Information and Broadcasting Minister Zahir Uddin Swapon says that due to Bangladesh’s import dependence on fuel oil, prices been increased to keep pace with the ongoing international crisis.

“Populist decision-making is not the only job of the government, the job of the government is to maintain good governance in the long term,” he said in response to a question while speaking to the media at the Secretariat on the first working day after the Eid holidays on Monday.In response to reporters’ questions regarding the increase in fuel oil prices, the information minister said, “You probably know that since the day the energy crisis began, all the countries that are dependent on import-based energy have been increasing prices in line with the international crisis. Everyone knows that even though everyone else has increased prices, our government has maintained fuel prices at their old level for a long time, despite being an import-dependent country.

“We have to import fuel. Our power minister and state minister have regularly informed the nation about this and provided the statistics. But if it is true that we have to continue importing, then we will have to continue relying on import capacity.”The Ministry of Finance and the Ministry of Power, Energy, and Mineral Resources have already formed an advisory committee under the leadership of Wahiduddin Mahmud to deal with the war situation, the minister said.Financial Planning Services.He said, “The government is acting on the advice of the advisory committee and the advice of Wahiduddin Mahmud, a prominent economist in the country. According to his counsel, prices have not been increased for a long time.“Again, the crisis is not over yet, and we will have to continue importing. The government has to keep running while keeping all these things in mind.”

Chinese companies in 15 key industrial sectors received vastly more state support than their international competitors between 2005 and 2024, according to an OECD report released on Monday.

The 15 sectors received $108 billion in 2024 alone, according to data compiled by the Organisation for Economic Cooperation and Development in its Manufacturing Groups and Industrial Corporations (MAGIC) database.

Between 2005 and 2024, it added, “Chinese firms received on average three to eight times more government support than firms based in the OECD, a conservative estimate.”

“These subsidies were also considerably higher than the support received by firms based in non-OECD economies such as Brazil, India and Indonesia.”

The Paris-based organisation of 38 member countries said its “conservative” estimate was based on disclosures by the biggest companies in the 15 sectors, which underpin entire segments of the global economy.

It considers direct subsidies, tax breaks and favourable loans from banks and public financial institutions -- at times below their base lending rates -- to be public support.

“For Chinese firms, almost 60 percent of their global market share gains can be explained by the subsidies they received,” the OECD said.

Chinese firms have carved out huge market shares over 20 years in sectors such as solar panels, shipbuilding and steel, not because they are better than their US or European competitors but because of their unparallelled state support, it added.

- Effect of subsidies -

With subsidies, they have more financial leeway to invest in new production sites, more time to reach profitability and greater support against economic headwinds, according to the report.

This has led to overcapacity in some sectors, pushing down global prices to the detriment of other international players.

“Just like doping in sports, the risk is that subsidies help less productive players win unfairly at the expense of better, more innovative and more efficient ones,” the OECD’s Secretary-General Mathias Cormann told a press conference.

“Subsidies increased market share but that did not lead to significant gains in productivity or profitability,” Cormann added.

“Firms won market share not by being more efficient or more innovative but by being more heavily subsidised.”

The OECD looked at aerospace and defence; aluminium; car manufacturing; cement; chemicals; fertilisers; glass and ceramics; heavy machinery; semiconductors; shipbuilding; photovoltaic panels; steel; telecommunications equipment; rolling stock; and wind turbines.

Worldwide state support in these sectors reached its highest level since the 2008 financial crisis in 2023-24, amounting on average to 1.3 percent of companies’ revenues in 2024.

The OECD noted that the peak observed in 2009 coincided with a severe global recession, which was not the case in 2023-24.

That “indicates the recent increase in industrial subsidies to be more structural”, it added.

Gold prices fell on Monday ‌as renewed US-Iran tensions pushed the dollar and oil prices higher, fuelling fears of inflation and reinforcing the higher-for-longer interest rate outlook.

Spot gold was down 0.8 percent at $4,498.89 per ounce at 0909 GMT after ​hitting a two-week high on Friday. The yellow metal dropped 0.9 percent in May, ​its fourth consecutive monthly fall.

