The interim government's reliance on the banking sector surged significantly to meet development project costs and other expenditures, with borrowing from internal banks reaching over Tk73,000 crore in the first seven months of the current fiscal year, FY2025-26.

According to a report from Bangladesh Bank, 81% of the government's total domestic and foreign loans between July and January were sourced from the internal banking system. The total net borrowing from both local and international sources stood at approximately Tk90,000 crore during this period.

Economists warn that excessive government borrowing from banks can crowd out the private sector, discouraging investment and creating pressure for interest rate hikes. This comes at a time when private sector credit flow has already hit a record low due to political instability ahead of the 13th national elections.

Central bank officials identified several factors behind the rapid increase in bank loans. A primary reason is the government's capital support for the "Combined Islamic Bank," formed by merging five banks. In the first week of last December, the government injected approximately Tk 20,000 crore into the bank, a large portion of which was financed through bank borrowing.

Additionally, while revenue collection fell short of targets in the first half of the fiscal year, operating expenses rose significantly, forcing the interim government to lean more heavily on the banking sector.

The government proposed a budget of Tk7.90 lakh crore for the FY2025-26, with an overall deficit (including grants) of Tk2.21 lakh crore, or 3.5% of GDP. To bridge this gap, the government planned to borrow Tk1.25 lakh crore from domestic sources, including Tk1.04 lakh crore from the banking system and Tk21,000 crore from non-banking sources.

However, data shows a sharp shift in borrowing patterns.

Net borrowing reached Tk73,035 crore from July to January, nearly an eight-fold increase compared to Tk9,442 crore during the same period of the previous fiscal year.

Borrowing from non-banking sources plummeted to Tk7,216 crore, down from Tk25,864 crore in the previous year.

The total stock of domestic debt stood at Tk10.37 lakh crore as of January 2025, an increase of over Tk1.51 lakh crore within a single year.

The report also highlighted a dwindling contribution from external sources. In the first seven months of FY2025-26, net foreign borrowing amounted to only Tk9,832 crore, accounting for less than 11% of total loans.

In contrast, the government had secured approximately Tk27,964 crore from foreign sources during the same period in the previous fiscal year.

Experts emphasised the need for a balanced debt management strategy to attract private investment and ensure long-term economic stability.

The securities regulator has approved a proposal from non-listed Akij Food & Beverage Ltd to raise Tk 5 billion by issuing zero-coupon bonds, a move that reflects the growing reliance of large corporations on alternative financing instruments.Financial literacy course

According to the regulatory approval, the bond will be unsecured, non-convertible, and fully redeemable. Unlike conventional bonds, this instrument does not offer periodic interest payments. Instead, the bond is issued at a discounted price and redeemed at full face value upon maturity, allowing investors to earn a fixed return.

The approval came at a meeting of the Bangladesh Securities and Exchange Commission (BSEC) last week, presided over by its Chairman Khondoker Rashed Maqsood.

The tenure of the bond will range from six months to 60 months, providing flexibility for investors with varying investment horizons.

The bond units will be issued through private placement to banks, non-bank financial institutions, insurance companies, institutional investors, and high net-worth individuals. Each unit will carry a face value of Tk 1 million, effectively limiting participation to large-scale investors.

Sena Insurance has been appointed trustee, responsible for safeguarding investors' interests and ensuring regulatory compliance, while North Star Investments (BD) will act as the fund manager.Bangladesh market analysis

Market insiders said amid tighter banking liquidity and relatively high borrowing costs, corporations are actively diversifying funding sources. Structured instruments such as zero-coupon bonds allow issuers to better align repayment obligations with long-term revenue generation.

The proceeds from the issuance are expected to support the company's expansion and operational financing needs, although detailed utilisation plans were not disclosed. This would be a cost-efficient way to fund expansion without immediate interest servicing burdens.

Founded in 2006, Akij Food & Beverage has grown into one of the country's leading beverage manufacturers. Its portfolio includes several well-known brands such as Mojo, Frutika, and Speed, which enjoy a strong market presence across segments.

Minister for Power, Energy and Mineral Resources Iqbal Hasan Mahmud Tuku stated in a parliamentary session today (30 March) under Rule 300 that the government has taken the initiative to import 50,000 tonnes of octane in April.

Additionally, the government announced that another 30,000 tonnes of octane will be supplied from domestic sources.

As a result, even though the monthly demand is 35,000 tonnes, the current management will ensure an additional reserve for at least two months.

The minister said that although global instability – particularly tensions in the Middle East – has created pressure on the global fuel supply, Bangladesh has kept the situation under control through advanced preparation, consistent imports and effective management.

The minister noted that despite the increase in prices on the international market, fuel prices have not been raised domestically.
Keeping fuel prices stable a major success of govt: Salahuddin

Currently, while the selling price of diesel is Tk100 per litre, the actual cost is approximately Tk198. The government is also providing subsidies for octane.

The minister stated that for the March-June quarter, a total subsidy of Tk15,409 crore will be required for diesel, and Tk636 crore for octane, totalling Tk16,045 crore.

"Furthermore, for LNG imports through Petrobangla, a subsidy of Tk15,077 crore will be required for the April-June quarter. This government believes the state's primary responsibility is to stand by the people during crises and ensure their protection," he added.
What’s driving our hoarding instinct in the ongoing fuel crisis?

The minister said, "I want to reassure the nation through this parliament that fuel prices have not been increased in the country despite the foreign crisis. Many countries around the world have had to adjust fuel prices repeatedly. Even in many neighbouring countries, prices have increased by more than 25%."

He emphasised that the Bangladesh government has prioritised the public interest and kept prices stable, because if fuel prices rise, the cost of agricultural production, transport and the general public's cost of living increases manifold.

The discussion on hiking fuel prices comes in the face of a global crisis stemming from the Middle East war. In order to cope with energy shortages, prices have increased in many neighbouring countries, and some countries have even shut down educational institutions due to energy shortages.

Earlier, Home Minister Salahuddin Ahmed said keeping fuel prices unchanged in the country, despite their rise in international markets following the Middle East war, was a major success of the government.

The Bangladesh Securities and Exchange Commission has approved the issuance of an Orange bond, the first of its kind in the country, by SAJIDA Foundation to raise Tk 158.5 crore to finance women's economic empowerment and accelerate progress towards gender equality.

