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.

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

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

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

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

RFL started manufacturing Proton mobile phones in late 2022.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Bangladesh's apparel exports to the European Union (EU) fell 19.26 percent year-on-year to €2.89 billion in January-February this year, according to data from Eurostat.

Exports stood at €3.57 billion during the same period a year earlier.

In terms of volume, Bangladesh’s apparel exports to the bloc declined 11.14 percent to 205.52 million kilogrammes during the two-month period.

Eurostat data also showed a decline in unit prices, with the average export price per kg falling 9.13 percent year-on-year to €14.04.

February saw export value falling 12.39 percent, volume dropping 3.30 percent, and unit prices declining 9.39 percent on a year-on-year basis.

During the January-February period, China’s apparel exports to the EU rose to €4.20 billion, although export value posted a negative growth of 4.01 percent. Unit prices declined 5.27 percent, while export volume increased 1.34 percent.

Meanwhile, Turkey recorded a 22.91 percent decline in apparel exports to the EU to €1.20 billion, while Vietnam posted a 2.06 percent fall to €711.73 million despite a 6.56 percent rise in unit prices.

During the same period, the EU’s total apparel imports saw negative growth at 11.27 percent year-on-year to €13.83 billion.

Apparel imports by the bloc also fell 6.23 percent in volume, while average unit prices declined 5.38 percent in 2026.

The rate of development spending improved marginally in the first ten months of the current fiscal year 2025-26, but the amount of money spent during the period was actually lower compared to a year earlier.

Spending under the Annual Development Programmes (ADP) stood at Tk 86,516 crore during the July-April period, or 41.41 percent of the total revised allocation, according to data released yesterday by the Implementation Monitoring and Evaluation Division (IMED). In April alone, spending rose 5.22 percent.

The ten-month execution rate is slightly higher than the 41.31 percent achieved during the same period of FY25 but is Tk 6,908 crore less in absolute terms.

The revised ADP allocation for FY25 stood at Tk 2.16 lakh crore, while it was Tk 2.08 lakh crore for FY26.

The marginal uptick in the execution rate does little to reverse a multi-year slide in budget implementation.

The 10-month ADP execution rate stood at 49.26 percent in FY24, 50.33 percent in FY23, and 54.57 percent in FY22.

In FY25, the full-year development spending hit a historic low, with only 68 percent of the revised ADP implemented, the weakest performance since FY1976-77.

The decline in the actual money spent reflects the disruption of a mid-year political transition following the uprising, which prompted several project directors and contractors to step away from their positions. Economic uncertainty compounded the slowdown.

The Health Services Division has performed the worst, implementing only 22.15 percent of its July–April target despite rising concerns over healthcare access.

With two months left in the fiscal year, analysts say Bangladesh is on course for another year of weak ADP execution.

The shortfall may also dent revenue collection by the National Board of Revenue, which collects advance income tax and VAT from implementing agencies. However, lower execution could also help contain the budget deficit and reduce government borrowing from the banking sector.

Among top-allocated ministries, the Ministry of Science and Technology’s execution rate stands at 80 percent, driven largely by the Rooppur Nuclear Power Plant expenditures.

The Energy and Mineral Resources Division follows at 68 percent, and the Ministry of Agriculture at 62 percent.

Meanwhile, despite the sluggish implementation trend, the new BNP-led government has announced an ambitious development budget of Tk 3 lakh crore for the upcoming FY27.

The Dhaka Stock Exchange (DSE) extended its rally for a fourth consecutive session today (23 May), as investor confidence strengthened following Finance and Planning Minister Amir Khosru Mahmud Chowdhury's pledge to ensure professional and skilled leadership at key financial institutions.

Speaking at a policy symposium in the capital, Finance and Planning Minister Amir Khosru Mahmud Chowdhury announced a complete ban on political appointments in the financial sector, including the Bangladesh Securities and Exchange Commission (BSEC).

