The Dhaka Stock Exchange (DSE) and BRAC EPL Investments today (18 May) signed an agreement to facilitate subscription of the Sajida Orange Zero-Coupon Bond to mobilise capital specifically for women-focused economic empowerment and gender-inclusive development through the bourse's Electronic Subscription System (ESS).

The subscription process began on 18 May and will continue until 23 May, allowing eligible investors to participate through the DSE platform.

The bond, issued by development organisation Sajida Foundation, received approval from the Bangladesh Securities and Exchange Commission in March this year to raise Tk158.5 crore through private placement.

Designed as a social impact financing instrument, the zero-coupon bond aims to fund women-focused economic empowerment initiatives and expand access to inclusive financing.

According to the DSE, Tk75.73 crore of the total bond value has been allocated for eligible investors through the subscription process.

Speaking at the signing ceremony held at the DSE headquarters, Managing Director Nuzhat Anwar said innovative and inclusive financing structures are essential for leveraging Bangladesh's demographic dividend.

She said thematic instruments such as orange bonds are opening new avenues for alternative financing in the capital market.

BRAC EPL Investments Chief Executive Officer Syed Rashed Hossain said the Sajida Orange Bond is laying the groundwork for an internationally aligned thematic bond market in Bangladesh.

He said the initiative would help create a strong impact investment platform capable of attracting both local and foreign investors by combining financial returns with measurable social impact.

He also expressed hope that the successful launch of the bond through the DSE platform would encourage more thematic bond issuances in the future.

Deputy CEO of Sajida Foundation Md Fazlul Hoque, described the Orange Zero-Coupon Bond as a significant initiative for women's empowerment.

He said Sajida Foundation has been working for over 30 years to support women through employment generation, income enhancement and financial inclusion programmes.

Under the allocation plan, around 32% of the raised funds will be used for SME financing and employment generation, 20% for housing-related initiatives, and nearly 40% for agriculture and food security projects.

The remaining funds will support microfinance operations, programme implementation and technology-driven financial inclusion initiatives.

Senior officials from DSE, Sajida Foundation and BRAC EPL Investments were present at the signing ceremony.

Despite achieving healthy economic growth over the past decade, Bangladesh’s economy is now showing signs of strain due to persistent inflation and slowing private investment, exposing underlying weaknesses, experts said at an event yesterday.

“Bangladesh faced the Middle East crisis with several existing vulnerabilities, including persistent inflation, weak investment growth and financial sector stress,” said Dhruv Sharma, senior economist at the World Bank.

He made the remark while presenting a keynote speech at the seminar on “Bangladesh Development Update: Special Focus - A Business Environment that Delivers Jobs” jointly organised by Policy Research Institute of Bangladesh (PRI) and the World Bank at the PRI auditorium.

Although Bangladesh Bank has succeeded in bringing inflation down from around 12.5 percent to nearly 9 percent, tighter monetary policy alone cannot fully address the inflationary pressures, which are being fuelled less by excess demand and more by inefficiencies in supply chains, distribution systems and market management, according to Sharma.

World Bank’s Bangladesh-Poverty and Equity Assessment 2025 showed that another 1.4 million people slipped below the poverty line, raising the national poverty rate to 21.4 percent. Sluggish job creation and external shocks, particularly the Middle East conflict, have added to the pressure on households.

He cautioned that prolonged tight monetary conditions are weighing on investment and employment as businesses continue to struggle with high borrowing costs.

Unless wider reforms are made to improve market governance, logistics and the investment climate, hiking interest rates risks further slowing economic growth while failing to substantially ease inflationary pressure, he said.

Bangladesh’s growth model, long driven by cheap labour and protected domestic industries, is no longer delivering sustainable results, said Fahmida Khatun, executive director of the Centre for Policy Dialogue.

She said the country had achieved impressive economic growth over the years, alongside gains in health, education and poverty reduction. But the momentum has weakened since fiscal year 2021-22 as macroeconomic indicators deteriorated under both external shocks and internal vulnerabilities.

She pointed to persistent weaknesses in the banking sector, saying financial institutions were no longer able to adequately support productive private-sector investment with affordable financing.

According to her, many businesses are now focused more on survival than expansion amid regulatory uncertainty, policy unpredictability and bureaucratic delays.

Piecemeal measures would not be enough to restore stability, Fahmida stressed, calling instead for broad institutional reforms in governance, banking, trade policy and labour markets to ensure sustainable and employment-oriented growth.

Foreign investors are increasingly worried about Bangladesh’s unpredictable fiscal and taxation policies, which are hurting long-term investment confidence, said TIM Nurul Kabir, executive director at the Foreign Investors’ Chamber of Commerce and Industry (FICCI).

He said businesses planning investments over 10 years need policy consistency, but sudden changes in taxes and duties are creating uncertainty.

Restoring investor confidence would be a major challenge for the interim government ahead of the budget, he added.

Zaidi Sattar, chairman of the PRI, stressed the need for job-intensive growth, saying employment generation remains central to Bangladesh’s economic and social progress.

Rising youth unemployment posed a serious challenge for policymakers, he said, noting that Bangladesh’s experience over the past three decades showed that growth, employment and poverty reduction moved together.

Ashikur Rahman, principal economist at PRI, warned that Bangladesh’s growth trajectory has weakened since 2019, with slower growth and rising volatility becoming a growing concern.

“The economy’s buffers are now very weak,” he said, stressing that reforms in the financial and revenue sectors were no longer optional.

Rahman cautioned that Bangladesh could face a middle-income trap without urgent reforms and stronger macroeconomic discipline.

Asian share markets were on the skids on Monday as fresh drone attacks in the Gulf shoved oil prices and bond yields higher, while the AI euphoria underpinning the tech bull run will be tested by earnings from Nvidia this week.

A drone strike caused a fire at a nuclear power plant in the United Arab Emirates, while Saudi Arabia reported intercepting three drones, as US President Donald Trump warned that Iran must act "fast" to reach a deal.

Meanwhile, the vital Strait of Hormuz remains closed to all but a trickle of shipping as Tehran tries to formalise its control of the waterway that during normal times carries 20% of the world's oil trade.

"The closure is draining global oil inventories fast," warned analysts at Capital Economics. "Inventories could reach critical levels by end-June, setting the stage for Brent at $130-140pb, if not higher."

"If the strait is closed through year-end and oil stays around $150pb into 2027, that would push inflation to near 10% in the UK and euro zone, send rates back to their recent peaks and lead to global recession."

Brent was trading up 1.9% at $111.34 a barrel, while US crude climbed 2.2% to $107.72 a barrel. Crucially, futures for September climbed above $100 and December hit a contract high as markets braced for protracted shortages.

G7 finance ministers are scheduled to gather in Paris on Monday to discuss the Strait of Hormuz and critical raw material supplies, even as geopolitical differences threaten to test the group's cohesion.

Global bond markets were hammered on Friday on concerns that energy costs would stay high and thus continue to drive inflation.

Yields on US 10-year notes hit a 15-month top of 4.631%, having already surged 23 basis points last week. Yields on 30-year bonds reached 5.159% after jumping 18 basis points on the week.

Japanese yields hit peaks not seen since 1996 as the government proposed issuing fresh debt to fund a planned extra budget to cushion the economic blow from the US-Israeli war on Iran.

Investors in turn feared central banks globally would have to tighten to head off an inflationary spiral and a hike from the Federal Reserve is now seen as a 50-50 chance this year.

Minutes of the Fed's last meeting are out on Wednesday and should show how much pressure there was on the committee for a shift to a neutral stance and away from an easing bias.

New Fed Chair Kevin Warsh will have a chance to air his views at the G7 meeting and analysts are keen to hear whether he still favours the rate cuts that Trump so desires.