The zero-coupon bond, a debt that pays no interest but is sold at a deep discount, marks a major milestone in Bangladesh’s capital market evolution, said a press release by BRAC EPL Investments Ltd.

SAJIDA Foundation partnered with BRAC EPL Investments Ltd and Impact Investment Exchange (IIX), the Singapore-based global impact investing platform, to issue the Orange bond, a specialised investment tool designed to raise money specifically for empowering women, girls, and gender minorities while tackling climate change.

“The pioneering bond supports the transition toward more inclusive, resilient, and capital market-driven development finance solutions, and contributes to broader efforts to develop the impact investment ecosystem in Bangladesh,” said the press release.

BRAC EPL Investments Ltd said Bangladesh’s bond market has long been dominated by government securities and bank subordinated debt. This transaction breaks that mould by introducing thematic, impact-linked fixed income as a new asset class.

The bond offers investors tax-exempt financial returns while enabling measurable social impact, particularly in supporting women and women-led businesses.

Some 48 percent of the proceeds will be allocated to food security and agriculture, 32 percent to women-led SMEs, and 20 percent will be used for climate-resilient housing across 36 districts.

“Impact will be tracked through independently verified annual reports aligned with international standards, ensuring transparency and tangible benefits for women’s economic empowerment.”

City Sugar Industries Limited, a concern of City Group, has received regulatory approval to raise Tk1,300 crore through a three-year zero-coupon bond.

The approval was granted by the Bangladesh Securities and Exchange Commission (BSEC) at a meeting today (30 March), according to a press release.

The proposed bond will be secured and mortgage-backed, non-convertible, and fully redeemable, with an estimated discount rate of around 13.50%. Under the structure, the company will provide land as collateral, offering enhanced security to investors.

The bond will be issued through private placement to corporate entities, high-net-worth individuals, banks, financial institutions, and insurance companies. Each unit of the bond will carry a face value of Tk13 lakh.

Officials said the proceeds from the bond issuance will be used to repay existing liabilities with various banks and financial institutions, helping the company restructure its debt and improve financial stability.

BRAC EPL Investments Limited has been appointed as the trustee of the bond, while BRAC Bank will act as the arranger. The bond is also expected to be listed on the Alternative Trading Board, providing a platform for secondary market trading.

Syed Rashed Hussain, chief executive officer of BRAC EPL Investments, said the mortgage-backed nature of the bond ensures a higher level of security for investors.

He explained that the company's land will be transferred under the trustee as collateral, and in case of default, the trustee will have the authority to liquidate the assets to repay investors.

He added that this is the first instance of a mortgage-backed bond issuance in Bangladesh, setting a precedent in the local capital market and potentially opening the door for similar structured financing instruments in the future.

Earlier, City Auto Rice and Dal Mills Limited, another concern of City Group, issued a Tk350 crore bond for repaying the debt.

Market analysts believe the move reflects a growing trend among corporates to explore alternative financing options beyond traditional bank loans, while also offering investors more secure investment avenues.

Bangladesh secured higher foreign loan commitments in the first eight months of the current fiscal year, yet actual disbursement fell by 26 percent compared with the same period last year, raising concerns about the country’s ability to use external funds effectively.

Between the July-February period, foreign loan disbursement dropped to $3.05 billion, down from $4.13 billion a year earlier, according to data released by the Economic Relations Division (ERD) yesterday.

The decline was driven largely by slower project aid, the primary channel for financing infrastructure and development projects.

Disbursement under project assistance fell to just above $3 billion in the first eight months of this fiscal year, compared with over $4.1 billion during the same period last year.

This slowdown comes despite nearly $40 billion in financing commitments from foreign lenders.

Analysts say the widening gap between pledged funds and actual disbursement reflects Bangladesh’s limited capacity to use external resources on time.

Foreign aid is crucial for roads, power plants, and social sector projects, but delays can reduce project benefits and increase costs.

The trend is particularly concerning as Bangladesh’s external debt servicing rises. During the July-February period, the country paid $2.9 billion in principal and interest, up from $2.63 billion a year earlier.

Deen Islam, professor of economics at Dhaka University, said the figures indicate a gradual shift from development financing to debt rollover.

“When a large portion of new external borrowing is used to service existing debt rather than finance productive investment, the net inflow of resources into the economy declines,” he said.

“Infrastructure and development spending may slow, while rising debt servicing puts additional pressure on foreign exchange reserves and the exchange rate,” Islam said.

He added that the situation could also fuel imported inflation. While not yet a crisis, he described it as a “warning sign”.

“If this trend persists, policymakers will face difficult trade-offs between taking on more debt and reallocating domestic resources away from development spending,” he said.

Meanwhile, Monzur Hossain, member (secretary) of the General Economics Division (GED) under the Planning Commission, said, “Loan disbursement is directly tied to project progress. When implementation slows, disbursement inevitably falls.”

He pointed to structural bottlenecks, particularly in investment projects.

“Many projects involve complex conditions, and meeting those requirements takes time. Land acquisition remains a major challenge in many cases,” Hossain said.

He also noted weaknesses in the execution of the Annual Development Programme (ADP) as a key factor. “Since most of these loans are linked to ADP projects, delays in overall project execution translate into slower disbursement,” he added.

During the period of the interim government, many projects were almost stagnant. However, Hossain expressed optimism about improvement in the coming months.

“Now, with a political government in place, monitoring has increased, projects are being prioritised, and delays are being scrutinised more closely,” he said.

“I expect the situation to improve soon, particularly in the final months of the fiscal year as measures taken by the Planning Commission begin to take effect,” he added.

Oil prices extended gains on Monday, with ​Brent headed for a record monthly rise, after Yemeni Houthis launched their first attacks on Israel over the ‌weekend, widening the US-Israel war with Iran in the Middle East.

Brent crude futures jumped $3.94, or 3.5 percent, to $116.51 a barrel at 0703 GMT after settling 4.2 percent higher on Friday.

US West Texas Intermediate was at $102.14 a barrel, up $1.86, or 1.87 percent, following a 5.5 percent gain in the previous session.

“The market has all but discounted the prospect of ​a negotiated end to the war, Trump’s claims of ongoing ‘direct and indirect’ talks with Iran notwithstanding, and is bracing for ​a sharp escalation in military hostilities, which is a bullish signal for crude, with huge uncertainties on the timing and nature of the outcome,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.

