VAT rationalisation to direct transfers for low-income households instead of broad reduced-rate exemptions.

Business Environment

The report noted that Bangladesh's business environment continues to suffer from transport-logistics bottlenecks, unreliable utilities, regulatory complexity, corruption, weak human capital alignment and fragile banking systems.

It warned that corruption in administrative processes remains the most severe constraint to ensuring an enabling business environment.

Despite digital reforms such as the partial launch of "BanglaBiz" and activation of the Bangladesh Single Window system, CPD found that transparency and accountability remain weak.

The study recommended full backend digital integration across agencies under a unified document management framework to eliminate duplication of business licensing requirements.

It also called for establishing both a Tax Ombudsman and a Banking Ombudsman to address grievances and strengthen institutional accountability.

In the financial sector, CPD flagged high non-performing loans (NPLs) and limited SME access to financing as major barriers.

Although reforms such as the Bank Resolution Ordinance 2025 and Deposit Protection Ordinance 2025 were introduced, the think tank said credit allocation decisions lack transparency and efficient implementation.

It urged Bangladesh Bank to innovate credit assessment models, develop inclusive SME financing options with lower collateral requirements and exercise caution in interest rate reduction to avoid inflationary pressures.

US-Bangladesh Trade Agreement

CPD raised serious concerns over the recently signed "Agreement on Reciprocal Trade" between Bangladesh and the United States, saying several clauses may restrict Bangladesh's trade policy autonomy.

The study alleged that the agreement includes discriminatory provisions relating to import licensing, technical standards and digital trade.

According to CPD, Bangladesh would be required to gradually eliminate tariffs on US-origin goods while facing potential additional tariffs if deemed non-compliant.

The report also claimed that Bangladesh would not be allowed to impose digital service taxes on US companies or introduce customs duties on electronic transmissions.

Other provisions cited include restrictions on retaliatory VAT measures, limitations on agreements with third countries that conflict with US standards and preferential access for certain US goods.

CPD warned that such clauses could severely jeopardise Bangladesh's smooth transition strategy (STS) for LDC graduation, particularly in negotiating balanced free trade agreements (FTAs) and economic partnership agreements (EPAs).

It urged the government to withdraw from the agreement before formal notification exchange and revisit other deals, including the EPA with Japan, particularly provisions related to duty-free LNG imports that may delay energy transition.

FDI Reform

CPD identified six major structural challenges in attracting and retaining foreign investment, including fragmented approvals, policy unpredictability, institutional overlap, slow dispute resolution, land access bottlenecks and weak data systems.

The report said investment approvals remain sequential rather than parallel, even after the launch of BanglaBiz offering over 100 services and fast-track foreign loan approvals up to $10 million for export-oriented firms.

CPD recommended mandatory API-based integration among the Bangladesh Investment Development Authority (BIDA), National Board of Revenue, Registrar of Joint Stock Companies, Customs, BEZA and BEPZA to ensure simultaneous processing and real-time tracking.

The think tank called for converting profit repatriation commitments — including the 30-working-day resolution target — into binding legal standards through legislative amendments.

It also proposed designating specialised commercial benches within the High Court within 180 days and establishing a full-fledged International Commercial Court within 24 months.

To enhance transparency, CPD recommended creating a unified national FDI monitoring dashboard linked to the government's target of raising FDI to 2.5 % of GDP, with quarterly public reporting.

A national readiness audit of economic zones, including litigation-free land and confirmed utility capacity, should be completed within 180 days, the study added.

Dr Moazzem said that raising tax revenue, reducing business costs, negotiating trade agreements and attracting FDI must be guided by knowledge-based decision-making and parliamentary oversight.

He stressed that without structural reforms in fiscal governance, regulatory transparency and institutional accountability, policy initiatives may remain fragmented and ineffective.

"The new government has a strong electoral mandate. The challenge is to translate it into evidence-based, transparent and accountable decision-making," he said.

CPD's findings come as the government prepares to implement its first 180-day priority agenda following the 12 February national election.