Japan's Nikkei eased 0.9%, having fallen 2% last week from record highs. South Korean stocks dipped 0.3%, though Samsung Electronics gained after a court issued a partial injunction against a union strike.

MSCI's broadest index of Asia-Pacific shares outside Japan lost 0.8%. Chinese blue chips lost 0.6%, as economic data disappointed. China's April retail sales edged up 0.2% when analysts had looked for growth of 2.0%, while industrial output rose a sluggish 4.1%.

AI, retail earnings to test the bull run

S&P 500 futures fell 0.6% and Nasdaq futures lost 0.7%. For Europe, EUROSTOXX 50 futures and DAX futures both fell 1.0%, while FTSE futures were flat.

While Wall Street has been supported by upbeat earnings, analysts at Citigroup noted that half of the boost to earnings came from one-time items like tariff add-backs and asset mark-ups. Both the gains in profits and the overall indexes were also tightly based.

"We identify 20 stocks that contributed the majority of index earnings upside," analyst Scott Chronert wrote in a note. "Forward guidance increases also show a similar narrow focus."

"Broadening is a necessary condition for meaningful index upside from here," he added. "This will require a better line of sight to the Iran conflict wind-down."

Rising yields also push up borrowing costs for the US government and home buyers, a negative for the budget deficit and housing markets. They also mean a higher discount for future company earnings, challenging stock valuations.

The all-important AI trade will be tested by earnings from Nvidia that are due on Wednesday, where expectations are sky-high for the world's most valuable company.

Nvidia shares are up 36% since a March low, while the Philadelphia SE semiconductor index has surged more than 60%, amid voracious demand for chips as tech companies spend massively to build AI-related infrastructure.

Also due this week are results from a host of retailers led by Walmart, which will provide an insight into how consumers are faring with high energy prices.

In forex markets, risk aversion has tended to benefit the greenback as the world's most liquid currency. The US is also a net energy exporter, giving it a relative advantage over Europe and much of Asia.

The euro sat at $1.1618 after losing 1.4% last week. The pound wallowed at $1.3311, having dived 2.3% last week as political instability added to already intense pressure on the gilt market.

The dollar held firm against the yen at 158.91, with only the threat of Japanese intervention preventing another speculative assault on the 160.00 chart barrier.

In commodity markets, gold idled at $4,544 an ounce, having drawn little support so far as a safe haven or as a hedge against inflation risks.

The Dhaka Stock Exchange has announced an updated schedule for its office and trading operations in line with the government-declared Eid-ul-Adha holiday period.

According to the announcement, the DSE will continue its regular office and trading activities on Saturday, 23 May and Sunday, 24 May following normal trading hours.

The exchange will then remain closed from 25 to 31 May due to the official Eid-ul-Adha holidays.

Normal trading and office operations will resume on 1 June.

Bangladesh Bank (BB) has directed all banks to keep their branches and sub-branches open on May 23 and 24 ahead of Eid-ul-Azha to facilitate financial transactions and salary payments for garment workers.

The central bank issued a circular in this regard, stating that all bank branches across the country will remain open during regular banking hours on the upcoming Saturday and Sunday.

Banks, however, will remain closed from May 25 to May 31 for the Eid holidays.

The directive follows a government notification regarding the upcoming Eid-ul-Azha holidays.

To ensure smooth payment of wages, bonuses, and other allowances for workers in the garment sector, BB instructed commercial bank branches in Dhaka, Ashulia, Tongi, Gazipur, Savar, Bhaluka, Narayanganj, and Chattogram to continue limited banking operations on May 25 and 26.

According to the circular, these branches will operate from 10am to 3pm, while customer transactions will be allowed from 10am to 1pm.

The central bank also said bank branches, sub-branches, and booths located in seaport, land port, and airport areas must continue limited operations during the Eid holidays, except on Eid day itself, to support import and export activities.

Officials and employees assigned duty during the holidays will receive allowances in accordance with existing rules, the circular added.

Meanwhile, the National Board of Revenue (NBR) has also instructed all customs houses and stations to keep import and export operations running on a limited scale during the Eid holidays.

According to a separate circular issued yesterday, the directive will remain in effect during public and weekly holidays from May 25 to May 31, excluding the day of Eid.

The revenue authority has urged relevant officials to take necessary measures to ensure uninterrupted external trade during the festive period.

Government's highest economic-policy body Monday endorsed an ambitious Tk3.0-trillion annual development programme (ADP) for the upcoming fiscal year with nearly one-third of the money earmarked as block allocations.

Economists forewarn that such huge block allocations could create room for misuse of the public funds and undertaking "politically motivated" projects, but the finance minister says ADP structured on well-defined strategic parameter.

The ADP outlay for fiscal 2026-27 is 30.43-percent higher than the Tk 2.30-trillion original ADP outlay and 50-percent higher than the Tk 2.0 trillion revised one of the outgoing FY2026.

Of the new development-budget outlay, the government has kept aside Tk 973.04 billion as block allocations.

The National Economic Council (NEC) approved the massive ADP for the upcoming FY2026-27 taking implementation challenge after a massive blow in the current fiscal.

Till March this fiscal, the government agencies had executed only 35.57 per cent of the Tk 2.0- trillion RADP.

The NEC in a meeting held at the Planning Commission in Dhaka with NEC Chairperson and Prime Minister Tarique Rahman in the chair gave the seal of approval.Maps

Briefing reporters following the meeting, Finance and Planning Minister Amir Khosru Mahmud Chowdhury said out of the total Tk 3.0 trillion worth of ADP outlay, the government will finance Tk 1.90 trillion from its domestic resources, while the remaining Tk 1.10 trillion will be sourced through foreign loans and project grants.

"This ambitious development roadmap marks an approximate 50-percent increase from the revised ADP of the current fiscal year, signaling government's intent to ramp up public investment and enhance macroeconomic implementation capacity," he adds.

To a question, the Finance and Planning Minister said, "If we want to reap benefit of our continuous 'population dividend', we have no way but to enhance investment in the education and health sectors for human-capital development.

"Besides, we need more private investment from home and abroad which would be attracted through improving our infrastructure."

The minister explains that the ADP is structured around five key pillars derived from the country's proposed Five-Year Strategic Framework for Reform and Development

The framework transitions Bangladesh from an infrastructure-only model toward a balanced, inclusive framework, he adds.

The five key pillars include state system reforms focusing on digitisation and the efficiency of law enforcement, inclusive socioeconomic development giving maximum precedence to education, healthcare, and social security.

Besides, Khosru says, economic restructuring, securing energy grids and investing in renewable energy, regional balanced development by improving logistics hubs and coastal infrastructure and socio-cultural cohesion with enhanced social harmony and cultural welfare have also been given focus in the newly formed ADP.

In a departure from traditional infrastructure-heavy development blueprints, the newly approved ADP prioritizes social protection, agricultural assistance, and human-resource development.Personal finance tools

"This shift aligns closely with the government's electoral promises to insulate low-income households from inflationary pressures."

To facilitate new social protection schemes and welfare initiatives, the government allocated a record Tk 170 billion for the social safety-net programmes, including "Family Card", "Farmer Card", and "honorarium" to the religious leaders within the development framework.

In the new ADP, the government allocated Tk 1.789 trillion for investment and study projects, Tk 27.96 billion for technical-assistance projects, Tk 39.85 billion for "development fund", Tk 592.76 billion block allocations for different ministries and divisions, Tk 380.274 billion block allocations for Programming Division of the Planning Commission and Tk 170 billion for the social safety-net programmes.

The total number of projects in the upcoming ADP is 1,150 wherein 983 are investment projects, 23 for feasibility study, 109 TA and 45 self-funding.