He said the government would appoint only professional and competent individuals to key regulatory positions in a bid to restore investor confidence and strengthen corporate governance.

The announcement boosted market sentiment, triggering a broad-based rally and adding significantly to market capitalisation, according to market insiders.

The benchmark DSEX index rose 64 points, or 1.22%, to close at 5,328. Over the past four trading sessions, the index has gained a cumulative 125 points.

The blue-chip DS30 index also advanced strongly, climbing 34 points to finish at 2,030.

Market breadth remained positive, with 217 issues advancing, 117 declining, and 60 remaining unchanged.

Total market capitalisation at the premier bourse increased by Tk5,400 crore in a single day, while turnover rose 4% to Tk902 crore.

The minister also said the government would prioritise improving auditing standards and financial disclosure requirements to rebuild market credibility and attract foreign institutional investors.

According to EBL Securities' daily market review, the market opened strongly from the first trading bell, supported by aggressive buying in large-cap banking and telecom stocks.

The brokerage house said expectations of meaningful reforms, early signs of domestic macroeconomic stabilisation, and easing geopolitical tensions around the Strait of Hormuz – which had earlier dampened investor risk appetite – helped sustain the rally ahead of the Eid holidays.

Banking and telecom stocks led the gains, with major index contributors including BRAC Bank, Grameenphone, Robi Axiata, Square Pharmaceuticals, and City Bank.

Sector-wise, engineering stocks dominated turnover, accounting for 15.7% of total transactions, followed by pharmaceuticals at 15.4% and general insurance at 12.9%.

The cement sector posted the highest gain, rising 3.3%, followed by services at 2.8% and banking at 2.1%. The information technology sector was the only major laggard, declining 1.9%.

Several loss-making companies also featured among the day's top gainers, indicating renewed speculative activity among some investors. Meghna Cement Mills topped the gainers' list with a 9.86% rise, followed by Emerald Oil Industries, Aramit Cement, Regent Textile Mills, and Sena Insurance.

On the losing side, Daffodil Computers shed 9.36%, followed by Premier Leasing & Finance, Apex Spinning & Knitting Mills, and CAPM BDBL Mutual Fund 01.

In terms of liquidity, Asiatic Laboratories emerged as the most traded stock, followed by NCC Bank, RD Food, Mir Akhter Hossain, and Jamuna Bank.

The upbeat mood also spilled over to the Chittagong Stock Exchange (CSE), where key indices posted sharp gains. The Selective Categories' Index (CSCX) rose 81 points to 9,131, while the All Share Price Index (CASPI) gained 138 points to close at 14,838.

However, turnover at the port city bourse fell 20% to Tk24 crore.

Bangladesh’s public debt rose to around 41 percent of gross domestic product (GDP) in fiscal year 2024-25, with rising domestic borrowing and weak revenue mobilisation increasing fiscal pressure ahead of the country’s graduation from least developed country (LDC) status in 2026, the Asian Development Bank (ADB) said.

In a report titled Bangladesh at a Crossroads of Reforms, released earlier this month, the Manila-based lender said Bangladesh faces a moderate risk of both external and overall debt distress, with limited capacity to absorb shocks in the near term.
The ADB said the risks stem from structural weaknesses rather than a sharp deterioration in headline debt indicators.
Bangladesh’s tax-to-GDP ratio remains among the lowest among lower-middle-income economies, while persistent weaknesses in fiscal governance, public expenditure management and debt administration continue to undermine economic stability, the report said.
The lender warned that Bangladesh’s graduation from LDC status in November 2026 would gradually reduce access to concessional financing and trade support measures, increasing the need for stronger domestic revenue mobilisation and improved fiscal governance.

Domestic debt accounted for 55.6 percent of the country’s public and publicly guaranteed debt stock in FY25, increasing rollover and debt-servicing pressures amid weak revenue collection and a bank-dominated investor base. External debt made up the remaining 44.4 percent.