After the interim government took over, Ahsan Mansur was perhaps one of the few people who carried out some substantial and visible work. Those of us who closely observed and evaluated his actions tend to agree on one point: during the interim period, the economic sector was the only area where meaningful steps were taken. Compared to other sectors, this one saw concrete reform initiatives, particularly from the central bank.

If we look at the record, significant reforms were introduced in the banking sector. Changes were made to the boards of directors of several banks, and restructuring efforts began. The exchange rate situation improved, foreign reserves showed signs of recovery, and remittance inflows increased. These are not minor developments. I would suggest that during Dr Ahsan H Mansur's tenure, the economic sector experienced notable progress.

That said, it is also true that despite his goodwill and intentions, some reforms could not be completed.
For example, we cannot claim that full monetary discipline was established. Nor can we say that a strong structure of accountability, transparency, and responsibility was fully institutionalised. Still, leaving those limitations aside, I would argue that his tenure left behind considerable achievements.

Now, the question is why he had to leave so abruptly. When a political government is elected, it certainly has the authority to appoint a new governor. It can reshuffle ministries and bring in people it considers more suitable or capable. That is not unusual. What surprised many of us, however, was the manner in which Dr Mansur's departure took place.

As far as we know, he did not receive a formal termination letter. He reportedly learned about his removal through news channels. To me, this indicates that proper institutional due process was not followed. When he left, there was agitation among central bank staff, and he had to leave amid that unrest.

A newly elected government has every right to bring in new leadership, but there is also a matter of institutional etiquette. A proper and respectful transition would have reflected better on the system.

If we think about the monetary and banking reforms initiated during this period, important groundwork has been laid. Discussions had also begun on recovering embezzled funds that were laundered abroad. These were serious steps.

I would like to highlight three concerns about what might happen in his absence.

First, regarding reforms: Many of the recent monetary and financial reforms were undertaken on our own initiative. In the past, such reforms often came in response to directives from institutions like the IMF. This time, however, there was an effort to act proactively. Don't we want a financial sector that operates under a proper system? Don't we want transparency and accountability? Don't we want structural changes that strengthen the sector? Of course we do. These reforms had begun to move in that direction, and many of us appreciated that.

Second, we now have a newly elected government with many pressing political priorities. There are pending bills left by the interim administration, the referendum issue, implementation of the July Charter, and several other political commitments.

My concern is how high financial sector reform will rank among these priorities. There is always the possibility that some regulatory frameworks could be rolled back. Much will depend on how seriously the new government chooses to prioritise economic and financial reform.

Third, and perhaps most importantly, just before the interim government's tenure ended, the issue of granting full autonomy to Bangladesh Bank resurfaced. Dr Mansur raised the matter and placed it before the interim administration, leaving it for consideration by the newly elected government.

The future of many reforms depends heavily on this question of autonomy. Without real independence, the central bank risks functioning more as a department of the finance ministry rather than as the state's monetary authority. In such a scenario, vested interests could exert influence, and reform efforts could stall.

Ultimately, the future of banking and monetary reform in Bangladesh will depend largely on whether the central bank is allowed to operate as a truly autonomous institution. Without that foundation, sustaining meaningful reform will be extremely difficult.

Selim Jahan is a Professorial Fellow at the BRAC Institute of Governance and Development.

ChatGPT developer OpenAI has secured $110 billion in fresh funding from a group of major technology firms led by Amazon, pushing the company's pre-money valuation to $730 billion.

OpenAI co-founder and CEO Sam Altman said yesterday (27 February) that Amazon has committed $50 billion to the round, while Nvidia and SoftBank will each invest $30 billion.

He added that more investors may join as the funding process continues.

'Unbelievably dangerous': ChatGPT Health may miss life-threatening emergencies, finds study

Amazon will initially invest $15 billion, with the remaining $35 billion to be released over the coming months under certain conditions.

Altman said the partnerships will help expand OpenAI's global reach, strengthen infrastructure and improve financial stability, enabling the company to bring advanced AI tools to more users and businesses worldwide.

