Micro, small and medium enterprises (MSMEs) account for nearly 99 percent of Bangladesh’s 1.17 crore industrial establishments and employ more than three crore people, underlining their crucial role in the country’s economy.

The sector contributes around 30 percent to the economy and provides nearly 85 percent of industrial employment, according to the SME Foundation’s analysis of the Bangladesh Bureau of Statistics’ Economic Census 2024. The analysis was released on the occasion of International MSME Day.

The SME Foundation said the cottage, micro, small and medium enterprise sector remains a key driver of employment and socio-economic development, particularly in a country with a large population and limited resources.

Since its establishment under the industries ministry in 2006, the foundation has supported about 22 lakh small and medium entrepreneurs through various programmes, with women accounting for 60 percent of the beneficiaries.

FY27 budget prioritises MSME development with SME Foundation service platforms, cluster mapping updates, YESS programme, and broad support including mentorship, training, credit access, exports, branding, and market expansion for entrepreneurs
Speaking at a programme marking International MSME Day at the Bangladesh Investment Development Authority auditorium in Agargaon yesterday, Industries, Commerce, and Textiles and Jute Minister Khandakar Abdul Muktadir said Bangladesh still lags behind many regional countries in terms of MSMEs’ contribution to GDP.

“In countries like Vietnam, Cambodia, and even India and Pakistan, MSMEs contribute much more to GDP than they do in Bangladesh. We want to raise their contribution,” he added.

Muktadir said the rate of new entrepreneur creation had declined sharply over the past 12 to 15 years, contributing to rising income inequality.

“Those who already owned industries and factories became bigger, while fewer new entrepreneurs were able to emerge. One of the main reasons was the shortage of gas,” he added. He also said economic opportunities had become concentrated in the hands of a small group.

“This has kept economic activity concentrated among a few people. It is one of the main causes of rising inequality, and unfortunately, we followed that path. As a result, income inequality is much higher today than it was 15 to 20 years ago,” he added.

The minister stressed that strengthening the MSME sector is essential for keeping the economy dynamic and inclusive.

To promote entrepreneurship, the government is preparing a comprehensive plan to support new entrepreneurs through development and mentorship programmes, he added.

The government is also launching mentorship programmes and has started initiatives to establish new industrial parks through the Bangladesh Small and Cottage Industries Corporation in Pabna, Sylhet and Saidpur in Nilphamari.

It also plans feasibility studies for additional industrial parks where existing ones are fully occupied. Addressing the gas crisis, Muktadir said the government would prioritise industries with lower energy consumption while continuing efforts to ease gas shortages affecting factories.

He added that the national budget for FY27 gives special importance to MSME development and creating new entrepreneurs.

The budget includes plans to establish service platforms through the SME Foundation, update SME cluster mapping, and implement the Youth Entrepreneurship & Startups for Students (YESS) programme.

It also includes targeted support for new entrepreneurs through mentorship, technical training, database development, demand-based credit, export support, branding and design assistance, and improved access to local and international markets.

WOMEN REMAIN UNDERREPRESENTED

Nasreen Fatema Awal, president of the Women Entrepreneurs Association of Bangladesh, highlighted the wide gender gap in entrepreneurship.

She said Bangladesh has around one crore male entrepreneurs, compared with only about 7 lakh women entrepreneurs.

“This gap is not just a statistic; it reflects the untapped potential of our economy,” she added.

Nasreen also said that increasing the number of women entrepreneurs would create more jobs, raise household incomes, improve children’s education and healthcare, and make economic growth more inclusive.

Anwar Hossain Chowdhury, managing director of SME Foundation, said more than 250,000 entrepreneurs have received direct assistance from the organisation since its inception.

Since 2009, the foundation has disbursed around Tk 1,300 crore in loans to nearly 15,000 entrepreneurs through its credit wholesaling programme. At least 25 percent of the recipients are women.

He said the foundation continues to promote entrepreneurship, strengthen business capacity, encourage technology adoption, expand market access, and advocate policy reforms to make Bangladesh’s MSME sector more competitive.

There has been a serious concern about economic growth because of the liquidity crisis, huge volumes of bad and doubtful loans, inadequate revenue collection, pressure on foreign debt repayments, declining remittances from non-resident Bangladeshis and uncertainty over export growth. Some of these challenges are beyond our control, while others, including revenue collection, debt recovery and liquidity management, can certainly be addressed through appropriate policy measures.

Bad and doubtful loans reported so far need to be categorised in a dispassionate and objective manner. A large portion of these outstanding loans resulted from fraudulent lending, with funds siphoned out of the financial sector. These are criminal offences and should be dealt with through legal action. Some loans have become bad because of adverse economic conditions, including slower imports caused by the foreign currency crisis, the wars in the Middle East and Ukraine, inadequate power supply to industrial units, rising fuel prices and production costs, weaker exports and other related factors. There is also another category comprising wilful and habitual defaulters. Even in these difficult circumstances, many borrowers continue to repay their loans regularly, demonstrating their commitment and honest intention.

Loans that have become bad because of economic factors beyond borrowers’ control warrant rehabilitation schemes in both the short and long term. Such support should follow careful review on a case-by-case basis, taking industry-specific issues into account. Working capital financing is another critical requirement for boosting production and, where applicable, increasing exports.

Unfortunately, since independence, Bangladesh has seen the persistent presence of habitual and wilful defaulters, with or without political patronage. This has seriously undermined the repayment culture, encouraged corruption and ultimately weakened economic growth. This issue should be addressed firmly, with no further incentives or concessions for wilful defaulters. Strict measures could include restrictions on business expansion, overseas travel by family members, children’s overseas education, infrastructure development and donations to institutions used to fulfil political ambitions. It is unfortunate that many wilful defaulters have never been brought to account, while a large number have escaped responsibility one way or another. This should not be allowed to continue.

Where appropriate, legal action should be initiated without further delay. Inter-company loans are another important area requiring close review. It is necessary to determine whether such funds have been extended to subsidiaries and associated entities and whether those entities have the capacity to repay them on time. It is well established that borrowers often overstate the value of their personal assets when securing loans. Subsequently, those assets may be diverted or disposed of, with or without the knowledge of banks or financial institutions. As a result, loans become effectively unsecured, exposing banks to greater risks in recovering overdue advances.