The report said external debt remained largely concessional and below solvency thresholds, although risks have increased following downward revisions to export data for FY2023 and FY2024.

Rising domestic borrowing is also increasing debt service-to-revenue pressures and strengthening sovereign-bank linkages, amplifying crowding-out risks for private sector credit and contingent liabilities, the ADB said.

Stress tests showed that disaster-related shocks pose the biggest long-term threat to Bangladesh’s debt sustainability.
Bangladesh’s tax-to-GDP ratio stood at 7.5 percent, constrained by weak compliance systems, fragmented administration and heavy reliance on manual processes.

Although reforms such as the Income Tax Act 2023 and expanded digital tax services have been introduced, the ADB said tax administration still relies heavily on manual systems and fragmented databases. Revenue collection often falls more than 15 percent short of targets because of unrealistic projections and institutional weaknesses.

The report also highlighted weaknesses in debt management systems and warned that state-owned enterprises are creating additional fiscal risks as liabilities and government guarantees continue to rise.

The lender said these vulnerabilities are increasing Bangladesh’s overall fiscal risk exposure at a critical stage of its economic transition.

Germany-based industrial sewing and embroidery thread manufacturer AMANN Group plans to expand its factory operations and make fresh investments in Bangladesh, the company's Chief Executive Officer Markus Nicolaus said at a meeting with Bangladesh Garment Manufacturers and Exporters Association (BGMEA) leaders in Dhaka.

The announcement came during a bilateral meeting between BGMEA President Mahmud Hasan Khan and an AMANN Group delegation at the BGMEA Complex in Uttara recently, according to a press release issued yesterday (23 May).

The meeting discussed the capacity of Bangladesh's readymade garment sector, current challenges in the international market and future investment strategies. BGMEA Director Md Hasib Uddin was also present.

Mahmud said Bangladesh's apparel sector was recovering after a slowdown in exports earlier this year caused by global economic uncertainty.

"Bangladesh's readymade garment industry is now going through a major transformation. We are putting strong emphasis on product diversification. But our current goal is not only to increase export volume, but also to produce higher-value garments," he said.

He said AMANN Group could support Bangladesh's apparel sector not only as a thread supplier but also as a strategic business partner.

Mahmud said many reputed German brands were still not sourcing from Bangladesh and requested AMANN to present Bangladesh's transformed apparel industry and production capacity to those brands.

Announcing the company's factory expansion plan in Bangladesh, Markus Nicolaus said Bangladesh's readymade garment sector had strong future potential.

"We are closely observing which other sectors here may attract new investment. There are major investment opportunities, especially in Bangladesh's high-tech textile sector," he said.

He said AMANN wanted to serve the premium segment and meet demand from high-end international brands through its products.

The AMANN delegation asked about global and local risk factors in the apparel sector, Bangladesh's labour standards, current US tariff policy and its impact on international trade.

The meeting also discussed the country's port, energy and logistics infrastructure and future development plans.

AMANN Group operates in Bangladesh through AMANN Bangladesh Ltd.

The Bangladesh Energy Regulatory Commission (BERC) has further reduced jet fuel prices in May following a series of sharp adjustments in recent months, amid fluctuations in the international oil market.

In a press release issued today (23 May), the energy regulator announced a cut of Tk39.57 per litre in aviation fuel prices, with the revised rates taking effect from midnight.

Under the latest revision, the price of Jet A-1 fuel for domestic flights has been reduced from Tk205.45 per litre to Tk165.88 per litre, inclusive of duty and VAT.

For international flights operated by local and foreign airlines, the price has been lowered from $1.3385 per litre to $1.0823 per litre, excluding duty and VAT.

The latest reduction follows another downward adjustment on 7 May, when BERC cut jet fuel prices by Tk22.35 per litre. Before that, the regulator raised prices by nearly Tk25 per litre on 7 April, while on 24 March aviation fuel prices saw a steep hike of around Tk90 per litre.