Former World Bank Lead Economist in Dhaka office Dr Zahid Hussain says since the ministries could apply discretionary powers for getting the funds from the massive block allocations, it could create a room for misuse of the public funds and taking "politically motivated" projects.

"In another way, since the funds are not specified yet for any specific projects, the government could be able to cut the ADP size at the end of the fiscal if agencies fail to implement those fully or if the revenue generation becomes low like in the previous years," he told the FE.

The NEC also approved a Tk 89.248 billion worth of development budget for the autonomous and semi-autonomous government bodies.

Planning Commission officials say those funds will ensure flexible financing for flagship initiatives, such as the expanded "Family Card" and "Farmer Card" programmes, alongside targeted social-development assistance.

While social-safety initiatives heavily influence the budgetary philosophy, the transport and communications sector retains the highest traditional sectoral funding at Tk 500.92 billion or 16.7 per cent of the total ADP.

The education sector follows closely with Tk 475.91 billion, while healthcare is set to receive Tk 355.35 billion and the power and energy sector has been allocated Tk 326.91 billion.Bangladesh trade analysis

Among ministries and divisions, Local Government Division has been accorded the largest individual share, totalling Tk 337.35 billion.

Addressing longstanding implementation challenges, the NEC has directed all ministries and divisions to strictly prioritize projects that are scheduled to be completed by June 2027.

The Planning Ministry emphasizes that stricter oversight mechanisms and new criteria for appointing project directors will be deployed to optimize fiscal discipline and curb discretionary spending during the upcoming fiscal year.

The US dollar-dominated global oil trading system is being tested by the Iran war and the closure of the Strait of Hormuz, as governments in major consuming nations turn to increasingly opaque deals with Tehran and Gulf producers to secure supplies.

Since the outbreak of the war on February 28, roughly a fifth of global oil supplies from the Gulf ​have been disrupted, dealing a tough blow to economies, particularly in Asia, which depends on the Middle East for about 60 percent of its imports.

With the Hormuz blockade now in its 13th week, ‌there are growing signs that major Asian importers are adapting to the new reality by striking direct arrangements with Gulf producers, often with Tehran’s consent, to allow vital flows of crude, chemicals and fertilizer through the Strait.

In recent days, several oil tankers have crossed Hormuz, frequently sailing with their tracking systems switched off to avoid detection, following direct contacts between leaders in the purchasing countries and Iran.

Last week, a Panama-flagged tanker carrying 2 million barrels of Kuwaiti and Emirati crude passed through the Strait en route to Japan following discussions between ​Prime Minister Sanae Takaichi and Iranian President Masoud Pezeshkian. Iran has also struck arrangements with China, Iraq and Pakistan to move oil and liquefied natural gas out of the Gulf.

The precise structure of these bilateral and ​trilateral deals remains largely opaque. But it is highly likely that many are being settled outside the traditional oil trading system, either through currencies other than the US dollar or through informal barter arrangements.

Regardless of whether these trades include explicit transit fees to Tehran - something Tokyo has denied - the pattern reinforces Iran’s de facto control over traffic through the critical waterway.

Iran seeks to enshrine ​this influence in any future settlement with Washington, a demand President Donald Trump has firmly rejected.

However the standoff is ultimately resolved, the current disruption is likely to leave a lasting imprint on oil trade patterns.

PERMANENT RISK

Crossing Hormuz is now likely ​to carry a persistent geopolitical risk premium. That will embed higher costs into Middle East crude, forcing importers to rethink supply security.

In turn, that may encourage more direct, government-backed deals with regional producers to clinch supplies, create pricing mechanisms that insulate buyers from volatility and help secure transit through Hormuz.

Signs of that shift are already emerging. Indian Prime Minister Narendra Modi visited the United Arab Emirates on Friday to discuss long-term supply agreements and expand strategic storage. The timing of the trip – in the middle of a regional war – ​underscores the urgency of New Delhi’s situation and may signal a broader turn toward bilateral energy diplomacy across Asia.

“In the current circumstances, there is every reason to expect China, India, Japan, South Korea, and other import-dependent countries ​to extend the network of bilateral relationships they already have with Gulf states - including a post-war regime in Iran - and with other oil and gas exporters around the world,” consultancy Dragoman said in a note on Friday.

PETRODOLLAR UNDER THREAT

These evolving trade ‌patterns add to the slow erosion of the dollar’s dominance in global oil trade.

Modi’s talks in Abu Dhabi followed a 2023 agreement between India and the UAE to settle bilateral trade in rupees and dirhams rather than dollars, part of a broader push by emerging economies to diversify their payment systems.

Today’s oil trading architecture was designed in the 1970s and 1980s to avoid such fragmentation. The creation of crude futures markets in New York and London brought transparency and liquidity to a system previously dominated by producer-set prices.

Crucially, it also entrenched the US dollar as the system’s core currency.

The dominance of the “petrodollar” gave Washington unparalleled leverage over global finance, enabling it to impose sanctions that effectively exclude countries, companies and ​individuals from the international trading system.

Over recent decades, the US has dramatically ​expanded the use of sanctions, targeting countries such as Iran, Venezuela, Russia and China in pursuit of geopolitical and economic objectives. Those measures drove the development of a vast oil trading network that bypassed the dollar and Western shipping.

The risk of falling foul of US sanctions prompted major emerging economies to explore alternative trading mechanisms. So far, those efforts have had only limited success: even today, just 10 percent ​to 20 percent of global oil trade is estimated to occur in non-dollar currencies.

But the shock of the Iran war and the partial shutdown of one of ​the world’s most important energy arteries, which has forced buyers to rethink their energy security strategies, could accelerate that shift.

With Asia accounting for over a third of global oil consumption and more than half of global imports, any move toward bilateral, state-driven trading relationships in this region would push the market toward a much more fragmented global energy trading system.

To be sure, the Middle East supply disruption has also reinforced the US as the world’s premier oil and gas producer, and Washington is likely to remain dominant in the global economy for decades to come. No single currency ​is expected to take the dollar’s place.

But the fallout from the Iran war could nevertheless lead to the fragmentation of oil pricing, ​reducing transparency and weakening Washington’s grip over the financial architecture that has underpinned the global oil trade for decades.

The National Board of Revenue (NBR) has missed its revenue collection target by nearly Tk104,000 crore in the first 10 months of the 2025-26 fiscal year, amid sluggish growth in tax receipts and an ambitious government target.

The shortfall is the highest on record, according to NBR officials familiar with the matter.

Experts say that although revenue collection may pick up in the final two months of the fiscal year, the government is still likely to face an overall shortfall of at least Tk1 lakh crore.

An NBR official, speaking on condition of anonymity, told The Business Standard that revenue collection in April grew by only 6.71% compared with the same month last year, well below the average monthly growth rate of around 14% recorded in previous years.

Bangladesh's economic growth set to slow to 3.9% as inflation, banking risks, investment crisis deepen
Although revenue growth remained relatively strong in the early part of the fiscal year, collection momentum weakened later, affecting the overall performance during the July-April period.

According to preliminary NBR estimates, revenue collection in the first 10 months of the fiscal year rose by 10.60% year-on-year.

Towfiqul Islam Khan, additional research director at the Centre for Policy Dialogue, told The Business Standard, "During the previous government's tenure, revenue targets were set beyond the economy's actual capacity. Combined with the current economic slowdown, this has created a major gap in revenue collection."

He said a large share of government revenue is linked to implementation of the Annual Development Programme (ADP), and slower project execution during the current fiscal year had reduced VAT and other tax collections tied to development spending.

"That is one of the reasons behind the slowdown in revenue growth," he said.