Increasing revenue collection is equally important. For many years, Bangladesh has failed to raise revenue to the expected level, leaving its tax-to-GDP ratio below that of neighbouring countries and comparable economies. Weak measures by the National Board of Revenue (NBR), inadequate digitalisation and corruption remain major obstacles. Required tax payments cannot be expected solely on a voluntary basis. Greater emphasis should be placed on credible financial statements, effective tax audits as practised in many countries, third-party verification of key financial information, adoption of a faceless assessment system and stronger action against corruption. Good governance is equally important, as poor governance encourages corruption, which ultimately undermines economic growth.

Bangladesh must overcome these challenges. Otherwise, economic growth will be seriously affected at a time when the world is already facing severe pressures from wars and continuing economic uncertainty.

Few phrases have dominated public discourse in Bangladesh over the past several years as much as these two words. They have haunted households and policymakers alike.

The impact is felt daily. Travelling a short distance by rickshaw in Dhaka for Tk 10 is a thing of the past. A bundle of leafy vegetables for Tk 10 requires hard bargaining with the floating vendor in neighbourhood alleys. Prices have risen so much that Tk 100 vanishes into a vegetable bag soon after it comes out of the wallet.

For a four-member family, keeping weekly bills for vegetables, eggs and other essentials within Tk 500 has become nearly impossible. That note now buys far less than it did two years ago. And there is no sign of prices cooling.

The Bangladesh Bank (BB) has maintained a contractionary monetary policy stance since the first half of fiscal year 2023-24 to make money more expensive and tame excess demand to curb inflation. It started raising the policy rate, or repo rate – at which it lends to commercial banks – in May 2022 and hiked it to 10 percent in October 2024. The rate is yet to come down.

Yet inflation – a measure of the increase in the prices of a basket of goods and services purchased by an average consumer – remains stubborn.

Month-on-month inflation stood at 9.42 percent at the end of May, with the 12-month average above 8.6 percent, indicating that overall inflation is likely to hover well above the BB’s target of 7 percent at the end of June this year.

This would be at least the sixth consecutive year inflation has exceeded the central bank’s targets. In FY25, average inflation hit 10 percent, more than 2 percentage points above target. The year before, it was 9.73 percent in June 2024, 2.23 percentage points above the BB’s goal.

Similarly, actual private-sector credit growth fell short of its targets set in the successive monetary policies.

In April 2026, it expanded by only 4.75 percent year-on-year, against a BB target of 8.5 percent by end-June. In April 2025, private-sector credit growth was 7.50 percent.

Public-sector credit growth, by contrast, exceeded its projected level.

The question is, why? What’s wrong with monetary policy that has failed to contain spiralling prices meaningfully, reverse sluggish demand and accelerate economic activity?

In its recent monetary policy statements, the BB attributed persistently high inflation to a combination of factors – the Russia-Ukraine war and conflicts in the Middle East, a more than 40 percent depreciation of the taka against the US dollar, and volatility in global commodity prices.

Domestically, years of a lending rate cap at 9 percent kept real interest rates negative for a while, repeated fuel and energy price hikes led to higher production and transportation costs, and government continued to borrow heavily to finance budget deficits.

This coincided with domestic production and supply disruptions caused by recurrent floods and rising inflation expectations, causing prices to trend upward.

FISCAL AND MONETARY FAILURES

Birupaksha Paul, professor of economics at the State University of New York at Cortland and a former chief economist at the BB, argues inflation has remained high “because of both fiscal and monetary failures.”

“The government has increased its borrowings to one of the highest levels, which is inflationary. On the other hand, the central bank’s liquidity support to cash-hungry banks is also inflationary. These two channels are thwarting monetary tightening with high policy rates,” he said.

The BB has so far provided Tk 75,903 crore in emergency liquidity assistance to banks facing cash shortages as of June 6, Finance Minister Amir Khosru Mahmud Chowdhury told parliament last week.

Meanwhile, the government’s net borrowing from the banking system surged more than threefold to Tk 1,04,410 crore during July–April of FY26, from Tk 30,405 crore a year earlier.

Birupaksha said high interest rates have also contributed to limited credit growth, while its weakness also stems from institutional failures such as non-inclusive politics, extortion by political thugs, and the poor law and order situation.

“The government failed to stimulate business confidence by adequately supporting the closed or vandalised mills and factories. It’s a new type of fiscal-monetary trap that adds fuel to inflation and delivers a damper to private credit growth,” he said.

INFLATION IS NOT DEMAND-DRIVEN

Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD), has a different reading.

She argues monetary policy has had limited success in achieving its key objectives for several reasons, primarily because inflation has not been driven by demand.

“Supply-side disruptions, exchange rate depreciation, higher import costs, and inefficiencies in domestic markets have all played a major role. Monetary policy, on its own, cannot easily solve this,” said Fahmida, also a director on the BB’s board.

For private-sector credit, she said high borrowing costs are only a part of the story. Weak investor confidence, energy shortages and policy uncertainty are also responsible.

“That is why we have seen earlier that when companies are reluctant to invest due to the lack of an enabling environment, simply adjusting interest rates is unlikely to generate the desired increase in private credit,” she said.

According to her, monetary policy should be supported by prudent fiscal policy and broader structural reforms that improve the investment climate, ease supply constraints, and strengthen market competition. “Without such policy coordination, bringing inflation under control while also stimulating investment and growth will remain a difficult balancing act.”

UNFAVOURABLE CIRCUMSTANCES

Deen Islam, professor of economics at Dhaka University, said the latest monetary policies of the BB failed to achieve their objectives not only due to the inadequacy of the policy rate but also owing to unfavourable circumstances.

“It should be noted that the rise in prices was caused mostly by supply-side factors, higher import prices, exchange rate effects, and market rigidity, whereas the banking sector was too weak to transmit policy signals effectively,” he said.

At the same time, private credit remained subdued because both banks and borrowers became cautious.

“Therefore, the next monetary policy should not only announce a rate stance; it should explain the transmission strategy: how BB will anchor inflation expectations, restore credit discipline, support productive lending, coordinate with fiscal policy, and rebuild confidence in the banking system,” he added.