According to the commission, jet fuel prices are revised monthly under a market-based pricing mechanism linked to international benchmark rates.

The regulator said the revised prices were determined based on the average Platts rate of Jet A-1 fuel between 5 May and 21 May, the US dollar exchange rate used in BPC's LC settlement process, and prevailing diesel prices in the domestic market.

BERC also considered changes in coastal tanker and pipeline transportation charges before finalising the new rates.

The government yesterday (23 May) approved separate proposals for procuring three cargoes of liquefied natural gas (LNG) from the spot market and importing 70,000 metric tonnes of fertiliser to ensure uninterrupted energy and fertiliser supply across the country.

The approvals came at the 23rd meeting of the Cabinet Committee on Government Purchase for 2026 held at the Cabinet Division conference room at the Secretariat.

Finance Minister Amir Khosru Mahmud Chowdhury presided over the meeting.

The committee recommended approving a proposal from the Energy and Mineral Resources Division to purchase three LNG cargoes from the international spot market through international quotation collection under Rule 105(3) (Ka) of the Public Procurement Rules, 2025.

The LNG cargoes are scheduled to arrive on 15–16 June, 21–22 June and 25–26 June this year, corresponding to the 23rd, 24th and 25th consignments.

The total procurement cost, including Advance Income Tax (AIT), has been estimated at Tk2,330.82 crore.

Under the proposal, two cargoes will be procured from Posco International Corporation of South Korea and one cargo from TotalEnergies Gas & Power Ltd of the United Kingdom.

The committee also recommended approving a proposal from the Ministry of Industries to import 30,000 metric tonnes of bagged granular urea fertiliser under the 15th lot from Karnaphuli Fertiliser Company Limited during the 2025–26 fiscal year.

The total procurement cost for the urea fertiliser has been fixed at Tk254.52 crore, while the price per metric tonne was set at $688.375, including a Free on Board (FOB) price of $683.375 and a bagging charge of $5.

Officials said the fertiliser would be procured from KAFCO to maintain a stable fertiliser supply for the country's agricultural sector.

Meanwhile, the committee recommended another proposal from the Ministry of Agriculture to import 40,000 metric tonnes of DAP fertiliser under the 12th (optional fourth) lot from OCP Nutricrops of Morocco under a state-level agreement with Bangladesh Agricultural Development Corporation.

The proposed procurement cost for the DAP fertiliser import has been estimated at Tk434.66 crore, with the price set at $881.67 per metric tonne.

The role of the Bangladesh Securities and Exchange Commission (BSEC) and stock exchanges is set to become more prominent in mergers, acquisitions, demergers and other corporate restructuring activities involving listed companies under a new draft regulation.

The securities regulator today (23 May) published the draft "Bangladesh Securities and Exchange Commission (Corporate Restructuring) Rules, 2026" and invited opinions, suggestions and objections within two weeks of publication.

According to the draft rules, listed companies will have to submit merger or demerger schemes to the BSEC and stock exchanges for review before seeking court approval.

BSEC said listed companies frequently engage in mergers, demergers, amalgamations, acquisitions and other restructuring activities, which require proper valuation, adequate disclosures and greater market transparency, particularly to protect minority shareholders.

Speaking to The Business Standard, BSEC Director and Spokesperson Abul Kalam said companies would first need board approval for any restructuring proposal before approaching the court.

"The approved draft scheme must then be submitted to the BSEC and the stock exchanges. After incorporating the observations of the regulator and exchanges, companies will have to obtain shareholders' approval before going to court," he said.

He added that the proposed rules would not curtail the authority of companies or courts, as the BSEC and stock exchanges would act as observers in the process.

According to the draft, any listed company undertaking restructuring with another listed or non-listed entity must submit the draft scheme to the commission and relevant stock exchange within 30 days of board approval, along with prescribed documents.

Boards of directors will also be required to record opinions on the rationale for the restructuring, fairness of valuation, adequacy of disclosures, impact on minority shareholders, potential share dilution, related-party transactions and market integrity concerns.