US President Donald Trump said ​the US and Iran have been meeting “directly and indirectly” and that Iran’s new leaders have been “very reasonable”, as more U.S troops arrived in ​the region, while the Israeli military said on Monday it is attacking the Iranian government’s infrastructure throughout Tehran.

Brent has soared 59 percent this month, the steepest monthly jump, exceeding gains seen during the 1990 Gulf War, after the Iran conflict effectively closed the Strait of Hormuz, a conduit for a fifth of the world’s ​oil and gas supplies.

The war, launched on February 28 with US and Israeli strikes on Iran, has spread across the Middle East, ​raising concern about shipping lanes around the Arabian Peninsula and the Red Sea.

The Israeli military on Monday said Iran launched multiple waves of missiles at Israel ‌and an ⁠attack had also been launched from Yemen for only the second time since the war began.

“The conflict is no longer concentrated in the Persian Gulf and around the Strait of Hormuz, but now extends into the Red Sea and the Bab el-Mandeb — one of the world’s most crucial chokepoints for crude and refined product flows,” JP Morgan analysts led by Natasha Kaneva said in a note.

Saudi crude exports ​re-directed from the Strait of ​Hormuz to the Yanbu port ⁠in the Red Sea reached 4.658 million barrels per day last week, data from analytics firm Kpler showed.

If exports from Yanbu were disrupted, Saudi oil would need to pivot toward Egypt’s Suez-Mediterranean (SUMED) pipeline to ​the Mediterranean, JP Morgan analysts said.

Attacks in the region escalated over the weekend and damaged Oman’s Salalah ​terminal despite efforts ⁠to start ceasefire talks.

Iran said it was ready to respond to a US ground attack, accusing Washington on Sunday of preparing a land assault even as it sought negotiations.

Pakistan’s Foreign Minister Ishaq Dar said they had covered possible ways to bring an early and permanent end to the ⁠war in ​the region as well as potential US-Iran talks in Islamabad.

Separately, Vietnam’s Binh Son ​Refining and Petrochemical on Monday said it is in talks with Russian partners to buy crude oil. The company said it would also buy more crude oil from Africa, ​the US and Southeast Asia.

Foreign loan disbursement declined by 26.2% in the first eight months (July–February) of the current fiscal year.

According to an updated report published today (30 March) by the Economic Relations Division (ERD), development partners disbursed $3.053 billion during this period, compared to $4.134 billion in the same period of the previous fiscal year.

ERD officials said the slowdown in project implementation due to elections led to the drop in disbursement. The administration remained focused on the election during the current fiscal year, which slowed the pace of development project implementation and affected foreign loan disbursement.

Officials also noted that, similar to the previous fiscal year, there was administrative instability at the beginning of the current fiscal year and during the interim government period. At the same time, there was a lack of confidence among development partners, which further slowed project implementation from the outset.

In addition, after the Awami League government lost power in 2024, many project directors and related officials left their positions. Appointing new project directors took time, and this situation persisted into the first half of the current fiscal year, disrupting both project implementation and fund disbursement.

Meanwhile, ERD data show that in the first eight months of the fiscal year, Bangladesh repaid nearly the same amount to development partners as it received in disbursements.

According to ERD, Bangladesh repaid $2.899 billion in principal and interest on past loans during July–February, while disbursement during the same period stood at $3.05 billion.

In the same period of the previous fiscal year, Bangladesh repaid $2.636 billion to development partners.

Officials said repayments have increased as grace periods for many previously taken loans have ended. However, on a full-year basis, repayments are still expected to remain lower than disbursements. For example, Bangladesh repaid $4.086 billion in the previous fiscal year, while disbursements were $8.56 billion. Similarly, although repayments may rise by the end of the current fiscal year, they are unlikely to exceed disbursements.

ERD data show that Bangladesh repaid $1.943 billion in principal during the first eight months, up from $1.692 billion in the same period last year.

Interest payments during this period amounted to $955.8 million, compared to $944.1 million in the same period of the previous fiscal year.

Meanwhile, Bangladesh secured $2.431 billion in foreign loan commitments during July–February, slightly higher than $2.353 billion in the same period last year.

ERD sources said that last fiscal year's student-led uprising, change of government, administrative instability, and lack of confidence among development partners contributed to lower loan commitments. Although the situation has improved in the current fiscal year, the interim government remains cautious about foreign borrowing, which has limited the pace of new commitments. However, commitments are expected to increase under a newly elected government.

Mustafa K Mujeri, executive director at the Institute for Inclusive Finance and Development, said development partners generally feel more comfortable working with a stable and democratically elected government. As a result, during the interim government period, both major loan commitments and disbursements remained low except for urgent needs. This contributed to the decline in disbursement compared to the previous fiscal year. Although commitments have increased somewhat in the first eight months, the rise is not significant.

He added that repayment of foreign loans taken in previous years has now become a major pressure. As repayment periods for loans taken under the previous government begin, the amount of repayment is increasing. Currently, disbursement and repayment are nearly at the same level, which could increase pressure on foreign exchange reserves.

According to him, if new loan inflows do not increase, this pressure may intensify in the future. At the same time, global uncertainties, including the Middle East conflict, have increased costs of energy, transport, and insurance. Importing oil and LNG from alternative sources at higher prices is putting additional strain on reserves. The current reserve stands at around $30 billion, and increasing it to $40-45 billion could bring some relief. In this situation, the government is seeking budget support from the International Monetary Fund, World Bank, and Asian Development Bank to ease pressure on reserves.

Mujeri said coordinated efforts are essential to tackle the crisis. Strengthening foreign assistance, expanding exports, boosting reserves, and controlling expenditure will help Bangladesh address these challenges.

According to ERD data, Russia disbursed the highest amount – $755.15 million – during July-February, mainly for the Rooppur power project. The World Bank disbursed $636 million, the Asian Development Bank $566.19 million, China $257.72 million, Japan $189.36 million, and India $152.89 million.

In terms of commitments, the Asian Development Bank provided the highest at $1.269 billion during the first eight months. The World Bank committed $416.25 million, while European Union countries pledged $392.07 million.