A tax relief measure on mobile phone imports is set to expire next week with no extension in the proposed budget, stoking fears of further grey market expansion as the National Equipment Identity Register (NEIR) remains unimplemented.

Grey market handsets already account for more than 60 percent of Bangladesh’s smartphone market, according to the Mobile Phone Industry Owners’ Association of Bangladesh, depriving the government of tax revenue and undercutting legitimate importers and local assemblers.
Industry insiders fear the withdrawal of the tax break without implementing NEIR could undermine efforts to curb illegal handset imports.The tax relief was introduced on January 13 after protests by mobile phone importers against the government’s plan to roll out NEIR. During the unrest, roads were blocked, and installations at the Bangladesh Telecommunication Regulatory Commission (BTRC) office were vandalised.To ease tensions, customs duty on imported finished handsets was cut to 10 percent from 25 percent, bringing total tax incidence down to 43.43 percent from 61.80 percent. Duty on components and raw materials for local assemblers was also lowered, to 5 percent from 10 percent.“The tax reduction was introduced to support the transition toward NEIR implementation,” an official of the National Board of Revenue told The Daily Star, requesting anonymity. “If NEIR is implemented, the tax cut may be reconsidered.”NEIR identifies and blocks stolen, cloned or unauthorised devices using each handset’s unique 15-digit IMEI code. It remained stalled under the interim government and has made no progress under the BNP-led administration, which took office in February.

BTRC Chairman Md Emdad ul Bari said the regulator plans to raise the tax issue with the government, as lower taxation remains important for controlling the grey market.

On the stalled rollout, he said implementation must be gradual, given the technical complexity involved. “This is not something that can be enforced overnight. It requires technical readiness, market alignment, and consumer awareness.”

On whether prices would rise once the relief expires, Bari said the impact may not be immediate, noting they did not fall significantly when taxes were cut in January.

“The market depends on multiple factors, including imports, grey market activity, local manufacturing, and assembly. So the discontinuation of the tax reduction may not immediately affect retail prices,” he said.

The NEIR project has been delayed for years. BTRC signed an agreement with Synesis-Radisson-Computer World for the system in November 2020 at a cost of Tk 29 crore, with a trial run beginning in July 2021.

During the trial, authorities found millions of phones in use were unauthorised and that hundreds of feature phones shared identical IMEI numbers -- complications that repeatedly pushed back full enforcement.

Mohammed Mesbah Uddin, chief marketing officer of Fair Group, which is preparing to resume Samsung handset production this year, said NEIR is now critical for local manufacturing.

“To protect investors, support local manufacturing, and curb illegal imports, NEIR implementation is no longer optional -- it is necessary,” he said.

The Dhaka Stock Exchange (DSE) closed the week on a mixed note today (25 June), with the benchmark DSEX index posting a net decline of 9 points over five trading sessions.

The market gained ground in three of the five sessions, accumulating 98.62 points, but losses of 107.19 points in the remaining two days proved heavier, dragging the index into negative territory for the week.

Stocks extended their rally into a third consecutive session yesterday, with the DSEX rising 36 points as turnover climbed 18% to Tk1,110.74 crore.

Trading opened on a positive note at 10am, with the benchmark indices advancing from the outset as a majority of stocks gained in value. The upward momentum held throughout the session, sustaining gains until the market closed at 2pm. Of the 395 issues traded, 273 advanced, 68 declined, and 54 remained unchanged.

Pragati Insurance led the gainers, with its share price rising 9.90% to Tk83.2. Sonargaon Textile followed with a 9.58% gain to Tk96, while Green Delta Mutual Fund added 8.57% to close at Tk3.8.

On the losing side, Beximco Ltd topped the decliners, shedding 9.84% to Tk28.4. International Leasing and Premier Leasing both fell 8.33%, closing at Tk1.1 and Tk1.2 respectively.

EBL Securities, in its daily market commentary, said the benchmark index ended the week marginally lower despite a late recovery, as early-week profit-taking following the post-budget rally outweighed a subsequent rebound driven by bargain hunting in undervalued stocks.

The brokerage noted that the market opened on a subdued note, with investors locking in gains from recently appreciated stocks amid uncertainty over near-term policy direction.

Momentum returned from midweek, however, as bargain hunters moved in to accumulate equities, a trend supported by the Finance Minister's reaffirmation of the government's commitment to long-term capital market development.

The recovery extended through the latter part of the week, aided by easing concerns over the Strait of Hormuz and expectations of market-friendly policy developments, allowing the index to claw back most of its earlier losses. The appeal of tax rebate benefits also encouraged fresh investor exposure to the capital market, the brokerage added.

US President Donald Trump on Friday threatened to slap a 100 percent tariff on European countries that impose a digital services tax, adding that existing trade deals would be scrapped.

“Any Country that imposes such a Tax will immediately be met with a 100% TARIFF on any and all Goods sent to the United States of America,” Trump said in a post on his Truth Social platform.

He added that “this TARIFF will supersede Trade Deals made with the Country, whether implemented, signed, or not.”

The move comes just a day after EU countries gave the green light to a trade agreement negotiated last year with the United States, which caps taxes on European imports at 15 percent.

Reacting to Trump’s fresh threats, the European Union on Friday vowed to “respond swiftly and decisively to defend its rights and regulatory autonomy,” according to a European Commission spokesman.

Trump has repeatedly made it clear he wants to tackle so-called non-tariff barriers to trade -- and strict European regulations on technology and environment are in his crosshairs.

With most tech giants based in the United States, Trump views digital taxes as a hindrance to US exports.

Earlier this month, Trump threatened to impose a 100 percent tariff on French wine and champagne unless Paris removed its digital services tax on technology firms.

France imposed in 2019 a three-percent levy on the revenues earned by technology firms, including US giants Facebook, Amazon, Apple and Google’s parent Alphabet, within the country’s borders.

South Korea’s Samsung Electronics is expected to announce a record domestic investment plan next week, according to local media reports, in a massive bet on AI-driven semiconductor demand.