The rules also require disclosure of independent directors' opinions and explanations regarding compliance with securities laws, regulations and listing conditions.

After receiving observations from the regulator and stock exchanges, companies will have to place the revised scheme before shareholders and creditors for approval through a special resolution. Companies must also disclose price-sensitive information and announce a record date.

The restructuring process will remain subject to court approval, although the BSEC may become a party to court proceedings if necessary.

The draft rules also prescribe extensive disclosure requirements for restructuring schemes, including transaction consideration in cash, shares, assets or securities; share swap ratios; transfer of liabilities; tax obligations; contingent liabilities; employee status; provident fund and gratuity arrangements; and measures to protect minority shareholders.

Companies must additionally disclose whether the restructuring could lead to a backdoor listing or reverse takeover, along with the benefits accruing to sponsors and controlling shareholders, the extent of dilution for public shareholders and the valuation methodologies used.

One of the most significant provisions relates to valuation requirements. Companies undertaking restructuring must appoint independent valuers from among audit firms enlisted with the commission or registered merchant bankers.

However, those firms or merchant bankers cannot act as statutory auditors or corporate advisers to the companies involved in the restructuring.

The valuer must certify that the valuation, exchange ratio or swap ratio is fair and reasonable and does not prejudice any class of shareholders or creditors. The valuation also cannot be determined solely on the basis of market price.

The draft rules make it mandatory to apply at least two absolute valuation methods and two relative valuation methods.

For absolute valuation, the rules mention methods such as Discounted Cash Flow (DCF), Dividend Discount Model (DDM), Residual Income Model (RIM) and Asset-Based Model.

For relative valuation, the draft includes Price-to-Earnings (P/E), Price-to-Book (P/B), Price-to-Sales (P/S) and EV/EBITDA-based methods.

The draft further states that the discount rate used in valuation cannot be lower than the yield on 10-year treasury bonds. Revenue growth assumptions also cannot exceed the company's average growth rate over the previous five years unless justified by capacity expansion under a Balancing, Modernisation, Rehabilitation and Expansion (BMRE) project.

Companies will also have to obtain no-objection certificates from banks, financial institutions, bondholders, secured creditors and holders of Islamic Shariah-based securities.

The draft rules include a detailed checklist of documents, including audited financial statements for the past five years, asset revaluation reports, physical inspection reports, land documents, loan papers, tax records, VAT returns, related-party transaction details, inventory statements, bank statements and due diligence certificates.

The rules also require approval of restructuring schemes by at least 75% of general shareholders, excluding sponsors, directors and shareholders holding 5% or more shares.

Bangladesh Bank has issued new directives for commercial banks regarding the declaration and distribution of cash dividends to shareholders, apparently to enhance the financial capacity of banks and reinforce the overall capital base of the banking sector.

Banks with a paid-up capital of less than Tk2,000 crore will not be allowed to declare any cash dividends, according to a circular issued by the central bank today (23 May).

Also, the banks that meet all statutory requirements and qualify to distribute profits can pay a maximum of 50% of their total declared dividends in cash.

The directives will come into effect from 31 December 2026.

The central bank clarified that while these new measures introduce stricter caps, all other existing instructions from previous relevant circulars, including the DOS circular issued on 13 March 2025, will remain fully effective.

No bank except BRAC Bank allowed to offer cash dividends

Under the new directives, only BRAC Bank will be allowed to declare cash dividends. Meanwhile, although National Bank has paid-up capital above the required target, it will not be able to provide dividends due to its high volume of non-performing loans.

A review of the data shows that among the currently well-performing banks in the capital market, none of the top-ranked banks in various indices, including The City Bank, Eastern Bank, Mutual Trust Bank, Prime Bank and Dutch-Bangla Bank, will be able to declare cash dividends.