A dedicated division under Bangladesh Bank spearheads anew stolen-asset-recovery initiative with over 200 high-value non-performing loan (NPL) cases under scrutiny, each involving an estimated Tk 2.0 billion.Bangladesh market analysis

A newly established unit--Stolen Asset Recovery Division--is currently validating the amounts using data from the Credit Information Bureau (CIB), says Farhanul Gani Choudhury, adviser to the governor on stolen asset recovery.

Talking to The Financial Express, he said the 200 cases were shortlisted from NPL data submitted by commercial banks to the central bank. According to compiled information, these cases collectively account for approximately $12 billion or Tk 1.47 trillion in NPLs.

Bangladesh's total NPL volume stood at Tk 5.57 trillion as of December 2025, according to BB data.

Mr Gani clarifies that while the total NPL amount in these 200 cases is under intelligence scrutiny, it does not necessarily mean that the entire sum has been siphoned off.

"The SAR has now started working under a single platform to proceed in a structured way," he says.

The division will prioritise cases based on the number of banks affected by each NPL, he adds.

Under the second phase, SAR has engaged with 40 banks.Personal finance tools

Through civil proceedings, the division aims to determine how much of the NPL amounts in these 200 cases has actually been siphoned off the banking system.

Meanwhile, the first phase of the SAR initiative is also progressing in full swing.

"These 200 cases involve around 200 companies and individuals - a mixed group. While individuals are involved, they often operate through companies," Mr Gani says, without naming names of the suspects.

He notes that many of these borrowers are multi-bank clients, meaning a single individual has taken loans from multiple banks.

Sharif Zahir, chairman of UCB, which was the first bank to sign an NDA in the case involving former land minister Saifuzzaman Chowdhury, has said the response from litigation funders on asset recovery has so far been disappointing.

"One firm, FT, initially responded but later backtracked. Perhaps they found the amount not large enough or not sufficiently attractive," he says.Premium content access

He adds that UCB moved quickly to claim the alleged stolen assets in order to appoint an administrator. Grant Thornton has since taken over the administratorship.

"If we proceed through civil litigation, it is not that difficult to recover stolen assets. However, criminal proceedings require government-to-government agreements, which make the process more complex."

Mr Zahir expresses optimism about recovering at least part of the assets linked to Saifuzzaman Chowdhury, some of which have already been put up for sale in the UK.

On the 200 cases, Mr Gani explains that in cases where a single defaulter is linked to 10 or 15 banks, coordination becomes essential.

For cases involving only one bank, such coordination is not required, and the choice of international firm becomes less critical. However, in multi-bank exposures, a consortium or lead-bank approach is necessary.

"I have established an entirely new department. This work would not be sustainable without a strong institutional structure," he told the FE.

The SAR division consists of around 12 officials led by a director, in line with the organogram approved earlier by former BB governor Dr Ahsan H Mansur and endorsed by the current governor.

At a meeting with senior journalists on Sunday, the new BB governor reaffirmed his position to proceed on SAR without political and other interventions.

A director has already been appointed and is actively working on SAR. Previously, these responsibilities were partially handled by the Bangladesh Financial Intelligence Unit (BFIU), but now all asset- recovery functions have been consolidated under one umbrella.Bangladesh market analysis

All members of this division are officials of Bangladesh Bank. The structure includes one director from BFIU, two additional directors, four joint directors, and several assistant and deputy directors. Given the technical nature of the work, an IT specialist will also be appointed.

BFIU Director Syed Mahbub, who has been closely involved in SAR efforts from the outset, is also part of the division.

The division of crusaders for stolen asset recovery includes two to three joint directors who have completed two-year master's degrees in asset recovery from the UK, bringing valuable international expertise and knowledge of global best practices.

Under Phase 1, SAR has completed 36 non-disclosure agreements (NDAs) with 10 banks. NDAs have also been signed with nine international firms, and data sharing is now underway.

United Commercial Bank, Janata Bank, National Bank, Al-ArafahIslami Bank, Agrani Bank, AB Bank, and Islami Bank Bangladesh, among others, have signed the agreements with the law firms.

The global law and litigation firms engaged are Kroll, R1 Consortium, Interpath, Dentons/EY, DLA Piper/Unitas Global, PwC/Baker McKenzie, Omni Bridgeway, and Grant Thornton.Personal finance tools

"Data is the most critical element. Everything I have done so far has been through coordination. Now we will be able to assess how viable this data is for building cases internationally," Mr Gani further says.

He explains that prior to signing NDAs, international firms did not have access to case-level data and were relying only on broad macroeconomic estimates of capital flight.

"Now it will become clear how much of this can actually stand up in international jurisdictions. Based on this, they will need to convince their litigation funders. Once they receive positive feedback from those funders, they will proceed with commercial contracts."

The SAR division has already begun seeking feedback from international firms, with mixed responses so far.

Some banks have performed well by properly organising and indexing their data and clearly presenting their proceedings in the Money Loan Court. Others, however, have submitted unstructured data, reflecting gaps in capacity and understanding.

"I plan to organise a best-practice session where better-performing banks will demonstrate to others how to prepare and present data to the required standard," he says.

SAR has also asked international firms to formally outline their minimum data requirements to ensure clarity in expectations.

Officials have observed that not all international firms operate the same way - some are more supportive and flexible, while others are less so.

Overseas credit card spending by Bangladeshis declined by 5.74%, falling to Tk463 crore in January from Tk491.2 crore the previous month, according to the latest report of the Bangladesh Bank.

However, Bangladeshis spent the highest amount using credit cards in Thailand in January 2026, totalling Tk69.4 crore, reveals it.

The central bank's report titled "An Overview of Card Usage Patterns Within and Outside Bangladesh" showed that spending in Thailand increased from Tk64.9 crore in December.

After Thailand, the United States was the second most popular destination, where spending stood at Tk67.5 crore in January, slightly down from Tk68.2 crore in December.

The United Kingdom ranked third with Tk38.4 crore in spending, also decreasing from Tk44.4 crore a month earlier.

Spending in Singapore rose slightly to Tk38.3 crore while expenses in India dropped significantly to Tk28.5 crore from Tk35.1 crore in December.

According to the report, India had been the top destination for Bangladeshi credit card spending until August 2024. However, stricter visa policies have reduced travel to India, shifting spending to other countries.

The report also showed debit card usage abroad, with the UK, US, China and India topping the list.