He noted that ChatGPT now has over 900 million weekly active users and more than 50 million paying subscribers. According to Altman, AI is entering a new stage where cutting-edge research is rapidly turning into everyday tools used at a global scale.

As part of a multiyear deal, OpenAI and Amazon will introduce new AI capabilities for enterprises, with Amazon Web Services becoming the exclusive third-party cloud provider for OpenAI Frontier.

The two firms will also expand their existing agreement by $100 billion over eight years.

OpenAI said it is also deepening ties with Nvidia, while stressing that its long-standing partnership with Microsoft remains unchanged and central to its strategy.

Japan aims to help transform India's Northeast into a geopolitical gateway to Southeast Asia by strengthening connectivity to the Bay of Bengal and the Indian Ocean, Deputy Foreign Minister Horii Iwao said on Thursday.

Speaking in Shillong, Horii said Japan remains "firmly committed" to the region's development and views it as a "powerful engine of growth" when integrated into a broader economic grid spanning Nepal, Bhutan, Bangladesh and Southeast Asia, says the Hindu.

The initiative forms part of Japan's Free and Open Indo-Pacific (FOIP) policy, under which Tokyo is working to establish an "Industrial Value Chain" linking India's Northeast to maritime routes. Officials say the objective is to promote holistic regional development by improving connectivity and supply chains.

Under the administration of Prime Minister Sanae Takaichi, Japan is expanding cooperation with India beyond infrastructure projects to include private-sector collaboration in strategic sectors such as semiconductors, economic security and clean energy.

Horii also highlighted renewed efforts to strengthen people-to-people ties between Japan and the Northeast, including social and cultural exchanges.

The push follows recent high-level diplomatic engagements. Indian Prime Minister Narendra Modi met Takaichi, Japan's first female prime minister, at the Group of 20 summit in South Africa in November 2025.

In January 2026, India's External Affairs Minister Subrahmanyam Jaishankar hosted Japanese Foreign Minister Toshimitsu Motegi for talks aimed at deepening the bilateral partnership.

To help the economy recover from its current challenges, investment should be boosted by increasing taxes on a priority basis, Finance and Planning Minister Amir Khasru Mahmud Chowdhury said today (27 February).

"Our priority is to increase taxes. We need to enhance investment by increasing taxes. Through this, the tax-to-GDP ratio can be increased," he told journalists while visiting the site of a proposed government hospital in the Patenga area of Chattogram city.

The minister made the remarks in response to questions from reporters regarding the government's priorities for overcoming the ongoing economic difficulties and the focus areas of the upcoming national budget.

Khasru said employment generation remains one of the key priorities outlined in the BNP's electoral programmes, emphasising that investment is critical to creating jobs.

"If there is no investment, where will employment come from? That is why we are emphasising domestic and foreign investment. And we have also pledged to make changes in healthcare and education," he added.

He said that employment generation would be the central focus of the next national budget, and the government would take all necessary measures to achieve that goal.

Earlier, the finance minister inspected the designated land in the Jelepara area under Patenga Police Station in Chattogram for the construction of the proposed government hospital.

Bangladesh's economic growth slowed for a third consecutive year in the 2024-25 fiscal year, falling to 3.49% – the weakest performance since the immediate recovery from the Covid-19 pandemic.

The Bangladesh Bureau of Statistics published the final GDP figures on its website today (26 February), showing that the country's economic growth stood 48 basis points lower than the provisional estimate of 3.97% for the last fiscal year to June 2025.

Economists describe the slowdown as inevitable, noting that growth was stifled by mounting pressure from falling investment, contractionary monetary policy, and weakening domestic demand.

The latest data show a steady deceleration in growth over three years. GDP growth stood at 7.10% in FY22 before falling to 5.78% in FY23 and 4.22% in FY24. During the height of the Covid-19 pandemic in FY20, growth had dropped to 3.45%.
Infographics: TBS
Infographics: TBS

The new reading suggests the economy is again hovering close to that low point.

According to the final BBS estimates, Bangladesh's GDP at current prices reached $456 billion in FY25, up from $450 billion in FY24. Per capita income rose to $2,769, after declining for two consecutive years.