Towfiqul added that higher fuel prices and a possible rise in revenue collection during the final two months of the fiscal year could help narrow the gap slightly.

"Even then, the revenue shortfall at the end of the fiscal year could still exceed Tk100,000 crore," he said.

VAT collection falls

NBR officials said that in April, import tax and income tax collection grew by 18% and 14.66% respectively compared with the same period last year. However, VAT collection declined by 3%.

According to officials, around 55% of VAT collected by the NBR comes from ADP-related activities and public sector institutions, including electricity and gas utilities.

Syed Mushfequr Rahman, a member of the VAT implementation wing at the NBR, told TBS, "ADP implementation has slowed, which is why VAT collection is also declining."

"The information we are receiving from the field level suggests that VAT receipts from public institutions are lower than expected. We will have a clearer picture once we get the full data on which other sectors are contributing less," he added.

Challenge next fiscal

The government is preparing to set a combined revenue collection target of Tk695,000 crore from NBR and non-NBR sources in the next fiscal year.

According to CPD estimates, based on projected revenue collection in the current fiscal year, the implied growth target for next year would be around 42%.

Towfiqul described the target as unrealistic. "The highest revenue growth in Bangladesh's history was 27% in fiscal year 2007-08. The likelihood of achieving the projected growth target next fiscal year is very low," he said.

"As a result, a large revenue shortfall is likely to persist in the next fiscal year as well."

Bangladesh relies on indirect taxes far more heavily than its regional peers, raising fresh questions about the fairness of the country’s tax structure and its impact on ordinary citizens, according to a study presented yesterday.

The data, which measures indirect tax dependence as a percentage of total revenue, places Bangladesh at the top of the regional ranking. When VAT, customs duties and supplementary duties are combined, Bangladesh’s indirect tax share reaches 78.2 percent -- a staggering 28 percentage points above the regional average.

Even when calculated using VAT and customs alone, Bangladesh still stands at 65.8 percent, nearly 17 percentage points higher than India’s 48 percent.

Snehasish Barua, managing director of SMAC Advisory Services Limited, presented the comparative study at a roundtable discussion held yesterday in Dhaka on the over-reliance on indirect taxes and their multidimensional impacts on the economy. The event was organised by Voice for Reform, a citizens’ platform in Bangladesh.

By contrast, the Asia-Pacific average sits at just 40.2 percent, according to OECD 2025 data. Vietnam records 60 percent, Pakistan 58.6 percent, and Sri Lanka 64.8 percent -- all below Bangladesh’s figure.

India, often seen as a comparable developing economy, trails Bangladesh significantly, with direct taxes accounting for a far larger share of its revenue base. India’s direct tax share stands at 45 percent, while Bangladesh manages only 21 to 35 percent.

M Masrur Reaz, chairman of Policy Exchange of Bangladesh, said the country’s revenue system is overly dependent on indirect taxation, making it a major structural weakness.

He said indirect taxes are easier to collect but discourage efforts to expand the direct tax base. “As long as this dependence continues, the system will remain regressive, and inequality will persist,” he said.

Reaz added that low tax compliance is driven not only by cultural factors but also by fear of harassment and administrative burdens.

He warned that reliance on customs duties is unsustainable as Bangladesh graduates from least developed country status, noting tariffs still account for 27 to 28 percent of revenue.

“If we had gradually shifted toward direct taxation, we could have used fiscal policy more effectively to address inflationary pressures and rising inequality,” he said.

He said that in the current challenging context, spending Tk 35,000 crore on a new government pay scale would be the wrong decision.

Imran Hassan, secretary general of the Bangladesh Restaurant Owners Association, said current tax assessment methods are ineffective and require full system integration. “All businesses must be brought under the VAT net,” he said, proposing that tax collection be integrated with VAT payments.

He alleged resistance from authorities, arguing that meaningful system reform would reduce opportunities for informal pressure on businesses.

Md Farid Uddin, former member of the National Board of Revenue, said the VAT rate should under no circumstances exceed 10 percent.

The tax reform task force formed during the interim government had also proposed a maximum VAT rate of 10 percent, though several of its other recommendations have since gone unaddressed, he noted.

Rushad Faridi, assistant professor of the Department of Economics at the University of Dhaka, warned that excessive reliance on indirect taxation creates instability in budget execution, as revenues become highly dependent on consumption and overall economic conditions.

“If the economy slows down, fiscal pressure builds up immediately, forcing cuts in essential spending or increased borrowing,” he said, adding that direct taxation provides a more stable fiscal framework.

He also said indirect taxes create a “fiscal illusion,” where people do not fully realise their tax burden, reducing public pressure for government accountability.

Prof M Abu Eusuf, executive director of RAPID, said Bangladesh’s main challenge is not a lack of reform ideas but weak enforcement.

“We all know the problems and solutions. Reform strategies already exist, but without enforcement and a strong commitment, nothing will change,” he said.

Faisal Mahmud, managing editor of The Daily Waadaa, said India’s experience with Goods and Services Tax (GST) and the Unified Payments Interface (UPI) shows how a digitalised economy can strengthen tax administration and expand formalisation.

He urged policymakers to study India’s GST system more closely, saying it offers important lessons for improving Bangladesh’s tax and revenue framework.

AKM Fahim Mashroor, Co-coordinator of Voice for Reform, who moderated the event, proposed setting the standard VAT rate at 7.5 percent while introducing a rate exceeding 25 percent on luxury goods.

Among others, Saeed Ahmed Khan, former head of tax at Unilever Bangladesh, Abdur Rauf, founding president of the VAT Forum, and Doulot Akter Mala, president of the Economic Reporters Forum, also spoke at the event.

The upcoming FY27 budget will be a “litmus test” for the newly elected government, experts warned yesterday, as it faces mounting pressure to balance reforms, debt obligations and political promises within the tightest fiscal space in recent memory.

There is little room to manoeuvre for policymakers as they face weak revenue mobilisation, an underperforming ADP, rising debt costs and unaddressed corruption, they said at a pre-budget dialogue organised by Citizen’s Platform for SDGs at the Lakeshore Hotel in Dhaka.

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Towfiqul Islam Khan, additional director (research) of the Centre for Policy Dialogue (CPD), said while presenting the keynote paper that the budget would be shaped by a series of difficult trade-offs.

“The first budget of the newly elected government faces dual pressures of balancing economic stability and reforms while meeting political demands to deliver quickly and prove legitimacy, all within the tightest fiscal space in recent memory,” he said.

Public financial management faces challenges on multiple fronts, he said, including streamlining tax expenditures, protecting investment, advancing reforms, managing subsidies for the marginalised, and addressing the ADP (annual development programme) backlog.

Khan noted that the National Board of Revenue’s tax-to-GDP ratio fell to the lowest in years at 6.6 percent in FY25. The country “forgoes roughly as much as it collects” through exemptions and tax expenditures.

The government’s planned Tk 6.95 lakh crore revenue target for the upcoming fiscal year would require at least a 42 percent jump in collection compared to the current fiscal year, according to Khan. The FY26 shortfall alone is expected to reach Tk 1 lakh crore.

“A Plan B will be required if revenue mobilisation does not keep pace,” he said, raising the question of where the government would cut if the gap proved too wide.

Mustafizur Rahman, CPD distinguished fellow, said a major component of the “litmus test” is whether the government can ensure redistribution of resources through the budget.

According to him, the core issue was not revenue volume but reducing the gap between what taxpayers pay and what the government actually receives.

“That gap is corruption,” he said. “If we can bring this to zero, many of our other tasks will become much easier.”

The CPD fellow also warned of a deepening debt risk. Bangladesh’s borrowing is becoming increasingly non-concessional, yet the entire development programme still depends on loans.