US gold futures for August delivery fell 1.4 percent to $4,528.90.

The dollar edged higher, making greenback-priced bullion more expensive for holders of other currencies.

The ​US said it struck Iranian military sites over the weekend and Iran’s Revolutionary Guards on Monday ​said they had targeted a US base in response, the latest exchange of attacks amid negotiations to end the three-month-old war.

“The optimism surrounding negotiations between the US and Iran aimed at ending the standoff ​in the Strait of Hormuz faded over the weekend,” ActivTrades analyst Ricardo Evangelista said. “As a ​result, energy prices rebounded, reviving inflation concerns and reinforcing hawkish Federal Reserve expectations.”

Brent crude oil prices gained ‌more than 3 percent after the latest strikes. Higher oil prices can accelerate inflation and keep interest rates higher for longer. While gold is traditionally seen as a hedge against inflation, it loses its appeal in a high-interest-rate environment as a non-yielding asset.

Traders are now pricing ​in a Fed rate ​hike this year, with a 40 percent chance of a quarter-point increase in December, according to CME Group’s FedWatch tool.

A host of Fed board members are set ​to speak this week, while major data releases are scheduled to ​include the ⁠ISM survey of manufacturing and the May payrolls report on Friday.

“Traders will be closely watching this week’s key data releases as these have the potential to reshape expectations regarding the future ⁠path ​of Fed monetary policy, influencing demand for the US ​dollar and, consequently, the performance of gold prices,” Evangelista said.

Spot silver rose 0.7 percent to $75.79 per ounce, platinum gained 0.4 percent ​to $1,925.26 and palladium fell 0.8 percent to $1,343.55.

The global smartphone market is heading for its steepest annual contraction on record, with shipments projected to slump by 13.9% this year to 1.08 billion units, Counterpoint Research said on Monday, citing a worsening shortage of memory chips.

The forecast is a downgrade from the 12.4% decline projected in February, with the squeeze in global chip supply exacerbated by the Iran war.

Impact most acute at budget end of market

The impact is being felt most acutely in lower-end smartphones as chipmakers shift production capacity to AI-related chips, making entry-level devices less economical to produce.

Global smartphone wholesale prices rose 14% in the first quarter while shipments fell 3.1% year on year. That trend is expected to continue as inventory built before the supply shock becomes depleted, with some models priced below $150 likely to disappear from the market.

"Smartphone makers in the low and mid-tier are caught between cost increases they cannot absorb and consumers with limited spending power," said Wang Yang, a principal analyst at Counterpoint, an independent research company that publishes quarterly smartphone shipment data.

"The question is no longer how to grow shipments or market share, but whether to remain in the market at all."

The memory chip shortage is the most severe supply-side disruption the smartphone industry has faced, Wang said, adding that manufacturers are unable to offset the impact through pricing or product changes.

Premium end of the market more resilient

The premium segment has proven more resilient. Apple posted record revenue for the first three months of the year, helped by customers upgrading to its iPhone 17 series. Apple's 2026 shipments are expected to remain flat before rising 5% next year, Counterpoint projections show.

With more stable chip supply and stronger margins than many rivals, Apple is well placed to gain market share and could face less pressure to raise prices.

Samsung Electronics kept volumes steady in the first quarter and is expected by Counterpoint to register only a 4% decline in shipments over the full year, outperforming the wider market thanks to stable supply and a consistent product line-up.

Transsion, which is heavily exposed to the market for smartphones priced below $150, is forecast to suffer a 32% drop in shipments this year. Rivals Xiaomi and Honor, meanwhile, are projected to post full-year declines of 28% and 20% respectively, Counterpoint said.

The International Monetary Fund (IMF) has said that the Bangladesh government has requested a new IMF-supported programme as discussions continue over the country’s reform agenda and policy priorities.

In a statement, IMF Mission Chief for Bangladesh Ivo Krznar said the IMF staff are currently engaged in talks with the Bangladeshi authorities regarding the proposed programme.

“The Bangladeshi authorities have requested a new IMF-supported programme. IMF staff are in discussions with the authorities on their reform agenda and policy priorities,” he said.