Agri, service sectors slowed

Sectoral data show mixed trends, with agriculture and services slowing, while industry recorded a modest improvement compared with the previous year.

Agriculture grew by 2.42% in FY25, compared to 3.30% in the year before. The services sector's growth fell to 4.35% from 5.09% during the same period.

However, industries recorded 3.71% growth in FY25, slightly higher than the past year's 3.51%.

Investment, savings declined

The BBS data also show a broad weakening in investment and savings indicators.

In FY25, the investment-to-GDP ratio stood at 28.54%, down from 30.70% in FY24. The domestic savings-to-GDP ratio fell to 21.98% from 23.96%, while the national savings-to-GDP ratio declined to 27.67% from 28.42%.

Private investment dropped to 22.03% of GDP in FY25.

Per capita income rose to Tk334,511 ($2,769) from Tk304,102 ($2,738) in FY24. In nominal terms, this represents an increase of Tk30,409, or $31, year-on-year.

Slowdown not unexpected

Masrur Reaz, chairman and chief executive of Policy Exchange, said the slowdown, while concerning, was not surprising.

"For the past few years, Bangladesh's economy has been caught in a slow-growth cycle. The fall in GDP growth in FY25 is worrying but not unexpected," he said.

"Since FY2022-23, the economy has faced multiple challenges. High inflation and a decline in demand have reduced domestic output. At the same time, the central bank's high interest rates and contractionary monetary policy have reduced private sector loan demand and credit growth."

He added that the investment-to-GDP ratio has been declining steadily over the past few years. "This drop in growth is not surprising. High inflation, high interest rates and weak domestic demand have reduced output in industry and services, affecting overall economic output."

Masrur said the lack of new investment was another key factor. "Private sector investment has fallen to just 22% of GDP. The year following the political transition was also not supportive for the economic environment."

He noted that after August 2024, public investment also declined, with the Annual Development Programme reportedly at its lowest level in two decades. Law and order instability, protests, supply chain disruptions, and minor natural disasters also affected economic activity.

Disruptions in public administration and regulatory services further weighed on production and investment, he added.

"These four main factors – reduced domestic demand, high interest rates and falling credit growth, lack of new investment, and political and administrative instability – have together affected growth in FY2024-25. Overall, the final GDP figures reflect a slowdown that is quite normal and predictable under the circumstances," Masrur said.

'Economy in a sluggish phase'

Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development (InM), said the outlook was not encouraging.

"In terms of growth, the picture is not very positive. In FY2024-25 the economy was largely stagnant or sluggish," he said.

He explained that industry – particularly manufacturing – and services are the main drivers of growth. "Agriculture usually grows by only 2% to 3%; structurally it is a low-growth sector. Overall GDP growth mainly depends on industry and services. But sustaining and expanding these sectors requires large-scale investment."

He said both domestic and private investment had stagnated. "The private sector carries out most production activities, yet credit flow to this sector has fallen significantly. Recent data show private sector credit growth has dropped to around 6% to 6.5%, the lowest in several years."

Mujeri further said, "When investment falls, production does not increase, employment does not grow, and economic activities do not gain momentum. As a result, growth slows. Various economic indicators suggest the economy is currently going through a phase of stagnation, which is reflected in the GDP figures."

He noted that creating an investment-friendly environment was essential to reverse the trend. "To increase both domestic and foreign investment, policy stability, an environment of confidence, discipline in the financial sector, and stronger infrastructure support are needed."

He described this as a major challenge for the current government: how quickly it can restore momentum in the private sector. "If investment increases, production will rise, employment will grow, and overall economic growth will accelerate again," Mujeri added.

Stocks maintained strong upward momentum today (26 February) as trading activity surged at the Dhaka bourse following the appointment of a new governor at Bangladesh Bank, with turnover soaring 68%.

The benchmark DSEX of the Dhaka Stock Exchange advanced 45 points, or 0.81%, to close at 5,600, regaining the key psychological level after recent volatility. The blue-chip DS30 index rose 17 points, also 0.81%, to finish at 2,169.