“Interest and principal repayments are increasing gradually. This is creating a huge risk,” he said.

Debapriya Bhattacharya, noted economist and a distinguished fellow at CPD, criticised the government for not producing “a documented assessment of the economy” it inherited.

He said, “This government is focusing more on the outward aspects of political commitments such as Family Card, Farmers Card, canal excavation, and so on.

“But the core issue of the economy is maintaining macroeconomic stability, the biggest expression of which is controlling inflation, reducing interest rates and at the same time keeping the exchange rate stable.”

These issues, which are directly linked to people’s livelihoods, are not receiving sufficient attention, he said.

Debapriya said they suggested the government adopt a policy of “tough love” by preparing a budget that is consistent with reality.

Instead, he warned, the government is repeating the pattern of its predecessors and is risking passing a conventional budget similar to that of the interim government.

“You are increasing the ADP by another 20 percent even though 40 to 50 percent of the previous ADP could not be implemented. At the same time, you did not clean up the mess within those 1,500 projects,” he said. “You are simply reproducing the old situation in a new form.”

AK Enamul Haque, director general of Bangladesh Institute of Development Studies, said a portion of every budget usually remains unimplemented, and therefore, the efficiency level must be improved. He also stressed reducing land dependency in development projects.

“One reason many government projects are delayed is the huge amount of land demanded for project implementation. In a land-scarce country like ours, the land dependency of projects must be reduced,” he said.

Sharmind Neelormi, a professor of economics at Jahangirnagar University, suggested introducing a programme to ease tax-related fears among the nearly 82 percent of TIN holders who currently do not pay taxes.

She proposed engaging students from public and private universities in awareness programmes in exchange for an honorarium so that they could help TIN holders.

She also suggested allowing people with incomes below a certain threshold to submit “zero returns” for three years in order to build the habit of filing tax returns.

Mahmuda Habiba, a lawmaker from the Bangladesh Nationalist Party for a reserved women’s seat in the 13th National Parliament, said this year’s budget is “more of a crisis-management and stabilisation budget.”

Zahid Hossain, minister for women and children affairs and social welfare, said the government is focusing on making the country humanitarian and inclusive.

“But it may not happen overnight,” he said, urging all to work together.

The new BNP-led government has decided to spend Tk 3.09 lakh crore on development programmes in FY2026-27, the largest single-year increase in eight years, signalling a sharp break from the austerity-driven approach of the interim administration.

The allocation for the Annual Development Programme (ADP) is up 30 percent from the current year, which Finance and Planning Minister Amir Khosru Mahmud Chowdhury said reflects a five-year strategic framework for reform and development.

The minister acknowledged the massive expansion, but said the government is betting that political legitimacy and stronger institutional capacity will improve delivery.

“We have assumed that the elected government will have greater capability and implementation efficiency,” he said after the National Economic Council approved the plan yesterday, chaired by Prime Minister Tarique Rahman.

Bangladesh spent only 36.16 percent of its ADP in the July–March period of FY26, the lowest five-year rate both in percentage and absolute terms, even after the outgoing interim government slashed the plan by 14 percent, the steepest cut in recent memory, to contain inflation and shore up weak revenues.

According to the planning ministry, of the total allocation for FY27, government financing would be Tk 1.99 lakh crore, while the rest is expected to come from project loans and grants.

TRANSPORT, EDUCATION, HEALTH LEAD

The new government is eyeing the most development in the transport and communication sectors, which has been given 16.7 percent of the total ADP fund.

Education has also been given high priority. The sector will get 15.86 percent of the total development fund, while the health sector’s allocation stands at 11.84 percent.

Allocation and implementation of the ADP in the two major sectors remained almost stagnant at low levels in recent years. The new development spending plan for the education and health sectors is nearly double the original budget allocation for FY26.

The allocation falls in line with the government’s pledges. It has set a goal of gradually raising public healthcare spending to five percent of the gross domestic product (GDP) – the total value of all final goods and services produced within a country. It also announced plans to implement massive reforms in the education sector.

The Planning Commission said preferential allocations have been provided to the education, health and agriculture sectors to support discrimination-free socio-economic development.

“Special importance has been given to expanding quality and technology-based education, building skilled human resources, ensuring modern healthcare, empowering women, expanding social security, and promoting agricultural and environment-friendly development,” said the commission in a summary presented at the meeting.

“Simultaneously, initiatives have been undertaken to tackle the Fourth Industrial Revolution, advance technology-based industrialisation and ensure sustainable development,” it added.

The energy and power sector got the fourth-highest allocation of 10.9 percent of the total ADP. Bangladesh is facing growing pressure of energy bills, recently further compounded by additional costs during fuel supply disruptions caused by the US-Israeli war on Iran. The government also announced plans to push towards renewables.

Another major allocation goes to social development assistance, under which the government has started providing Family Cards, Farmers Cards and allowances for mosque imams and other religious leaders.

In line with that plan, the government expects to spend Tk 17,000 crore on social development assistance, with Family Cards alone accounting for Tk 14,500 crore. That programme was a central election pledge.

STRATEGIC FRAMING

The BNP-led government, which has come to power after 19 years, has taken up 1,277 new projects recommended by various ministries and departments. An additional 80 projects have been proposed under public-private partnership (PPP) arrangements and 148 under the Bangladesh Climate Change Trust Fund.

The plan has been made in line with the ruling party’s election manifesto and its five pillars: social development, economic restructuring, and balanced regional development among them.

“The context is very clear — a journey towards prosperity from a fragile economy. We are moving forward with strategies for recovery, transition and reconstruction,” Khosru said.

He said it reflects a “new perspective” in Bangladesh’s development planning.

“It is not only about infrastructural development; rather, it is an integrated outline for state reform, building a discrimination-free society, a sustainable economy and establishing regional balance,” said the minister.

THE IMPLEMENTATION QUESTION

The government’s ambitions, however, face a credibility problem as the gap between announced and actual spending has become a structural feature of Bangladesh’s development planning, not an aberration.

Debapriya Bhattacharya, convenor of Citizen’s Platform for SDGs, Bangladesh, raised that concern directly at a dialogue ahead of the NEC meeting.

Khosru acknowledged the record but framed ambition as a precondition for recovery.

“Without investment, growth, employment or development is not possible,” he said. “We want every project to ensure value for money. There must be returns on investment, and employment must be generated. We do not want jobless growth. Climate issues must also be taken into consideration.”

He also said in the past there were various questions, corruption allegations and concerns over inefficiency regarding the appointment of project directors. “From now on, there will be specific criteria for appointing PDs. Those who meet the criteria will be appointed.”

Bangladesh Bank (BB) has purchased $100 million from six commercial banks, marking the highest single-day greenback purchase by the central bank in May.

The dollars were bought at a rate of Tk 122.75 each on Monday, according to data released by the regulatory body.

Earlier, the highest single-day dollar purchase this calendar year was recorded on Jan 6, when the central bank bought $223.5 million at a rate of Tk 122.30 per dollar.

Within the current 2025-26 fiscal year, the highest single-day purchase took place on Sept 15 last year, when the central bank snapped up $353 million from the market at Tk 121.75 per dollar.

BB Executive Director Arief Hossain Khan told bdnews24.com: "With Monday’s transaction, the central bank has purchased a total of $310 million from commercial banks so far in May."

Before Monday's large-scale intervention, the regulatory body had last purchased $40 million from the market on Thursday.

According to BB data, the regulator has injected significant local currency into the banking system by purchasing a cumulative total of $5.98 billion from the market so far in the current fiscal year.

Government's highest economic-policy body Monday endorsed an ambitious Tk3.0-trillion annual development programme (ADP) for the upcoming fiscal year with nearly one-third of the money earmarked as block allocations.