The 1,000 trillion won ($650 billion) package, to be announced by the chip giant and the government, is in line with President Lee Jae Myung’s agenda for development in regions outside of the capital Seoul.
Lee will host a “National Mega Project” briefing on Monday, where Samsung will unveil major long-term investment plans, the reports said.Rival chipmaker SK hynix is also expected to announce spending plans at the same event. Both companies are top producers of advanced memory chips used in the data centres that train and run artificial intelligence tools like chatbots and image generators.The AI boom has sent the firms’ profits and share prices skyrocketing, with Samsung recently agreeing a bonus deal with its workers’ union to avert a major strike.

The Samsung investment package is expected to include about 300 trillion won for a new semiconductor complex in southwest South Korea -- one of the regions that has fallen behind the capital in tech investment.

Some 60 trillion won would likely be earmarked for six chip manufacturing plants at Yongin in the south, and more than 350 trillion won for AI infrastructure including data centres, according to Maeil Business Newspaper.

The proposed 10-year spending package would be the largest investment commitment ever announced by a South Korean company.

Lee met Samsung chairman Lee Jae-yong in Seoul this week to discuss semiconductor investments, according to news reports.

The president also reportedly met SK Group Chairman Chey Tae-won last week.

Samsung Electronics last year posted an operating profit of 43.6 trillion won -- a 33 percent increase year-on-year.

The company is projected to achieve an operating profit in the mid-to-high 300 trillion won range this year, and 550 trillion won next year.

Kim Yong-beom, the presidential chief of staff for policy, said Wednesday that discussions on the planned semiconductor project in Yongin were in their final stages.

“Once everything is confirmed, we plan to bring together the companies and relevant ministries to explain the plan to the public at once,” Kim said.

Gold rose on Friday as the dollar weakened and expectations of US interest rate hikes eased slightly following inflation data, though prices were still on track for a fourth consecutive weekly decline.

Spot gold was up 1.3 percent at $4,077.64 per ounce by 1:35 p.m. EDT (1735 GMT).

US gold futures for August delivery settled 1.2 percent higher at $4,096.30 per ounce. The US dollar eased from recent highs after the release of the Fed’s preferred inflation gauge on Thursday.

The US Personal Consumption Expenditures Price Index surged 4.1 percent in the 12 months through May, matching economists’ forecasts in a Reuters poll. Traders are pricing in about a 59 percent chance of a US rate hike in September, lower than an earlier expectation of 64 percent, according to CME Group’s FedWatch Tool.

Gold is seeing a modest rebound after coming under selling pressure earlier this week, said Jim Wyckoff, a market analyst at American Gold Exchange.

Higher interest rates and tighter monetary policy reduce the appeal of non-yielding bullion, as they tend to boost bond yields and increase returns on interest-bearing assets.

Spot gold hit more than a seven-month low earlier this week and prices were down 2.1 percent for the week. TD Securities said in a note that given gold’s inverse relationship with both higher oil prices and a stronger US dollar, sustained strength in energy markets could put further downward pressure on the precious metal in the months ahead.

Gold started trading at a premium in India this week for the first time in a month and a half, as a price correction lifted buying, while demand stayed subdued in China, the top consumer.

Bangladesh's gross foreign-exchange reserves crossed US$36-billion mark Wednesday with an aid dollop of nearly $320 million from Japan International Cooperation Agency (JICA).Bangladesh Market Analysis
FE

The country's gross forex reserves rose to $36.10 billion on the day from $35.80 billion of the previous day with disbursement of the funds by JICA, officials said.

JICA is a government agency responsible for delivering the bulk of Japan's Official Development Assistance (ODA).

As per the International Monetary Fund (IMF)'s Balance of Payments International Investment Poisson Manual-six edition, generally known as BMP6, the reserves in US dollar rose to $31.55 billion during the period under review from $31.24 billion, according to the central bank's latest data.

"Our gross forex reserves may touch $37 billion by the end of June if the government secures more funds from overseas sources," a top central banker told The Financial Express (FE) while replying to a query.

More foreign funds are expected to be included in the country's forex reserves shortly, the central banker hints.

Meanwhile, the World Bank has already approved $450 million worth of loan to help Bangladesh strengthen the foundations for a stronger banking sector for the revival of the economic growth and job creation.

Earlier, on June 14, the Asian Development Bank (ADB) disbursed more than $1.0 billion in budget support to Bangladesh.

Central bank officials, however, say stronger remittance inflows and lower import-payment obligations have also contributed to the improvement in the country's foreign-exchange-reserves position.

The purchasing of US dollars from commercial banks by the central bank has also helped push up the forex reserves recently, they add.

The central bank of Bangladesh has so far bought $6.42 billion from banks directly since July 13 last under the prevailing free-floating exchange-rate arrangement.

Bangladesh implemented just 48.23 percent of its Annual Development Programme (ADP) during the first 11 months of the outgoing fiscal year, marking the lowest execution rate in 16 years.

Data released on Thursday by the planning ministry’s Implementation Monitoring and Evaluation Division (IMED) showed that the Ministry of Science and Technology recorded the highest spending against its allocation between July and May of fiscal year 2025-26.

The Health Services Division posted the worst performance.

The interim government had initially targeted ADP spending of Tk 2.39 trillion for the fiscal year.

However, amid sluggish implementation, the National Economic Council (NEC) cut the programme by Tk 300 billion on Jan 12, reducing it to Tk 2.09 trillion.

The latest figures show total expenditure of Tk 1.08 trillion across all development projects during the first 11 months.

In the same period of fiscal year 2024-25, spending stood at Tk 1.11 trillion, with an implementation rate of 49.08 percent.

An analysis of IMED data suggests that the slowdown in ADP execution that followed the 2024 July Uprising, deteriorating law-and-order conditions and administrative reshuffles has yet to ease.

Government ministries and divisions spent Tk 142.48 billion in May alone, down from Tk 175.81 billion in May of the previous fiscal year.

The Awami League government had originally approved an ADP allocation of Tk 2.78 trillion for fiscal year 2024-25.

The interim government later reduced it to Tk 2.26 trillion, of which Tk 1.53 trillion was spent, yielding an implementation rate of 67.85 percent—the lowest in two decades.

After taking office following the student-led mass uprising that toppled the Awami League administration, the interim government prioritised selected projects and scaled back funding for many initiatives approved under the previous government, leaving numerous projects stalled.

ADP implementation rates during the first 11 months of the previous four fiscal years were 64.84 percent, 61.73 percent, 57.54 percent and 49.08 percent, respectively.