Market breadth remained firmly positive, as 239 issues advanced, 93 declined and 59 remained unchanged, reflecting broad-based buying.

Turnover climbed sharply to Tk947 crore, signalling renewed investor participation and improved liquidity. Market capitalisation also increased, supported by gains in large-cap stocks.

Major contributors to the ryesally included Islami Bank Bangladesh, Beximco Pharmaceuticals, City Bank, Eastern Bank and Robi Axiata, whose price appreciation lifted the indices.

Mostaqur Rahman FCMA was appointed governor of Bangladesh Bank for a four-year term on Wednesday, replacing Ahsan H Mansur.

Market observers noted that Mostaqur's prior experience as a board member of the Chittagong Stock Exchange between 1998 and 2000 underscores his familiarity with the capital market.

Minhaz Mannan Emon, director of the DSE and managing director of BLI Securities Limited, told The Business Standard that the day's rally and transaction growth had no direct correlation with the governor's appointment.

However, he voiced optimism about the new governor's integrity and longstanding engagement with national economic affairs, suggesting such factors could bolster investor confidence.

He also said the formation of a new government by the Bangladesh Nationalist Party has generated expectations of administrative changes across key institutions.

Speculation regarding potential leadership changes at the Bangladesh Securities and Exchange Commission may also be shaping investor sentiment, he added.

According to EBL Securities' daily market review, the capital market extended its recovery from a brief correction phase, driven by broad-based buying.

While mid-session profit-taking briefly slowed the rally, renewed buying interest in the latter half pushed the indices higher by the close.

Sector-wise, banking stocks dominated turnover with a 22% share, followed by pharmaceuticals (18.7%) and telecom (9.1%). All sectors ended in positive territory, led by ceramic (up 3.1%), IT (2.3%) and travel (2.3%).

City Bank, Robi, Orion Infusion, Khan Brothers PP Woven Bag and BRAC Bank topped the turnover chart.

Several loss-making firms featured among the gainers, including Familytex, BIFC, Union Capital and ICB Islamic Bank, each posting the maximum 10% rise.

Meanwhile, the Chittagong Stock Exchange PLC also closed higher. The CSCX index gained 69 points to 9,587, while the CASPI advanced 128 points to 15,597.

Turnover at the port city bourse stood at Tk19.54 crore, reflecting positive sentiment across both trading floors.

Gold prices edged up on Thursday as uncertainty over US tariff policy boosted the metal’s safe-haven appeal, while investors awaited further details on US-Iran talks later in the day.

Spot gold was up 0.4 percent at $5,190.01 per ounce, as of 0816 GMT. Bullion had hit a more-than-three-week high on Tuesday.

US gold futures for April delivery were down 0.4 percent at $5,206.80.

The US dollar eased, making dollar-denominated commodities more affordable for holders of other currencies.

“Iran-US persisting tensions and the uncertainty surrounding the global economy with (President Donald) Trump’s tariffs are a bullish catalyst,” said Carlo Alberto De Casa, external analyst at banking group Swissquote.

US envoy Steve Witkoff and Trump’s son-in-law Jared Kushner are due to meet an Iranian delegation for a third round of nuclear talks later in the day in Geneva.

Trump briefly laid out his case for a possible attack on Iran in his State of the Union speech on Tuesday, saying he would not allow a country he described as the world’s biggest sponsor of terrorism to have a nuclear weapon.

Non-yielding gold is seen as a safe store of value during times of geopolitical and economic uncertainty.

The US tariff rate for some countries will rise to 15 percent or higher from the newly imposed 10 percent, US Trade Representative Jamieson Greer said on Wednesday, without naming any specific trading partners or giving further details.

Gold prices scaled a record high of $5,594.82 on January 29 and were up 20 percent so far this year.

“The global gold rush does not seem to be over... Overall the sentiment remains positive with strong buys coming from Asia and from Central Banks,” De Casa said.

On the data front, investors await the weekly US jobless claims data, due later in the day.