Mashrur Arefin, managing director and CEO of City Bank, told TBS that the move has merit from a financial stability perspective, as some banks distributed high cash dividends despite weak capital positions.

He, however, expressed concern that the policy treats both strong and weak banks equally, which could negatively affect the stock market and investor confidence.

Mashrur said shareholders of well-managed banks deserve cash returns when banks perform consistently well, questioning why the Capital Adequacy Ratio (CAR) was not considered a key factor, arguing that banks with stronger CAR positions, such as 17-18% instead of the minimum 12.5%, should be allowed to provide cash dividends.

He also said he is waiting to see how tax regulations align with the new policy.

The move to strengthen banks' capital base is positive, as some weak banks previously paid excessive cash dividends despite poor financial conditions, said Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank.

A better approach would have been linking dividend approvals to the CAR, a practice followed in many countries, he said, notifying that Bangladesh's banking sector remains undercapitalised by global standards, while bank shares often fail to reflect actual performance.

Preventing well-capitalised banks from paying cash dividends could further weaken the stock market and reduce incentives for investors supporting financially stable institutions, added Syed Mahbubur.

Twenty-seven countries have moved since the Iran war started to put in place crisis instruments that could quickly access funding from existing World Bank programmes, according to an internal document viewed by Reuters.

The World Bank document did not name the countries or the total amount of funds potentially being sought. The World Bank declined to comment.

The document showed that three countries had approved new instruments since the Middle East conflict began on 28 February while the others were still completing the process.

The war and resulting disruption of global energy markets have hit global supply chains and prevented vital fertiliser shipments from reaching developing countries.

Officials in Kenya and Iraq have confirmed they are seeking rapid financial support from the World Bank to deal with the war's fallout, such as surging fuel prices hitting the African nation and a massive drop in oil revenue for Iraq.

The 27 countries are among 101 that had access to some form of pre-arranged financing instrument that they could tap in a crisis, including 54 that signed up to the Rapid Response Option, which allows countries to use up to 10% of their undisbursed financing.

World Bank President Ajay Banga last month said the bank's crisis toolkit would allow countries to draw on pre-arranged contingent financing, existing project balances and fast-disbursing instruments to access an estimated $20 billion to $25 billion.

He said the bank could also reorient parts of its portfolio to bring the total to $60 billion over six months, with further longer-term changes possible to bring the total to around $100 billion.

At the time, the head of the International Monetary Fund, Kristalina Georgieva, said she expected up to a dozen countries to seek $20 billion to $50 billion in near-term assistance from the global lender. But few requests have been logged, according to three sources familiar with the matter.

"Countries are definitely in wait-and-see mode," said one of the sources, who spoke on condition of anonymity.

Kevin Gallagher, director of the Global Development Policy Centre at Boston University, said countries were more willing to seek World Bank funds than negotiate with the IMF because IMF programmes generally require austerity measures that could compound the social unrest already seen in countries like Kenya.

Amid economic stress triggered by the Middle East war, the government had set a target of securing at least $3.2 billion in budget support from development partners, but the response has so far reached only about half of expectations.

As an alternative, authorities have begun repurposing the remaining funds through loans from ongoing development projects that are not immediately required.

Officials at the Economic Relations Division (ERD) said repurposing could unlock more funds than traditional budget support, allowing flexibility for critical spending for energy and food.

A letter sent by the Finance Division on 12 April asked the ERD to take steps to secure the $3.2 billion. However, the government has so far received assurances of $1.665 billion, ERD officials said.

This includes $1 billion from Asian Development Bank (ADB), $315 million from Japan, $250 million from the Asian Infrastructure Investment Bank (AIIB), and $100 million from Opec.

The government is also working on repurposing around $1.6 billion from development projects, officials said, adding the process is ongoing and the figure is likely to get higher.

An ERD senior official told The Business Standard that low-impact and slow-moving projects are being reviewed for repurposing, in consultation with development partners.