IMED records dating back to fiscal year 2010-11 show that this year’s performance is the weakest in 16 years.

Over the previous 15 years, implementation rates generally ranged between 65 percent and 70 percent.

Among the 15 ministries and divisions receiving the largest allocations, the average implementation rate was 59.09 percent. Together they accounted for 70.97 percent of the revised ADP.

Science and technology led with 83.33 percent, followed by energy and mineral resources at 79.48 percent and agriculture at 68.83 percent.

At the bottom was the Health Services Division, which spent only 22.15 percent of its allocation.

Bangladesh’s apparel exports to European Union (EU) took a severe hit in the first four months of 2026, recording the steepest decline among major global suppliers amid a broader market contraction, according to the latest Eurostat data.

Bangladesh underperformed compared to its key competitors, suffering from a dual blow of eroding export volumes and falling unit prices, said Mohiuddin Rubel, Former Director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Additional Managing Director of Denim Expert Ltd.

According to data presented in the document “EU export document”, total EU apparel imports from across the globe dropped by 10.42 percent year-on-year during the January–April 2026 period, falling to €27.77 billion from €31.00 billion in the corresponding period of 2025.

During this timeframe, Bangladesh’s exports to the EU plummeted by 19.33 percent, dropping to €6.09 billion from €7.54 billion.

Industry experts pointed out that unlike other major competitors who managed to hold ground on either price or volume, Bangladesh lost on both fronts simultaneously. The country’s export volume fell by 9.91 percent to 435.97 million kg, while its average unit price slid sharply by 10.45 percent to €13.96 per kg.

The single-month data for April 2026 painted an even bleaker picture for the country, showing a sharp 19.53 percent year-on-year drop in value, alongside a 14.63 percent decline in volume and a 5.74 percent dip in unit prices.

Mixed Fortunes for Global Competitors

While the overall European market slowed down due to a 5.48 percent drop in global import volumes and a 5.22 percent decline in average unit prices, Bangladesh’s rival manufacturing hubs showed highly varied strategies and outcomes:

China: The top clothing supplier posted the mildest value decline of just 4.70 percent (€7.95 billion) and emerged as the only major exporter to increase its shipping volume, which grew 3.25 percent to 408.91 million kg. This was achieved through aggressive pricing, with its unit price dropping 7.70 percent to €19.44 per kg.

Vietnam: Exhibited remarkable resilience, with its export value dipping a marginal 0.70 percent to €1.37 billion. Despite a 7.11 percent contraction in shipment volume, Vietnam managed to defend its market position through premium pricing, securing a 6.90 percent increase in unit prices to €29.43 per kg.

Turkey and India: Turkey saw a volume-led export value decline of 16.60 percent to €2.42 billion, even as its unit prices rose marginally by 1.49 percent. India registered a 12.10 percent contraction in value to €1.64 billion, hit by drops in both volume (-7.70 percent) and price (-4.76 percent).

Pakistan: Recorded an unusual market dynamic where its export volume actually rose by 5.86 percent (108.53 million kg), but its overall earnings plummeted by 17.94 percent to €1.09 billion due to a massive 22.49 percent collapse in unit prices—the steepest price drop among all monitored nations.

The Eurostat data highlighted that Bangladesh’s double-digit decline represents a distinct vulnerability in the European market. While China opted for volume growth via price cuts and Vietnam successfully prioritized value over volume, Bangladesh was uniquely caught in a downward spiral on both metrics.

Local industry insiders stressed that the dual erosion of price and volume on a comparable scale was not observed in any other major garment-exporting nation, signaling an urgent need for Bangladeshi exporters to re-evaluate pricing strategies, boost competitiveness, and diversify into higher-value apparel segments.

Despite 11 months having passed in the current fiscal year, ministries and divisions have failed to spend even half of the allocation under the Annual Development Programme (ADP), shows the latest data from the Implementation Monitoring and Evaluation Division (IMED).

Data published today (25 June) showed that only Tk1,00,763 crore was spent during the July-May period of FY2025-26, representing 48.23% of the revised ADP allocation.

The government had allocated Tk2,08,935.53 crore under the revised ADP for FY26, including funding from development partners and implementing agencies.

Also, the expenditure during the first 11 months of the fiscal year was Tk10,242 crore lower than the corresponding period of the previous fiscal year. In FY25, ADP implementation reached Tk1,11,005.73 crore (49%) during the July-May period.

The slowdown is even more pronounced compared to FY24, when development spending stood at Tk1,46,375.50 crore (57.54%) in the first 11 months of the fiscal year.

IMED officials said the previous fiscal year did not see a normal environment for development spending. Following the fall of the Awami League government in August 2024, administrative instability emerged, while many project directors and contractors left.

They said the situation continued into the current year. With the government focused on the election, its activities became largely polls-oriented, slowing the pace of development work.

After taking office, the new government began reviewing projects. A screening process was launched to identify projects that were not aligned with their election manifesto. Officials said the review of around 1,300 projects has also slowed implementation.

Mustafa K Mujeri, former director general of BIDS, said the low implementation rate this fiscal year was expected given the exceptional circumstances.

"Most of the government's attention was focused on the election and carrying out reforms. As a result, development projects could not receive the same level of priority," he said.

The economist said past practice showed attempts to boost spending at the end of the fiscal year often created risks of wasteful expenditure.

"Unnecessary or rushed spending may create further problems in the future. The focus should remain on proper planning and quality implementation," he added.

Spending by ministries, divisions

Data shows expenditure during July-May from government funds reached Tk59,789 crore, or 46.71% of the allocation. Spending from foreign loans and grants stood at Tk35,510 crore, or 49.32%, while agencies spent Tk5,465 crore from their own funds.

Only 15 of the 57 ministries and divisions managed to utilise at least half of their allocations. These 15 ministries and divisions accounted for 70.97% of the total ADP allocation, making their performance crucial to overall implementation.

Among the largest recipients, the Health Services Division posted the weakest performance, spending just 25.87% of its allocation. The Ministry of Primary and Mass Education utilised 35.18%, while the Ministry of Railways spent 42.46%.