Krznar said the IMF remains committed to supporting Bangladesh in maintaining macroeconomic and financial stability amid ongoing economic challenges.

“The IMF remains a committed partner to Bangladesh in its efforts to secure lasting macroeconomic and financial stability, strengthen resilience, and support strong, inclusive growth,” he added.

The development comes as Bangladesh continues efforts to stabilise its economy through fiscal, monetary and structural reforms while addressing pressure on foreign exchange reserves, inflation and the financial sector.

Bangladesh has been implementing various reform measures under its existing IMF loan programme approved in 2023.

Bangladesh is expected to play a significant role in a new US initiative aimed at boosting American cotton exports, as the Trump administration links potential tariff benefits for Bangladeshi apparel exports to the use of US cotton and textile inputs.
The United States Department of Agriculture (USDA) last week launched the Great American Cotton Plan to revitalise the cotton farm economy in the US.
“USDA and USTR secured commitments from Indonesia and Bangladesh that will support future US cotton purchases and textile production using American cotton,” the plan states.

Under the plan, Bangladesh could receive tariff reductions on apparel produced using US cotton and textile inputs, alongside other tariff-related concessions.
A Bangladesh-US reciprocal trade agreement signed on February 9 commits Washington to establishing a mechanism allowing certain Bangladeshi textile and apparel goods to enter the US at a zero reciprocal tariff rate.

However, the volume eligible for this benefit will be tied to Bangladesh’s imports of US-produced cotton and man-made fibre inputs. The US has yet to clarify the textile clause of the deal.Showkat Aziz Russell, president of Bangladesh Textile Mills Association (BTMA), said American cotton’s share of Bangladesh’s nearly $4.0 billion annual cotton import bill has been growing steadily, with local spinners, millers, and traders increasingly turning to US suppliers. He has already held talks with senior US officials on the bilateral cotton trade.
Russell flagged two key obstacles to scaling up US cotton use: the Rules of Origin (RoO) requirements and the long shipping distance between the two countries.He noted that while American cotton offers superior quality, greater clarity is needed on the tariff benefits available to Bangladeshi exporters.

During discussions with US officials, Russell sought clarification on the RoO requirements governing the use of US cotton and man-made fibre in garments eligible for tariff concessions.Based on discussions with US officials, he said the reduced tariff facility may apply only to a specified quota rather than all exports.Russell also stressed the need for warehouse facilities in Bangladesh to store and market US cotton. Imports from neighbouring countries require much shorter lead times, while shipments from the US can take more than 45 days, potentially affecting exporters’ competitiveness.Faisal Samad, a director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said the association will meet officials from the US Embassy in Dhaka next week to discuss the RoO requirements for garments made from US cotton and man-made fibre.

BGMEA leaders had previously sought clarification on the issue during meetings with visiting US Trade Representative (USTR) officials, but were told that work on the framework was still underway.

The US currently accounts for nearly 9 percent of Bangladesh’s annual cotton imports, which are valued at nearly $4.0 billion.US goods trade with Bangladesh totalled an estimated $11.8 billion in 2025.

American imports from Bangladesh reached $9.5 billion -- up 13.3 percent from 2024 -- while US exports to Bangladesh were $2.3 billion.The resulting trade deficit stood at $7.1 billion, a 17.9 percent increase from the previous year. Garments account for 86 percent of Bangladesh’s exports to the US.

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

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

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

Infograph: TBS
Infograph: TBS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Rating record

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

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

How a decade was squandered

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

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

What peers did differently

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

Fitch warning of May 2026

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

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

Three scenarios

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

What a rating downgrade actually means

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

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

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

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

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

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

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

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

Conclusion

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

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

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

Bangladesh generates a significant share of the world’s raw leather each year, yet earns only a fraction of what the material is worth due to compliance failures and decades of neglected infrastructure, according to industry leaders.

They point to shortcomings at the Savar Tannery Industrial Estate that have kept the country locked into low-value exports and shut out of premium global markets.

Bangladesh accounts for around four percent of the world’s rawhide and skin resources and produces an estimated 350-400 million square feet of hides and skins annually, according to Md Mizanur Rahman, professor and director of the Institute of Leather Engineering and Technology at the University of Dhaka.