The country’s merchandised shipments of processed foods and agricultural products to Gulf nations are facing a serious shock from the war in the Middle East, with freight charges soaring fourfold and new orders plunging.

Before the US and Israel launched the war on Iran on February 28, sending a container of processed foods cost around $1,500. Manufacturers say rerouting has now pushed the price to roughly $6,500.

“Besides, the volume of orders from Middle Eastern markets has declined by around 40 percent compared to pre-war levels,” said Ahsan Khan Chowdhury, chairman and chief executive officer of PRAN-RFL Group.

Bangladesh exports a wide range of products to the Gulf, including spices, biscuits, puffed rice, chanachur, noodles, mustard oil, beverages and other snacks. The main customers are Bangladeshi migrant workers in the region and members of the diaspora.

Official data puts the size of the market at more than $100 million. Major destinations include Saudi Arabia, the United Arab Emirates, Oman, Qatar, Kuwait and Bahrain.

Chowdhury, the CEO of PRAN-RFL Group, one of the largest food and beverage brands in Bangladesh, said shipments to Middle Eastern countries were previously routed through five to six ports.

“But after the Strait of Hormuz was closed and other ports came under retaliatory attacks, exporters were left with only Jeddah port operational,” he said. “This pressure on the Saudi Arabian port on the Red Sea has largely contributed to the rise in freight charges.”

Apart from these issues, he added that sending products to Middle Eastern markets now takes longer.

“Although factory production has not yet been affected, if the current situation persists, a reduction in production will likely become unavoidable in the near future,” he commented.

Rezaul Hoque Khondaker, manager for international marketing at local food processor Bombay Sweets and Company Limited, said the company suspended Middle East orders and halted production in late February, anticipating further escalation after the attack on Iran.

“At that time, only one shipment had already left Chattogram via Colombo for Qatar, and recalling it was not viable,” he said. “Despite shrinking margins, we proceeded with delivery to minimise losses and sought partial compensation from importers.”

Sayedul Azhar Sarwar, head of business at Danish Foods Ltd, a concern of Partex Star Group, said rising freight rates have introduced a new “war cost” that is significantly increasing overall expenses.

“Importers are increasingly reluctant to accept deliveries as higher costs erode competitiveness, particularly for goods already in transit,” he said.

He estimated that overall costs have risen by at least 15 percent, prompting many buyers to delay orders in the hope of more stable conditions.

He also said that job uncertainty among migrant workers is beginning to affect consumption, which could dampen demand for non-essential food items.

Luthful Kabir Shaheen, director for business development at City Group, said shipment schedules had become increasingly unpredictable, causing delays not only in the Middle East but also in Europe and the US, with transit times extending by around 10 days.

He, however, said production remains broadly stable, with companies adapting by routing goods through alternative Gulf hubs such as Dubai. “Despite steady demand for essential food items, the export process has become more complex, requiring greater operational flexibility.”

Similar to City Group, Sameera Rahman, head of export at Meghna Group of Industries, said their output for Middle Eastern markets remains steady.

“Our manufacturing operations are fully functional, supported by coordinated supply chains and careful resource planning,” she said. “But logistics remain under strain.”

She added that many shipping lines have paused new bookings and cancelled existing ones, disrupting dispatch schedules, while rising risk premiums were further driving up costs.

“War risk surcharges have nearly doubled freight costs on some routes, including shipments to Oman,” added Rahman.

According to the Export Promotion Bureau (EPB), processed food exports to the Middle East stand at $40-$45 million annually, while the broader agricultural sector earned $65.24 million in the fiscal year 2024-25.

Sixty-six World Trade Organization (WTO) member countries, representing 70 percent of global trade, have adopted a pathway to bring into force electronic commerce (e-Commerce) agreement through interim arrangements.

The adoption to bring the agreement into force via interim arrangements took place on March 28 at the 14th WTO Ministerial Conference (MC14) in Yaoundé, Cameroon.

Bangladesh has yet to officially clarify its stance, with Commerce Minister Khandakar Abdul Muktadir saying nations attending the summit offered varying opinions. While some favoured a four-year extension of the moratorium and others two years, very few sought a permanent moratorium.

Bangladesh has not spoken on this issue yet, he added.

Under the interim mechanism, participating members will begin applying the rules among themselves once 45 of the 66 signatories ratify the deal.

“This step marks a significant milestone. With digital transactions accounting for over 60 percent of global Gross Domestic Product (GDP), there is an urgent need to implement global digital trade rules that allow businesses and consumers to seize the benefits of digital trade,” the WTO said in a joint statement.

The agreement encourages legal frameworks that recognise electronic transactions and treat electronic and paper-based information as legal equivalents.

It also seeks to establish common principles for the interoperability of e-invoicing and the legal recognition of electronic transferable records, such as bills of lading and promissory notes.

Data from the WTO and the Organisation for Economic Co-operation and Development suggest that failing to implement the agreement leaves approximately $159 billion worth of trade “on the table” annually. If implemented globally, the pact could boost global GDP by $8.7 trillion by 2040.

Major economies that have accepted the interim agreement include Singapore, Australia, Japan, the European Union, Canada, and China.

“By moving forward with the E-Commerce Agreement, participating economies are helping to establish a shared regulatory framework that can lower costs and unlock new opportunities,” WTO Director-General Ngozi Okonjo-Iweala said in the statement.

The agreement is not applicable to Bangladesh as the country remains in favour of continuing the long-standing moratorium on imposing customs duties on electronic transmissions, said Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD), who is attending the conference.

“It means only the signatory countries will apply the agreement among themselves. Non-signatory countries like Bangladesh will continue to enjoy the moratorium until the agreement is adopted by the majority of WTO members,” he said.

Rahman said Bangladesh should cautiously observe the development before making a decision, adding that with the massive digitalisation of global trade, a significant volume of transactions now occurs digitally.

As a major importer and exporter of commodities and services, the withdrawal of the e-commerce moratorium could increase business costs for Bangladesh, he said.

The issue of electronic commerce was first raised at the Second Ministerial Conference in 1998, where members adopted a declaration to not impose tariffs on digital transmissions. At the 13th Ministerial Conference in Abu Dhabi in 2024, members had agreed to maintain the moratorium until MC14 or March 31, 2026.