The Technical and Madrasa Education Division implemented 44.42%, the Secondary and Higher Education Division 47.35%, and the Road Transport and Highways Division 46.23%. The Ministry of Housing and Public Works achieved a slightly better rate of 50.25%.

Bangladesh has secured about $3.11 billion in emergency budget support from four development partners, including the World Bank and the Asian Development Bank, this month to cushion the economic fallout from the US and Israel’s war on Iran.

Officials said the assistance, equivalent to about Tk 38,132 crore at the prevailing exchange rate, would help ease budgetary pressures, strengthen foreign exchange reserves and finance higher import costs stemming from the conflict.
The WB approved $450 million on June 24 to support banking sector reforms. Yesterday, it approved another $1.1 billion for food security and energy-related emergency financing, bringing its total budget support this month to $1.54 billion.Earlier, the ADB approved $1 billion, the Japan International Cooperation Agency (JICA) provided $314 million, and the Asian Infrastructure Investment Bank (AIIB) cleared $250 million.The war in the Middle East broke shortly after the current government assumed office in February, sending global prices of fuel, liquefied natural gas, fertiliser and other essential commodities sharply higher while disrupting supplies.International financial institutions, including the IMF, WB and ADB, warned that import-dependent economies such as Bangladesh would face mounting external pressures.In response, the government formed a committee in March to assess the likely economic impact of the conflict. Based on its findings, Bangladesh sought emergency budget support from development partners.

The finance ministry prepared a position paper in this regard, requesting an additional $3 billion in rapid-disbursing assistance to address urgent balance-of-payments needs and growing budgetary pressures during the final four months of FY2025-26.The paper described the Middle East conflict as an external and temporary terms-of-trade shock that had sharply increased the country’s import bills for fuel, LNG, fertiliser and food, while adding pressure on subsidies and social protection spending.The war created a “time-critical external financing need that cannot be met prudently through rapid reserve drawdown or disruptive import compression”, the paper said.It estimated that Bangladesh would require an additional Tk 385.42 billion (around $3.2 billion) in subsidies between March and June.The ministry also noted that foreign exchange reserves had fallen from $30.36 billion at the end of February to $29.39 billion by March 25 under the IMF’s balance of payments methodology, reflecting tighter external financing conditions.

According to the paper, the emergency financing would help preserve reserves while ensuring continued imports of fuel, LNG, fertiliser and food, create fiscal space for targeted and time-bound support, and reduce the risk of a disorderly adjustment.

The government also pledged to use existing public financial management systems and ensure transparent reporting on the use of the funds and related emergency spending.

The paper said any price-smoothing measures and subsidies supported by the financing would be temporary, progressively better targeted, and implemented alongside continued reforms to strengthen revenue mobilisation, prioritise public spending and improve the foreign exchange market.

Bangladesh’s foreign exchange reserves stood at $31.53 billion under the IMF methodology on June 25.

Announcing the latest $1.1 billion package yesterday, the WB said in a statement that the financing would support two projects aimed at helping Bangladesh cope with fertiliser and fuel price volatility, strengthen food security and improve emergency response capacity.

The package includes $300 million for food security and $713 million under a contingent emergency response component to finance quick-disbursing expenditures during crises.

The emergency financing will support cash transfers and livelihood assistance for affected households and micro, small and medium-sized enterprises (MSMEs), helping stabilise incomes and protect jobs.

It will also finance fuel and energy supplies needed to maintain essential services, including food distribution, healthcare, electricity and water supply, the WB said.

The funds under the emergency response component are expected to be disbursed by June 30.

Jean Pesme, WB country director for Bangladesh and Bhutan, said in the statement that rising food, fertiliser and fuel prices, combined with tighter fiscal conditions, had hit small farmers and vulnerable households the hardest.

“The World Bank has stepped up with immediate support to help Bangladesh mitigate this impact, ensure fertiliser supply for rice production, protect households, jobs and livelihoods, and maintain essential services,” he said.

The $300 million food security project will finance imports of 6 lakh tonnes of fertiliser, including 5 lakh tonnes of urea, enough to support rice cultivation on about 1.4 million hectares during the Aman (July-October 2026) and Boro (October 2026-April 2027) seasons.

Bangladesh imports more than 85 percent of its fertiliser requirements.

Souleymane Coulibaly, WB lead economist and task team leader, said the Aman and Boro seasons account for about 90 percent of the country’s annual rice production.

“Any disruption in fertiliser supply would not only threaten food security, but it would also deepen poverty and cost jobs,” he said.

Lesley Jeanne Yu Cordero, WB lead disaster risk management specialist and task team leader, said the project would repurpose unutilised financing from existing projects to channel resources quickly to the areas of greatest need.

Bangladesh's insurance sector is facing deep-rooted structural weaknesses, weak governance and declining public confidence, prompting calls from policymakers and industry leaders for stronger regulation, wider insurance coverage and comprehensive reforms.

The issues were highlighted at a seminar titled "Challenges, Prospects and the Way Forward for Bangladesh's Insurance Sector" organised by the Insurance Reporters Forum (IRF) today (27 June).

Speaking at the event, Prime Minister's Adviser on Finance and Planning Rashed Al Mahmud Titumir said many insurance companies lack strong asset management and investment capabilities, with the life insurance segment facing particularly serious challenges.

He stressed the need to expand agricultural and health insurance, noting that despite Bangladesh's vulnerability to natural disasters, crop insurance remains underdeveloped while health insurance coverage is largely confined to higher-income groups and salaried employees.

Titumir also called for greater use of technology to improve customer services and operational efficiency, saying weak regulatory oversight, poor accountability and declining public trust have become major obstacles to the industry's growth.

"The insurance sector needs a strong, effective and market-friendly regulatory framework to ensure accountability, protect policyholders and expand insurance coverage," he said.

Addressing the seminar, Insurance Development and Regulatory Authority (IDRA) Chairman Mir Nadia Nivin said restoring policyholders' confidence, establishing insurance as a major source of long-term investment and strengthening institutional capacity would be the regulator's three key reform priorities.

He said settling around Tk7,000 crore in outstanding insurance claims is IDRA's immediate priority.

The regulator will work with individual insurance companies to identify financial and operational weaknesses, recover trapped funds, facilitate asset sales where necessary and explore other measures to clear pending claims.