“The country could generate up to $10-$12 billion in export earnings from its existing raw materials alone if the sector were fully utilised,” he said.

“We are sitting on a huge resource, but we are not using it properly,” Rahman added.

He estimates that nearly 30 percent of the country’s leather is wasted due to poor preservation, inadequate processing capacity and the lack of proper utilisation of tannery by-products.

According to the professor, the leather sector offers one of the highest value-addition opportunities in Bangladesh’s manufacturing industry, with up to 90 percent value addition possible as most raw materials are sourced locally.

He noted that foreign buyers, particularly Chinese firms, often purchase Bangladeshi leather for as little as 40-50 cents per square foot and later sell processed leather in international markets for around $2 per square foot.

Much of the profit from Bangladesh’s leather ends up overseas, while local traders and producers receive low prices for rawhides, he added.

According to Rahman, much of the potential lies in by-products that currently go unused.

He noted that tannery waste can be processed into collagen, gelatin, fertiliser and animal feed – industries that, if formalised, would create new demand for hides and push up their market value. “Nothing from leather should go to waste. Every part has economic value.”

The timing of supply adds another layer of difficulty. Some 40-45 percent of the country’s annual rawhide comes to market within three days of Eid-ul-Azha, placing enormous strain on processing capacity and making efficient handling critical to securing better prices.

The DU professor said the lack of internationally compliant environmental infrastructure at the Savar Tannery Industrial Estate has further limited the sector’s ability to move up the value chain.

Md Tipu Sultan, chairman of the Bangladesh Finished Leather, Leather Goods and Footwear Exporters Association (BFLLFEA), said the country’s leather sector continues to receive lower prices in international markets mainly because many factories have yet to meet globally recognised compliance standards.

“If we can move quickly on these issues, it will make a significant difference,” he said.

The compliance gap is the central obstacle for the sector’s growth, he noted, stating that only a handful of factories currently hold the internationally recognised certifications required by buyers in the United States and European markets.

“One or two compliant factories are not enough. If at least 50 out of around 150 factories can achieve those standards, more compliance-focused buyers will source products from Bangladesh,” Sultan said.

“If we can move quickly on these issues, it will make a significant difference,” he added.

If progress continues, he said, many of the recurring problems facing the leather sector could be resolved before the next Eid-ul-Azha season.

At the factory level, the frustration runs deeper. Md Salauddin Ahmed, managing director of New Kajol Tannery Ltd and treasurer of the BFLLFEA, traces the industry’s current predicament to the forced relocation of tanneries from Hazaribagh to Savar – a move the government promised would come with full infrastructure support.

“The government shifted us to Savar with the promise of providing all necessary facilities. But many factories moved before essential infrastructure was ready,” he said.

Even years after the relocation, several tanneries still face shortages of gas and other utilities, while the central effluent treatment plant (CETP) has yet to operate at the expected standard, he added.

These shortcomings have prevented the sector from obtaining internationally recognised certifications, including approval from the Leather Working Group (LWG), a key requirement for supplying many global brands.

“As a result, major European buyers are not coming to Bangladesh. We are largely dependent on Chinese buyers, who currently dictate prices,” Ahmed said.

That dependence shows in the margins. Processed leather is selling at $0.50–0.55 per square foot, barely enough to cover costs. With most chemicals imported and the dollar strengthening, even cheap raw hides offer little relief.

“We import most of our chemicals, and costs have risen sharply due to the stronger dollar. Even when we purchase raw hides at relatively low prices, we struggle to make a profit,” he said.

According to Ahmed, the lack of buyer diversification has weakened the industry’s bargaining power and contributed to the decline in hide prices.

“If we can ensure proper environmental compliance and secure LWG certification, European and other international buyers will return. Then we can sell leather at much better prices and pay higher prices for raw hides as well,” he said.

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

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

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

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

RFL started manufacturing Proton mobile phones in late 2022.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A RELATIVELY MILD INFLATION WAVE

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The inflationary pressure begins at the point of distribution.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

In his view, the core problem is cash.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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