Economists forewarn that such huge block allocations could create room for misuse of the public funds and undertaking "politically motivated" projects, but the finance minister says ADP structured on well-defined strategic parameter.

The ADP outlay for fiscal 2026-27 is 30.43-percent higher than the Tk 2.30-trillion original ADP outlay and 50-percent higher than the Tk 2.0 trillion revised one of the outgoing FY2026.

Of the new development-budget outlay, the government has kept aside Tk 973.04 billion as block allocations.

The National Economic Council (NEC) approved the massive ADP for the upcoming FY2026-27 taking implementation challenge after a massive blow in the current fiscal.

Till March this fiscal, the government agencies had executed only 35.57 per cent of the Tk 2.0- trillion RADP.

The NEC in a meeting held at the Planning Commission in Dhaka with NEC Chairperson and Prime Minister Tarique Rahman in the chair gave the seal of approval.City & Local Guides

Briefing reporters following the meeting, Finance and Planning Minister Amir Khosru Mahmud Chowdhury said out of the total Tk 3.0 trillion worth of ADP outlay, the government will finance Tk 1.90 trillion from its domestic resources, while the remaining Tk 1.10 trillion will be sourced through foreign loans and project grants.

"This ambitious development roadmap marks an approximate 50-percent increase from the revised ADP of the current fiscal year, signaling government's intent to ramp up public investment and enhance macroeconomic implementation capacity," he adds.

To a question, the Finance and Planning Minister said, "If we want to reap benefit of our continuous 'population dividend', we have no way but to enhance investment in the education and health sectors for human-capital development.

"Besides, we need more private investment from home and abroad which would be attracted through improving our infrastructure."

The minister explains that the ADP is structured around five key pillars derived from the country's proposed Five-Year Strategic Framework for Reform and Development

The framework transitions Bangladesh from an infrastructure-only model toward a balanced, inclusive framework, he adds.s

The five key pillars include state system reforms focusing on digitisation and the efficiency of law enforcement, inclusive socioeconomic development giving maximum precedence to education, healthcare, and social security.

Besides, Khosru says, economic restructuring, securing energy grids and investing in renewable energy, regional balanced development by improving logistics hubs and coastal infrastructure and socio-cultural cohesion with enhanced social harmony and cultural welfare have also been given focus in the newly formed ADP.

In a departure from traditional infrastructure-heavy development blueprints, the newly approved ADP prioritizes social protection, agricultural assistance, and human-resource development.

"This shift aligns closely with the government's electoral promises to insulate low-income households from inflationary pressures."

To facilitate new social protection schemes and welfare initiatives, the government allocated a record Tk 170 billion for the social safety-net programmes, including "Family Card", "Farmer Card", and "honorarium" to the religious leaders within the development framework.

In the new ADP, the government allocated Tk 1.789 trillion for investment and study projects, Tk 27.96 billion for technical-assistance projects, Tk 39.85 billion for "development fund", Tk 592.76 billion block allocations for different ministries and divisions, Tk 380.274 billion block allocations for Programming Division of the Planning Commission and Tk 170 billion for the social safety-net programmes.

The total number of projects in the upcoming ADP is 1,150 wherein 983 are investment projects, 23 for feasibility study, 109 TA and 45 self-funding.

Former World Bank Lead Economist in Dhaka office Dr Zahid Hussain says since the ministries could apply discretionary powers for getting the funds from the massive block allocations, it could create a room for misuse of the public funds and taking "politically motivated" projects.

"In another way, since the funds are not specified yet for any specific projects, the government could be able to cut the ADP size at the end of the fiscal if agencies fail to implement those fully or if the revenue generation becomes low like in the previous years," he told the FE.

The NEC also approved a Tk 89.248 billion worth of development budget for the autonomous and semi-autonomous government bodies.
Planning Commission officials say those funds will ensure flexible financing for flagship initiatives, such as the expanded "Family Card" and "Farmer Card" programmes, alongside targeted social-development assistance.

While social-safety initiatives heavily influence the budgetary philosophy, the transport and communications sector retains the highest traditional sectoral funding at Tk 500.92 billion or 16.7 per cent of the total ADP.

The education sector follows closely with Tk 475.91 billion, while healthcare is set to receive Tk 355.35 billion and the power and energy sector has been allocated Tk 326.91 billion.

Among ministries and divisions, Local Government Division has been accorded the largest individual share, totalling Tk 337.35 billion.

Addressing longstanding implementation challenges, the NEC has directed all ministries and divisions to strictly prioritize projects that are scheduled to be completed by June 2027.

The Planning Ministry emphasizes that stricter oversight mechanisms and new criteria for appointing project directors will be deployed to optimize fiscal discipline and curb discretionary spending during the upcoming fiscal year.

Policy uncertainty remains one of the key barriers hindering both local and foreign direct investment, which are essential for economic growth and job creation in Bangladesh.

“The number one reason over the past few years has been policy uncertainty,” said Dhruv Sharma while delivering the keynote presentation titled ‘Bangladesh Development Update: Special Focus – A Business Environment that Delivers Jobs’.

“One cannot make a long-term decision about what to do with his or her firm without knowing the direction of policy,” he said, adding that the national election held last February had removed political uncertainty, which he described as another major barrier to attracting investment.

He noted that the high cost of capital, distorted tax incentives, lack of transparency, and supply chain and infrastructure challenges — including access to power, electricity and water — were among the other major obstacles.

Sharma said the government would release its five-year strategic framework soon, while the national budget is expected within the next couple of weeks.Bangladesh economic report

“So hopefully there will be some level of specificity regarding the direction in which the government wants to proceed,” he added while presenting the report at a dissemination event organised by the Policy Research Institute and the World Bank at PRI’s conference room in the capital.

The event was chaired by PRI Chairman Zaidi Sattar. Among others, Fahmida Khatun, Executive Director of the Centre for Policy Dialogue (CPD), TIM Nurul Kabir, Executive Director of the Foreign Investors' Chamber of Commerce and Industry (FICCI), and PRI Principal Economist Ashikur Rahman also spoke.

Describing fiscal and taxation policies as “unpredictable”, Mr Kabir said foreign investors wanted to see predictable long-term policies extending at least 10 years ahead to plan their business operations.

“When investors see a new policy being changed within two years, they lose confidence,” he said, explaining one of the key reasons behind the country’s low level of foreign direct investment.

Citing an example of declining investor confidence, he said foreign investors at headquarters often question why they should invest if the country itself does not fully understand its own growth potential.
According to the World Bank findings, key constraints to creating a business environment that delivers jobs include a heavy regulatory burden, with senior managers spending around 13 per cent of their time complying with regulations.

The report suggested smart deregulation, creating a level playing field, enabling private capital, and enhancing productivity for SMEs and informal firms as the way forward.

India has been buying Russian ​oil irrespective of US ‌sanctions waivers, Sujata Sharma, a joint secretary in the petroleum ​ministry, said on ​Monday.

“Regarding (the) American waiver on Russia, I would like to ​emphasise that we have ​been purchasing from Russia earlier ... I mean before waiver also, during ​waiver also, and ​now also,” she told a media ‌briefing.

“It is basically the commercial sense which should be there for us to purchase ... ​There ​is no shortage of crude. Enough crude has ​been tied up ​repeatedly ... and this, whatever waiver or no waiver, it will not ​affect,” she ​said.

The Indian rupee fell to an all-time low on Monday, as stubbornly high energy prices due to the Iran war sent global bond yields soaring, denting risk appetite and deepening economic headwinds confronting the world's third-largest crude importer.

The rupee fell nearly 0.3% to 96.2275 per dollar, eclipsing its previous all-time low of 96.1350. Asia's worst-performing currency of 2026 has fallen to record lows for five straight sessions.