Yields on treasury bills showed a mixed trend on Sunday as banks channelled excess liquidity into short-term government securities, reflecting subdued private sector credit demand and cautious market sentiment.

The shift in investment preference comes amid ongoing geopolitical uncertainties and slowing credit growth, prompting banks to favour safer, shorter-tenure instruments over longer-term exposure.

The cut-off yield, generally known as the interest rate, on 91-day T-bills fell to 9.78 per cent from 9.89 per cent earlier, while the yield on 182-day T-bills declined to 9.97 per cent from 10.00 per cent.

On the other hand, the yield on 364-day T-bills remained unchanged at 10.00 per cent, according to the auction results.

On the day, the government raised Tk 82.50 billion by issuing three types of T-bills to partially finance its budget deficit.

"Most banks preferred to invest their excess liquidity in risk-free government securities due to lower private sector credit demand amid ongoing geopolitical tensions," a senior official of the Bangladesh Bank (BB) told The Financial Express (FE).

Meanwhile, private sector credit growth fell to 6.03 per cent year-on-year in January 2026 from 6.10 per cent a month earlier, according to the central bank's latest figures.

"Banks deposited Tk 115 billion with the central bank under the Standing Deposit Facility (SDF) on Sunday to manage their funds efficiently," the official said, explaining the liquidity situation in the market.

He also predicted that the current trend in yields on government securities may continue in the coming weeks.

Currently, four T-bills are traded through auctions to manage government borrowings from the banking system. These instruments have maturities of 14 days, 91 days, 182 days and 364 days.

In addition, five government bonds with tenures of two, five, 10, 15 and 20 years are traded in the market.

Bangladesh's energy sector faces a "perfect storm" of global shocks and domestic inefficiencies, adding $760-830 million in monthly import costs in early 2026, according to Lion City Advisory Research.

Their report, Bangladesh Energy Sector: Crisis, Cost & Transition, warns that rising global fuel prices following the Iran-Israel conflict have pushed the country toward a "fiscal emergency." Brent crude surged to $105 per barrel in four weeks, while spot LNG prices jumped 125% to $22.51 per MMBtu.

Power sector inefficiencies, especially at the Bangladesh Power Development Board (BPDB), exacerbate the crisis. Installed capacity has grown fivefold to 28,919 MW since 2006, yet nearly 63% remains idle, generating annual capacity payments of Tk38,000 crore.

Blended generation costs now range Tk18-22 per kWh, more than doubling monthly subsidy needs to Tk7,500-9,500 crore.

The "Bapex Paradox" highlights domestic gas underperformance: only eight of 34 planned wells were drilled in FY2025, increasing reliance on costly LNG. Each additional 10 million cubic feet/day of domestic gas could save $82 million annually. Industrial energy efficiency could yield 50 bcf of "free LNG," replicating 13-27 new wells.

Renewable energy is more cost-effective: recent utility-scale solar bids stand at 8.27 US cents/kWh (Tk9.09), far below diesel (Tk32.53) or heavy fuel oil (Tk26). Policy uncertainty, including the IA framework cancellation, stalls private investment and 5,200MW of solar projects.

The report advocates the Bangladesh Energy Independence Program (BEIP): solar expansion, diesel replacement, and industrial efficiency to achieve 60-70% renewables by 2040 and potentially export $500 million-$1 billion annually. "At $105 oil per barrel, Bangladesh cannot afford not to transition," the report concludes.

The government has ruled out any increase in tax rates, opting instead to expand the tax base and curb evasion to raise the tax-to-GDP ratio, said Rashed Al Mahmud Titumir, economic and planning adviser to the prime minister.

The focus remains on boosting investment and improving compliance to enhance collection, he said at a press briefing yesterday at the National Board of Revenue (NBR) headquarters in Dhaka.

“We are not increasing tax rates. Our focus is on expanding the overall economic base so that revenue grows naturally,” Titumir said.

“The government will not increase the burden of domestic or foreign debt as in the past. Instead, we aim to raise the tax-to-GDP ratio without imposing additional pressure on taxpayers already strained by prolonged inflation.”

Three task forces are working day and night to raise revenue without increasing tax rates, he said, adding that the government is aiming to achiev an all-time-high revenue in the fourth quarter of the current fiscal year.

“We have three months remaining in the current fiscal year. Within this period, we are optimistic that in the fourth quarter we will achieve higher revenue targets than at any previous time,” he said.

To that end, he informed that the government is planning to “introduce performance-based incentives for officials and reduce wastage” instead of continuing to grant “group-based tax privileges.”

He noted that rising poverty levels make it imperative to prioritise social protection spending.

Several new and expanded programmes have already been rolled out, including support schemes targeting women, religious service holders, and other vulnerable groups.

Against this backdrop, the government has outlined a three-pronged strategy: keeping the budget deficit under control, reducing reliance on domestic borrowing, and increasing revenue through economic expansion.

Policymakers view investment as the key driver of sustainable growth.

“Increased investment will lead to higher production, which will create jobs. Higher employment will, in turn, raise incomes and government revenue,” Titumir noted.

Stating that the government inherited a “destroyed economy,” he said revenue figures in the past were often manipulated. With the updated iBAS system, real-time data will now be available.

He also described the decision to split the NBR into two entities as logical, adding that discussions would be held to move forward on the matter.

Titumir further said that while fuel and gas prices were increased repeatedly before the interim government, the current administration -- mindful of inflation -- will avoid such measures.

Global oil prices surged and Asian stock markets fell sharply on Monday as the conflict involving the United States, Israel and Iran intensified, raising concerns over economic disruption and a broader regional escalation.

Brent crude climbed above $115 per barrel, up from around $72 on 27 February before the conflict deepened, amid a near-standstill of shipments through the Strait of Hormuz, a vital route for global energy supplies. The disruption follows Iranian threats against vessels passing through the waterway, fuelling volatility in global energy markets, says the BBC.

The impact has extended beyond the Middle East. In Australia, the states of Victoria and Tasmania introduced free public transport measures to help commuters cope with rising fuel costs.

Asian financial markets reacted strongly to the developments. Japan's Nikkei 225 fell more than 4.5% in early trading, while South Korea's Kospi dropped 3.5%, reflecting investor concerns over the economic fallout from the conflict. Analysts have also warned that the United Kingdom could face the most significant hit to economic growth among major economies as a direct consequence of the war.