The reallocated funds will be channelled into short-term, one-year interventions in energy, food security and social protection. This, officials said, will help address immediate pressures while improving disbursement efficiency and ensuring more effective use of external loans.

ADB providing $1 billion support

ERD officials said the government had sought the full $1 billion in budget support from the ADB for the current fiscal year, which is now being received. Officials added that two budget support agreements are set to be signed on Monday in the presence of the ADB president.

Under the Second Strengthening Social Resilience Program, the ADB will provide $250 million as budget support. Under the Strengthening Economic Management and Governance, the ADB will extend a further $750 million.

ERD officials also said that $250 million will be reallocated from projects that have long remained stalled in implementation and disbursement.

WB prioritising repurposing

Amid shifting priorities in external financing, the World Bank is leaning more towards loan reallocation rather than fresh budget support for Bangladesh in the current fiscal year.

According to ERD sources, the government had formally sought at least $500 million from the lender under the Green and Climate Resilience Development Policy Credit. However, no final decision on budget support has been received so far.

A senior ERD official said Bangladesh is unlikely to receive budget support this fiscal year. Instead, the focus has shifted to repurposing unused pipeline loans.

A review of ongoing World Bank-financed projects shows that around $1.835 billion could potentially be mobilised through faster disbursement and reallocation for urgent needs.

Of this, a $785 million contingency fund has already been created under the Rapid Response Option (RRO) and Contingent Emergency Response Project (CERP) framework by reallocating funds from eight projects.

These include $239 million from the Gas Sector Efficiency Improvement and Carbon Abatement Project, $30 million from the Jamuna River Sustainable Management Project-1, $60 million from the Learning Acceleration in Secondary Education Operation, $15 million from the Road Safety Project, $95 million from the Resilient Urban and Territorial Development Project, $140 million from the Chattogram Water Supply Improvement Project, $74.4 million from the Regional Waterway Transport Project-1, and $134.6 million from the Environmental Sustainability and Transformation Project.

Officials said the government has decided to use this money under the CERP mechanism, which allows rapid deployment of funds for emergency imports of food, fuel and medicines.

The facility remains valid for up to six years, with individual activities limited to one year. Necessary omnibus amendments will be made to existing financing agreements, while the Finance Division will prepare the implementation framework.

The CERP mechanism allows unused funds from ongoing projects to be quickly redirected during sudden crises, without requiring lengthy new project approvals.

Separately, the government is set to introduce for the first time a $250 million emergency Investment Project Financing (IPF) facility, designed for rapid use similar to the RRO-CERP.

ERD sources said the $250 million IPF is not new borrowing, but a consolidation of cancelled or unused allocations from World Bank projects scheduled to close in FY26.

AIIB to provide $250m against $750m request

The government had sought $750 million in budget support from the AIIB. However, the lender has agreed to provide $250 million under the "Strengthening Economic Management and Governance" programme.

An additional $350 million is set to be reallocated from an ongoing AIIB-financed project. The funds will be diverted from the "Sylhet–Tamabil Road to a 4-Lane Highway" project.

ERD officials said disbursement under the road project has remained stalled for a long time due to complications in land acquisition. As a result, the government has decided to restructure the loan and repurpose the unused funds.

Japan trims support to $315m from $500m

The Japan International Cooperation Agency (Jica) initially agreed to provide $500 million in budget support in the current fiscal. The amount has since been reduced to $315 million.

Finance officials said the loan will be used in line with IMF recommendations. The support is expected to help increase social protection spending, strengthen revenue management.

Meanwhile, the government is set to receive $100 million in budget support from the Opec Fund (OFID) to help meet urgent financial pressures. However, requests for $200 million from France and $150 million from Germany remain uncertain, according to ERD sources.

ERD data show Bangladesh received a record $3.44 billion in budget support in FY25 from development partners. This compares with $2.03 billion in FY24, $1.767 billion in FY23, $2.597 billion in FY22 and $1.09 billion in FY21.