Traders said the losses would have been steeper if not for likely dollar-selling intervention by the Reserve Bank of India.

In addition to market interventions, Indian policymakers have deployed rare regulatory curbs to support the rupee including, most recently, restrictions on most silver imports.

The currency has declined 5.5% since the Iran war began.

"With chances of oil staying higher for longer, we revise our forecast for further INR weakness to 96/USD by mid-2026 and 98/USD by end-2026," analysts at BofA Global Research said in a note.

"Growth risks dampen prospects for any reversal in equity inflows while low carry, high hedging costs, concerns around wider fiscal deficit and rate-hikes would reduce scope for debt flows."

Overseas investors have net sold over $23.5 billion of local stocks and bonds since March.

Regional stocks slumped and bonds from Tokyo to New York extended losses as rising energy prices from the ongoing Middle East war fanned inflation fears.

Efforts to end the Iran war appeared to have stalled following a drone strike at a nuclear power plant in the United Arab Emirates.

The pressure reflected on Indian assets as well, with the 10-year bond yield up 6 basis points to 7.12% while the benchmark equity index Nifty 50 slumped over 1%.

This year has so far brought no relief to listed multinational companies (MNCs), with earnings declining in the first quarter compared to the same period last year as inflation has not let up.

Persistently high inflation, squeezing consumer demand, and rising operating costs due to increases in the costs of raw materials and energy have complicated the business environment for foreign firms operating in Bangladesh.Business strategy consulting

This is the backdrop to subdued economic activity. Sluggishness in business has been deepening since the political changeover in August 2024, while inflationary pressure has continued to erode consumers' purchasing power and corporate profitability, according to market analysts.

During the January-March quarter, things turned worse amid geopolitical tensions surrounding the US-Israel conflict involving Iran, which disrupted global energy supply chains.

Inflation hovered around 9 per cent during the quarter, and analysts warned that price pressures may persist in the coming months due to continuing global uncertainties, supply disruptions and elevated import costs.

Of the 13 multinational firms listed on the stock market, 11 have so far disclosed first-quarter financial results for 2026. Only four of these companies posted profit growth, while four others reported profit declines ranging from 12 per cent to 34 per cent.

Two other companies remained in the red due to heavy debt burdens, and one slipped into fresh losses.Economic trend analysis

Aggregate profits of the 11 firms fell 6 per cent year-on-year to Tk 12.20 billion in January-March this year, while combined revenue declined 4 per cent year-on-year to Tk 103 billion, according to company disclosures.

Marico Bangladesh and Berger Paints follow the April-March accounting year.

Md Akramul Alam, head of research at Royal Capital, said that apart from macroeconomic challenges, tight monetary and fiscal measures adopted by the Bangladesh Bank following the political transition had dampened economic activities.

Private sector credit growth remained weak at around 6 per cent early this year, reflecting poor business confidence and tighter lending conditions.

Mir Ariful Islam, managing director and CEO of Sandhani Asset Management, said multinational companies failed to achieve meaningful revenue growth at a time when consumers had little disposable income.

"Consumers cut back on discretionary spending as essential goods became more expensive," he said, adding that many companies were unable to pass rising costs on to consumers due to weakened purchasing power.

As multinational firms operate across diverse sectors, the reasons behind profit erosion vary from company to company.Politics

Higher finance costs heavily affected firms carrying large debt burdens, while reduced government spending under the Annual Development Programme adversely affected cement manufacturers.

Singer Bangladesh, for example, saw its losses widen 66 per cent year-on-year to Tk 578 million in the January-March quarter due mainly to a 41 per cent surge in finance costs linked to heavy borrowings.

The company attributed the weak performance to sluggish demand in the consumer electronics market, where domestic sales were hurt by inflation, geopolitical tensions, the national election and an extended Eid holiday.

Singer is also facing intensifying competition from local manufacturers such as Walton Group and Vision Electronics, alongside imported brands.

BAT Bangladesh posted a 34 per cent decline in profit to Tk 2.10 billion as lower sales and rising finance costs hit earnings. Net revenue plunged 23 per cent during the quarter through March.

The cigarette maker's domestic sales dropped 21 per cent, while leaf exports fell 23 per cent in the first quarter this year compared to the same quarter last year.Financial literacy course

Meanwhile, reduced government spending under the Annual Development Programme adversely affected cement manufacturers, according to Mr Alam. The overall construction sector remained under pressure due to high inflation and weaker infrastructure activity during the quarter.

Heidelberg Materials Bangladesh slipped into a loss of Tk 50 million in the March quarter, compared with a profit of Tk 197 million a year earlier, after sales dropped 16 per cent.

The company said higher prices of key raw materials squeezed margins, while intense competition prevented it from fully passing additional costs on to customers.

Another cement maker, LafargeHolcim Bangladesh, reported a 19 per cent year-on-year decline in profit to Tk 1.12 billion in the quarter as sales fell 6 per cent amid elevated inflation, tighter private sector credit and slower public infrastructure spending.

Rising energy costs linked to the Middle East crisis and persistent inflationary pressures reduced profitability, although operational efficiency and strict cost discipline helped cement makers preserve margins.Economic trend analysis

"Despite a challenging landscape defined by persistent inflation and higher energy costs, we remain committed to resilience through innovation and operational excellence," said Iqbal Chowdhury, chief executive officer of LafargeHolcim.

Fast-moving consumer goods companies also struggled with low sales as households prioritised essential food spending over discretionary purchases.

Unilever Consumer Care reported a 12 per cent year-on-year decline in profit, while Reckitt Benckiser Bangladesh posted a 28 per cent drop in earnings during the quarter compared to the corresponding period last year.

Masud Khan, chairman of Unilever Consumer Care, attributed the weaker business performance to macroeconomic and seasonal factors.

"A depressed economy, the national election and Ramadan all contributed to pressure on sales and margins," he said.

However, Bangladesh's two leading telecom operators managed to post profit growth through cost efficiency and stronger data revenue.Business strategy consulting

Grameenphone recorded revenue of Tk 37.6 billion in the January-March quarter, down 2 per cent year-on-year. Despite lower revenue, net profit rose 4.4 per cent due to improved cost management and lower finance costs.

Yasir Azman, chief executive officer of Grameenphone, said the company maintained stable financial and operational performance despite external challenges.

Robi Axiata posted an 86 per cent surge in profits, supported by strong revenue growth and disciplined cost management.

Ziad Shatara, managing director and CEO of Robi, said higher revenue was driven by robust growth in data usage and increasing numbers of 4G users.

Linde Bangladesh also reported a 36 per cent growth in profit, driven by higher sales and an 18 per cent decline in operating expenses following the divestment of its subsidiary last year.

Similarly, Bata Shoe posted marginal profit growth, supported mainly by Eid-centric seasonal sales, although overall retail demand remained weak.

Mr Ariful Islam of Sandhani Asset Management warned that corporate profits could remain under pressure over the next two quarters due to the ongoing energy crisis stemming from Middle East tensions.Financial literacy course

"Macroeconomic improvement and restoration of consumer confidence are crucial for business recovery in the coming months," said Mr Alam of Royal Capital.

Bangladesh is preparing another round of tariff rationalisation in the next fiscal year, cutting or easing protective duties on more than 200 imported goods, as part of a wider effort to modernise the trade system ahead of graduation from least developed country (LDC) status.

Under this plan, customs duties, regulatory duties and supplementary duties of the items are likely to be rationalised, according to finance ministry officials.

Last year, the government proposed cuts on around 350 tariff lines in the first phase of a broader reform programme. The upcoming budget for fiscal year 2026-27 is expected to continue that process.