"If a significant liability remains after exhausting all available options, the government may be approached for a one-time bailout package," Nivin said, adding that insurers and the regulator must first complete their own reform initiatives before seeking government assistance.

He also announced plans to expand microinsurance through microfinance institutions, develop a regulatory framework for Islamic insurance (Takaful) and strengthen insurance education to build a skilled workforce.

Bangladesh Insurance Association President Saeed Ahmed, MP, said the insurance regulator should remain independent of business interests and called for expanding mandatory motor insurance and introducing new insurance products for emerging sectors.

Bangladesh Insurance Forum President BM Yusuf Ali said coordinated efforts by the government, regulator and insurance companies are essential to modernise the industry and make it more transparent and customer-friendly.

Professor Dr Md Shahidul Islam Jahid, chairman of the Department of Banking and Insurance at the University of Dhaka, identified weak regulation, poor governance and a short-term profit mentality as the sector's main challenges, while emphasising the need to expand agricultural and climate-risk insurance.

Zenith Islami Life Insurance Managing Director SM Nuruzzaman said the life insurance industry faces greater challenges than the general insurance sector and called for easier asset disposal procedures and improved access to bank financing.

Presenting the keynote paper, Monir Hossain said modernising the insurance industry, strengthening governance, accelerating digitalisation and ensuring customer-centric services are essential to support Bangladesh's growing economy.

Listed conglomerate Beximco Limited has seen its share price collapse in the wake of the Bangladesh Securities and Exchange Commission's (BSEC) decision to remove its long-standing floor price, dealing massive losses to investors and erasing thousands of crores of taka in market value.

The BSEC allowed the stock to resume normal trading on 9 June, ending an extended period during which it had been locked at a floor price. Since then, Beximco shares have nosedived 74.20% across just 13 trading sessions, gutting approximately Tk7,706 crore from its market capitalisation.

According to data from the Dhaka Stock Exchange (DSE), Beximco shares closed at Tk28.40 today (25 June), down from Tk110.10 before the floor price was lifted, a loss of Tk81.70 per share over the period.

Market analysts said the prolonged floor price had created a significant gap between the stock's artificially maintained value and its actual market demand. Once the restriction was removed, the market quickly adjusted to reflect the stock's perceived fair value, triggering sustained selling pressure.

Over the past 13 trading sessions, approximately 2.2 million shares changed hands, including nearly 2 million in the last four sessions alone. However, only around 330,000 shares were traded today. With sellers significantly outnumbering buyers, the stock has remained pinned near its daily lower limit.

The sharp fall has also triggered a dramatic erosion in the company's market capitalisation. Before the floor price was lifted, Beximco's market value stood at around Tk10,385 crore. It has since declined to approximately Tk2,678 crore, a loss of nearly Tk7,706 crore in under three weeks.

Market participants said shareholders have borne the brunt of the decline, particularly retail investors, who collectively hold more than one-third of the company's outstanding shares.

The sharp fall has also led to a dramatic erosion in the company's market capitalisation. Before the withdrawal of the floor price, Beximco's market value stood at around Tk10,385 crore. It has now declined to approximately Tk2,678 crore, resulting in a loss of nearly Tk7,706 crore in market value within less than three weeks.

Market participants said shareholders have been the biggest casualties of the decline, particularly retail investors who collectively hold more than one-third of the company's outstanding shares.

Selling pressure emerged immediately after the floor price was removed. Large volumes of sell orders entered the market, but a lack of buyers limited actual transactions and accelerated the price decline.

Senior officials of several brokerage houses told The Business Standard that many investors had been unable to sell their holdings for years while the stock remained under the floor price mechanism.

"Investors finally got the opportunity to exit after the floor price was lifted. However, the absence of buyers has caused the price to fall rapidly," said one brokerage executive.

Conversations with investors revealed that many are willing to accept significant losses simply to free up capital and redeploy it elsewhere.

Abu Asad, an investor, told TBS that while he can now sell his shares, the price has fallen so sharply that exiting means taking a substantial loss.

Many investors are reportedly willing to absorb heavy losses but remain unable to sell due to a lack of buying interest. Some have criticised the regulator for not lifting the floor price earlier, alongside other companies, arguing that market conditions were more favourable at the time and that the delay ultimately deepened losses for retail investors. The floor price mechanism was first introduced on 19 March 2020 to shield the stock market from the fallout of the Covid-19 pandemic. While the restriction was gradually lifted for most listed companies, Beximco and Islami Bank Bangladesh PLC remained subject to it for an extended period.

On 8 June, BSEC decided to remove the floor prices of both Beximco and Islami Bank, allowing their shares to trade freely from the following day. The regulator said the move was aimed at restoring normal price discovery and improving market liquidity.

However, Beximco immediately came under intense selling pressure, resulting in significant losses for investors.

Analysts attribute the decline to several factors, including prolonged uncertainty surrounding the company, concerns about its business operations, discussions regarding debt and financial liabilities, and the adjustment of a share price that had remained artificially fixed for years.

Despite the sharp decline, some investors see the situation as an opportunity. They argue that shareholders who had been trapped in the stock can now reallocate their investments elsewhere, though most retail investors have already suffered substantial capital losses.

According to the company's shareholding structure as of May 2026, sponsors and directors hold 33.11% of Beximco's shares, institutional investors 32.59%, foreign investors 0.94%, and general investors 33.36%.

With more than one-third of the company's shares in the hands of retail investors, the collapse in share price has directly affected a large number of small shareholders.

Listed on the stock market in 1995, Beximco is the flagship company of the Beximco Group, one of Bangladesh's largest business groups. The company has a paid-up capital of approximately Tk943 crore and around 94.32 crore outstanding shares. Its industrial facilities are located in Kashimpur, Gazipur.

Market observers said the stock's eventual stabilisation will depend on the company's future business prospects, financial restructuring efforts, investor confidence, and the return of buying interest.

According to them, Beximco is now undergoing a genuine price discovery process after years under the floor price regime. However, that adjustment has already erased thousands of crores of taka in market value and inflicted heavy losses on a vast number of investors.

The World Bank has approved $1.1 billion for two projects to help Bangladesh mitigate the price and supply volatility in global fertiliser and fuel markets, sustain food security, and enable a rapid response to economic shocks.