The conflict has widened geographically, with Iran-backed Houthi forces in Yemen launching strikes against Israel, underscoring the growing involvement of regional proxies.

Tensions have also escalated through direct threats and military positioning. Tehran has warned it could target the homes and universities of US and Israeli officials. Meanwhile, an additional 3,500 US troops have arrived in the Middle East, prompting Iran's parliament speaker to say their forces are "waiting for American soldiers" and that they are "waiting" as US forces deploy to the region.

Attacks on infrastructure have added to concerns about further disruption. Iranian strikes have hit major industrial sites, including aluminium plants in the United Arab Emirates and Bahrain, causing injuries. Separately, a US radar jet stationed at a base in Saudi Arabia was recently photographed with significant damage.

The conflict, now in its fourth week, has raised questions about Washington's strategy. "Trump is waging war based on instinct and it isn't working," Jeremy Bowen, the BBC's international editor, said in an analysis one month after the conflict began.

While US troop deployments to the region have increased, officials have not confirmed whether they will be used for ground combat, a move that would mark a significant escalation.

The International Monetary Fund (IMF) announced on Friday that it has reached a staff-level agreement with Pakistan to unlock a new $1.2 billion package as part of its support programmes for the country.

The South Asian nation is one of the largest debtors to the IMF after Argentina and Ukraine.

The IMF in a statement praised the Pakistani authorities’ commitment to “pursuing sound and prudent macroeconomic policies to preserve the recent gains in macro-financial stabilisation, while deepening structural reforms to accelerate growth and strengthening social protection to mitigate the impact of volatile energy prices on the most vulnerable.”

The disbursement is subject to approval by the IMF Executive Board, according to the fund’s statement.

Economists have urged the government to adopt a conservative approach in preparing the upcoming budget for the next fiscal year, taking into consideration the impact of the US-Israel war on Iran, implementing electoral pledges, and boosting investment.

The call came at the first pre-budget meeting with Finance Minister Amir Khosru Mahmud Chowdhury and senior officials of other relevant government agencies at the state guest house Padma on Saturday night.

Among the economists, Salehuddin Ahmed, former finance adviser to the interim government, Debapriya Bhattacharya, distinguished fellow of Centre for Policy Dialogue (CPD), Fahmida Khatun, executive director of CPD, Selim Raihan, executive director of the South Asian Network on Economic Modelling (Sanem), and Zakir Ahmed Khan, former finance secretary, were present.

Speaking to The Daily Star, they noted that the first budget of the new government is crucial, as it will set the trajectory for how the economy will be managed over the next five years.

While Bangladesh’s budget preparation process typically begins in August-September, they said this budget should not be a routine exercise. Instead, it must reflect electoral commitments, prevailing global and domestic challenges, and long-term economic goals.

The economist pointed out that ongoing geopolitical tensions in the Middle East could exert multifaceted pressure on Bangladesh’s economy.

Volatility in global oil markets may drive up import costs, while the risk of supply disruptions remains. This could increase the burden of fuel subsidies, posing a significant challenge to budget implementation.

At the same time, remittance inflows may face headwinds if employment opportunities shrink or incomes decline for migrant workers in the region.

Against this backdrop, several economists underscored that there is little room for overly optimistic assumptions in budget planning. Instead, expenditure frameworks must reflect realistic revenue mobilisation capacity, pressures on foreign exchange reserves and inflation risks.

According to meeting sources, the finance minister brought up long-standing concerns over lack of transparency, cost overrun, and project selection and implementation during the meeting.

He sought suggestions regarding these concerns from the economists.

Economists, in response, suggested including a low number of projects in the budget to ensure smooth implementation.

They also stressed the need to strengthen, streamline and ensure accountability in the formulation of the Annual Development Programme (ADP).

Without addressing these weaknesses, they cautioned, the effectiveness of public investment will remain limited.

No move should be taken to reduce the policy rate at this stage, most economists suggested, as inflation remains high and could intensify further with rising energy and import costs.

Sharing his experience as adviser of the previous interim government, Salehuddin Ahmed stressed that balancing political commitments with economic realities remains a key challenge. He suggested continuing the reform initiatives.

Referring to family cards and expanded safety net schemes, economists suggested streamlining the existing social safety net programmes alongside those electoral promises.

They also called for prioritising restoring confidence in the private sector, stressing the need for improving the investment climate, ensuring policy continuity and reducing administrative bottlenecks.

In the current uncertain environment, investors remain cautious, making it crucial for the government to provide clear and credible policy signals, they noted.

Tax reform featured prominently in the discussion. Structural weaknesses in the National Board of Revenue (NBR), limited tax collection capacity and persistent tax evasion were identified as major concerns.

Economists stressed that expanding the tax base and undertaking administrative reforms are essential for improving revenue mobilisation. They also called for modernisation, greater automation and enhanced accountability within the NBR.

Rashed Al Mahmud Titumir, economic adviser to the prime minister, Md Mostaqur Rahman, governor of Bangladesh Bank, and Md Khairuzzaman Mozumder, secretary of the Finance Division, Monzur Ahmed, member of the General Economic Division of the Planning Commission, Nazma Mobarek, secretary of the Financial Institutions Division, and AK Enamul Haque, director general of Bangladesh Institute of Development Studies (BIDS), were also present at the meeting.

Bangladesh can absorb the economic shocks stemming from the ongoing Middle East war for the next few months, as it holds adequate foreign exchange reserves to meet rising import bills despite higher energy prices, central bank governor Md Mostaqur Rahman said today (29 March).

In a view-exchange meeting with senior journalists, the newly appointed governor expressed cautious confidence in the country's external position.

He, however, maintained a firm stance on monetary policy, stating that cutting interest rates would be "unwise" at this stage due to persistently high inflation, prioritising price stability over short-term growth.

The governor also pledged to keep the financial sector free from political influence and to strengthen rural economic activities as part of broader efforts to stabilise the economy.

Deputy governors echoed similar views at the meeting. Deputy Governor Md Kabir Ahmed said Bangladesh's gross foreign exchange reserves currently stand at around $35 billion, sufficient to cover several months of import payments.

"Moreover, the Bangladesh Bank expects about $1.5 billion in loan disbursements from the International Monetary Fund by June and is working to secure another $2 billion credit line to ease pressure on the balance of payments," he said.