Officials said the changes are designed to bring the trade system closer to global standards and prepare for the post-LDC era starting from November this year.

“We are continuing the process of tariff rationalisation to make the structure more competitive, transparent and compliant with international trade obligations,” said a senior official involved in the process.

Preferring anonymity, he also said that despite the planned reductions, sensitive sectors would continue to receive a degree of protection to allow local industries time to adjust to increased competition from imports.

According to finance ministry officials, Bangladesh will face more pressure to reduce trade barriers after the LDC graduation, as the country will lose several preferential trade benefits under the current international arrangements.

They also said the reforms are being designed in consideration of Bangladesh’s commitments under the World Trade Organization and ongoing talks on future trade agreements.

Bangladesh currently has 7,611 tariff lines. In other words, the country has 7,611 different product categories for which import taxes are set separately.

Its binding commitments at the World Trade Organization (WTO) cover 955 tariff lines, including 763 agricultural and 192 non-agricultural products. Tariffs on 60 of these lines were higher than the bound rates set when Bangladesh joined the WTO in 1995.

The National Board of Revenue (NBR) began tariff rationalisation in phases in FY23, following recommendations from a committee formed in 2021 to prepare for LDC graduation challenges.

In the past two years, tariffs on 60 items have been brought within bound rates based on those recommendations.

A related study also called for a review of supplementary and regulatory duties, noting that Bangladesh would need to compete without relying on import protection after graduation.

The study found regulatory duties on 3,565 tariff lines, about 47 percent of the total, ranging from 3 to 35 percent. Nearly 95 percent of revenue from regulatory duties comes from just 250 tariff lines.

Based on the recommendations, the NBR scrapped regulatory duties on 282 items between FY23 and FY25 and removed minimum import prices on 50 items.

Speaking on the implications of the country’s scheduled LDC graduation this year, trade expert Mostafa Abid Khan said that oversight was limited while Bangladesh remained an LDC, but that would change.

“But once we graduate, we will come under surveillance.”

He said the transition would not automatically force Bangladesh to change its policies, but verification from trading partners would increase.

He pointed out two immediate risks. These are exceeding agreed tariff limits on a small number of products and maintaining minimum import prices.

“In some cases, not many, only for a limited number of products, our bound tariff rates have already been exceeded,” said Khan.

He said, “Another issue is the minimum import value or minimum import price system. That cannot be maintained. It will not be allowed.”

He said Bangladesh must gradually lower protection and prepare industries for competition under future trade agreements.

M Masrur Reaz, chairman and CEO of Policy Exchange Bangladesh, said Bangladesh’s post-LDC challenge will centre on a sharp loss of trade competitiveness with the ending of preferential market access.

He said the impact of higher tariffs will largely depend on productivity and efficiency in the economy.

“Competitiveness comes from productivity, lower costs of doing business, and logistics efficiency, including speed to market,” he noted, adding that Bangladesh is currently weak in both productivity and competitiveness.

He also warned that the pharmaceutical sector will come under pressure after the loss of TRIPS-related flexibilities, particularly due to limited API production, weak backward linkages and patent constraints, which could push up medicine costs.

Reaz stressed that long-term reforms are essential, especially investment in skills, technology adoption, logistics and trade facilitation.

“Ideally, these reforms should have started five years ago, but they did not. We are still ignoring them. But this is a golden opportunity, and I would say almost the last opportunity.”

He said reforms should begin gradually from the next budget cycle, rather than being delayed or introduced abruptly after graduation.

Abdur Razzaque, chairman of Research and Policy Integration for Development (RAPID), said that the timing of graduation, whether soon or later, does not change the need for preparation.

“Whether LDC graduation happens in November or three years later, the government should identify the programmes needed and allocate resources accordingly,” he said.

Like Reaz, Razzaque highlighted the need for infrastructure and logistics reforms.

“Important infrastructure will be needed, and we must clearly define what is required. Implementation of the logistics policy will be essential, with clear responsibilities and timelines,” he added.

Calling for a structured approach, he said the transition should be guided by clear milestones.

“There should be a roadmap for what we want to achieve in the next one year, and in the next two years. A priority list has been prepared, and if implemented effectively, it could be a positive step,” he added.

New Zealand will continue duty-free and preferential market access for Bangladeshi goods after the country graduates from the least developed country (LDC) category, David Pine, New Zealand’s non-resident high commissioner in Dhaka, said yesterday.

New Zealand has been giving special importance to ensuring market access for Bangladeshi goods after the graduation, he said at a meeting with Commerce Minister Khandakar Abdul Muktadir at the secretariat in Dhaka, according to a ministry press statement.

He said that given the current global scenario, export market diversification is important, but so is diversifying import sources, adding that both countries stand to benefit from expanded bilateral trade.

New Zealand goods, he added, are known for reliability, high standards, food safety, and being free of genetically modified organisms, and the country is interested in establishing a stable, long-term trade structure.

Bangladesh exported $99.73 million worth of goods to New Zealand in fiscal year 2024-25, around 90 percent of which were garment items, according to the Export Promotion Bureau. In the July–April period of the current fiscal year, the figure stood at $78.93 million.

Both sides also expressed interest in exploring a trade deal such as a free trade agreement, to boost investment and bilateral trade, states the ministry statement.

Meanwhile, minister Muktadir said employment generation, and rapid growth of investment are important for Bangladesh’s sustainable LDC graduation.

He also noted that it is important to maintain the competitiveness of garment exports and ensure preferential market access for the country’s major apparel items.

The minister also asked the high commissioner to encourage entrepreneurs from his country to choose Bangladesh as an investment destination, as the Bangladesh government has taken many measures to ease doing business.

Bangladesh is scheduled to graduate from the LDC category on November 24 this year, though it has applied to the UN for a three-year deferment to 2029.

Some countries such as the UK, Canada, and Australia have already assured that they will continue preferential market access for Bangladeshi goods even after LDC graduation.

At the same time, Bangladesh has also been lobbying some of its trading partners to sign trade deals to retain duty-free market access in the post-LDC period.

Bangladesh risks losing $17.5 billion worth of exports annually after LDC graduation, as nearly 75 percent of its exports are LDC-induced.

The government is planning to form a capital market reform commission to bring transparency and restore investor confidence, according to officials at the Ministry of Finance.

The decision was taken at a recent budget-related meeting. It forms part of the ruling BNP’s broader commitment to reviving the capital market, which featured in the party’s election manifesto.

Ministry officials said the commission will work toward overall market reform, with the government also planning to focus on building a stronger bond and equity market.

Besides, the government is also planning to take steps towards ensuring the use of blockchain technology, create an investment gateway for non-resident Bangladeshis, and attract greater foreign investment.

The meeting was informed that Dhaka Stock Exchange’s (DSE) market capitalisation has dropped by Tk 33,000 crore, or 4.4 percent, between January 2024 and February 2026.

The bourse’s benchmark index, the DSEX, fell from 6,153 to 5,600 points in the same period.

The move follows reform efforts under the interim government, which had formed a five-member taskforce to recommend changes to the stock market.

The taskforce, after extensive stakeholder consultation, proposed amendments to several securities rules, many of which the Bangladesh Securities and Exchange Commission (BSEC) has since adopted.

In a successor note before leaving office, former finance adviser Salehuddin Ahmed said the BSEC was restructured after the interim government assumed office, and an external investigation committee was formed to look into 12 irregularities from the previous regime.

A taskforce was also formed that worked on reforming three major rules regarding margin loans, mutual funds and public offering issuance, he added.

Apart from these, another committee was formed to strengthen the BSEC and improve the capital market which also submitted a report including recommendations.

The recommendations were sent to relevant ministries to implement, Ahmed added in the note.