BB governor holds talks with IMF on advancing loan programme

The governor said the government is seeking cheaper fuel through bilateral deals or direct grants from leading oil exporters. Consequently, the prime minister's foreign affairs adviser is visiting various nations to negotiate these terms.

Furthermore, the Economic Relations Division (ERD) has finalised a $1 billion budget support package from the Asian Development Bank (ADB), said the governor.

However, senior executives at the central bank fear that a prolonged war could trigger significant economic risks and inflationary pressures.

Deputy Governor Habibur Rahman noted that with crude oil prices having now nearly doubled, import costs are expected to rise proportionately.

"In this regard, if the safety of Bangladeshi vessels navigating the Strait of Hormuz can be guaranteed, it will be possible to reduce these additional costs," he said.

The governor, however, said the fuel imports Bangladesh procures under long-term G2G (government-to-government) agreements are sourced at the rates specified in those contracts. He added that the government's efforts are ongoing to ensure that these essential supplies continue uninterrupted.

Bangladesh Bank spokesperson Arief Hossain said a significant number of migrant workers in the Middle East risk losing their jobs and are returning home, raising concerns about a decline in remittances.

He also said, "If the IMF imposes conditions on the government to eliminate fuel subsidies, Bangladesh will have to comply. In such a scenario, inflation could surge significantly."

BB pauses dollar purchase to avoid exchange rate volatility as Iran war fallout looms

Bangladesh Bank officials noted that despite these stringent conditions, failing to secure the IMF loan would jeopardise the country's ability to obtain further credit from the World Bank and the ADB.

Deputy Governor Zakir Hossain Chowdhury said if international fuel oil prices continue to rise over a prolonged period, it will create additional subsidy pressure on the government.

Deputy Governor Kabir Ahmed said he anticipates that import demand would remain subdued this monsoon as well, which will play a vital role in maintaining the stability of both the reserves and the exchange rate.

Highlighting the priorities of the Bangladesh Bank, the governor said ensuring that the financial sector remains free from political influence is the top priority.

"The second priority is the recovery of stolen assets, for which meetings are being held every few days. Most banks have already signed non-disclosure agreements, and the remaining ones are expected to follow suit," he said.

The governor noted that unless GDP growth reaches 5% or higher, it will be difficult to attract foreign investment. To generate employment, the disbursement of loans from a Tk600 crore startup fund is set to commence this coming June, he said.

Furthermore, steps will be taken to stimulate demand in rural areas to keep the economy dynamic through increased domestic consumption, said the governor.

Lending banks have also been instructed to take the necessary measures to reopen factories that were closed either during or before the tenure of the interim government, he said.

The governor said, "We are working to decentralise Bangladesh's banking sector; specifically, banks will be instructed to increase loan disbursements towards agri-based industries and agri-technology.

"We are also considering the formation of a subsidy fund for the SME sector. Our reserves are currently in a safe zone, and we do not intend to see any significant depreciation of the exchange rate."

Stating that there is no scope to retreat from the establishment of the Sammilito Islami Bank, the governor affirmed that its operations will be expedited. "The chairman and managing director will be appointed soon, and I am adamant that this new bank remains entirely free from any political influence," he added.

Noting that the Bangladesh Bank held a meeting with the country's leading industrial conglomerates last Wednesday to understand their challenges, the governor stated that any issues pertaining to the central bank would be resolved.

The governor announced that a single, standardised QR code for all financial transactions will be established across the country by 30 June. "The use of this Bangla QR will become mandatory from 1 July."

He added, "This initiative aims to accelerate cashless transactions, which in turn will play a vital role in boosting revenue collection."

Commerce Minister Khandakar Abdul Muktadir has urged the continuation of special support measures for a defined period after countries graduate from the Least Developed Country (LDC) category to help maintain economic stability.

Speaking on the third day of the ongoing WTO Ministerial Conference, the minister participated in various thematic sessions and emphasised Bangladesh's position on key global trade issues, including WTO reforms.

He also called for the adoption of an LDC graduation-related package at MC14 to support countries like Bangladesh in the post-graduation phase.

Muktadir stressed the importance of ensuring an effective, predictable, and rules-based dispute settlement system, called for the prompt restoration of a fully functional two-tier dispute settlement mechanism, including the revival of the Appellate Body, noting that a strong and impartial system is essential to safeguard the interests of developing and LDC countries.

On fisheries subsidies, the minister highlighted that Bangladesh's contribution to harmful subsidies is close to zero, while major fishing nations account for the bulk, urged stricter discipline on harmful subsidies alongside ensuring Special and Differential Treatment (S&DT) for developing and LDC countries.

He also called for full exemption for small-scale and marginal fishers to ensure fairness and sustainability.

At the conference, Bangladesh announced its accession as the 129th member to the Investment Facilitation for Development Agreement, marking its first participation in a plurilateral agreement under the WTO framework.

The minister expressed hope that this move would improve Bangladesh's investment climate and send a positive signal to foreign investors.

The step was welcomed by several partners, including the European Union, Japan, Korea, the United Kingdom, and Hong Kong.

On agriculture, Muktadir underscored the sector's critical role in ensuring food security, livelihoods, and poverty reduction, called for the swift resolution of long-standing issues such as public stockholding, special safeguard mechanisms, and trade-distorting subsidies by developed countries. He reiterated that S&DT must remain central to agricultural negotiations.

Reaffirming Bangladesh's strong support for the LDC package, the minister emphasized the importance of a smooth and sustainable transition, said special benefits should continue for a specified period after graduation to help maintain economic stability and urged adoption of the package at MC14.

Bangladesh also supported extending the moratorium on non-violation and situation complaints (NVSCs) under the TRIPS Agreement until the next ministerial conference. The minister noted that such complaints could undermine policy space for developing countries, particularly in areas like public health and education, and called for a permanent solution.

He further said WTO reform efforts must be grounded in its core principles of transparency, inclusiveness, and fairness, adding that adherence to these values would help preserve trust and credibility in the multilateral trading system.

The minister reaffirmed Bangladesh's commitment to a fair, inclusive, and development-oriented multilateral trading system, expressing hope that MC14 outcomes would guide future reforms while ensuring the interests of developing and LDC countries are protected.