The global lender stepped up with immediate support as rising food, fertiliser, and fuel prices stemming from the US-Israel war on Iran, which has culminated in a broader Middle East conflict, according to a press release issued yesterday (26 June).

The global shock, alongside a tighter fiscal space, has deeply impacted Bangladesh's economy, hitting smallholder farmers and vulnerable populations the hardest, it said.

World Bank Division Director for Bangladesh and Bhutan Jean Pesme said, "Rising food, fertiliser, and fuel prices stemming from the Middle East Conflict, along with tighter fiscal space, have deeply impacted Bangladesh's economy, hitting smallholder farmers as well as poor and vulnerable people the hardest."

He added that the financing aims to ensure fertiliser supply for rice production, protect households, jobs, and livelihoods, and maintain essential services.

Of the total funding, the Emergency Support for Food Security Project will provide $300 million in time-bound financing to help Bangladesh import fertilisers critical for the upcoming Aman and Boro cultivation seasons, spanning July-October this year and from October to April next year, respectively.

Bangladesh currently imports more than 85% of its fertiliser requirements, said the World Bank.

This project, it said, will finance the import of 6,00,000 tonnes of critical fertilisers – half of which will be Urea – covering 1.4 million hectares of rice production cultivated by smallholder farmers.

Souleymane Coulibaly, World Bank lead economist and task team leader for the project, emphasised that Bangladesh's food security heavily relies on the Aman and Boro seasons, which together account for about 90% of the country's total rice production.

"About half the population is employed in the agriculture sector. So any disruption in fertiliser supply would not only threaten food security, it would deepen poverty and cost jobs," Coulibaly added.

Regarding the remaining $713 million, the release clarified that it will fund the Contingent Emergency Response Project, which supports quick-disbursing emergency expenditures.

This includes cash transfers and livelihood assistance for affected households and micro, small, and medium enterprises to stabilise incomes and preserve jobs during crises, stated the lender.

It will also finance fuel and energy supplies to ensure the continuation of essential services, including food, medicines, medical equipment, energy, and water.

The project, which utilises the World Bank's crisis preparedness and response toolkit by repurposing unutilised financing from existing projects, will disburse the funds by 30 June.

"This project will provide Bangladesh immediate access to funds through the World Bank's crisis preparedness and response toolkit by repurposing unutilised financing from existing projects, directing resources where they are most needed and protecting people, businesses, and jobs from the impact of shocks," said Lesley Jeanne Yu Cordero, World Bank lead disaster risk management specialist and task team leader for the project.

The government will begin lobbying foreign diplomats in Dhaka next month to build support for its request to defer Bangladesh's graduation from Least Developed Country (LDC) status by three years, as the issue moves towards consideration at the UNGA.
"We will sit with all the foreign missions in Bangladesh in the first week of July. We will explain Bangladesh's reasons for seeking an additional three years before graduating from LDC status," a senior Economic Relations Division (ERD) official said on Wednesday.

As Bangladesh's request for a deferral will ultimately require approval through the UN system and endorsement by the United Nations General Assembly (UNGA), securing broad international support is considered crucial, he added.

Officials said Bangladesh's fate regarding the proposed deferment is likely to be decided at the UNGA session in September this year.

Although Bangladesh is scheduled to graduate to developing-country status in November 2026, Dhaka has sought an additional three years to prepare for the transition amid a series of domestic and external challenges.More than two months ago, Bangladesh formally requested the United Nations Committee for Development Policy (UNCDP), the body responsible for reviewing graduation criteria, to grant an extension in light of emerging economic and geopolitical pressures, including global shocks, energy supply constraints, domestic political transition and other external uncertainties.Special Occasions

The UNCDP has since responded to Bangladesh's request, outlining a number of conditions linked to the proposed deferment.The committee emphasised the importance of domestic reforms, including measures to stabilise the financial sector, strengthen domestic resource mobilisation through higher tax revenues, and prioritise expenditures that enhance resilience and support economic transformation.

According to ERD officials, policy recommendations on LDC graduation are first considered by the executive bodies of the UN system, including the Economic and Social Council (ECOSOC), before being forwarded to the UN General Assembly for final approval.

"Almost all foreign missions in Bangladesh represent UN member states. Therefore, we need to clearly explain the rationale behind our request for a graduation deferment," another ERD official said.

He noted that while an ECOSOC meeting is scheduled soon, Bangladesh's request may not be discussed immediately and could instead be taken up at a later meeting, possibly in late July.

"Once the matter is discussed at ECOSOC, we will have a clearer idea about the timeline for consideration of the graduation deferment request," the official said.Government

He added that although greater clarity on the process is expected after the ECOSOC discussions, the final decision will rest with the UNGA.

Bangladesh is not alone in seeking additional time. Nepal, another country scheduled for graduation in 2026, has also requested a three-year deferment.

"Since Nepal has submitted a similar request, the UN may adopt a common approach for both countries," the official said.

In a letter sent to the ERD Secretary on June 1, the UNCDP gave what officials described as a positive response to Bangladesh's request, although it did not specify any timeframe for a possible extension.

The committee stated: "Without significantly advancing on such reforms, it is difficult to see how an extension of the preparatory period requested by Bangladesh would contribute to a more sustainable graduation and a smooth transition. Hence, the extension should not be viewed as a pause or justification for delaying reforms."

The committee further advised that any extension should serve as a catalyst for accelerating reforms and implementing smooth transition measures, particularly those aimed at strengthening productive capacities, promoting economic diversification and preparing the private sector for graduation.

The government is likely to raise the tax-free income threshold to Tk 4 lakh over the next two fiscal years, FY2026-27 and FY2027-28, to ease the tax burden on lower-income earners.

The threshold could then increase to Tk 4.5 lakh in FY2028-29 and FY2029-30 before reaching Tk 5 lakh in FY2030-31, according to sources familiar with the matter.
The changes are expected to be incorporated into the Finance Bill 2026 before it is passed by parliament, a senior finance ministry official said.Finance Minister Amir Khosru Mahmud Chowdhury placed the bill in parliament on June 11 while presenting his first national budget for FY2026-27.The proposed budget set the tax-free income threshold at Tk 3.75 lakh for FY2026-27 and FY2027-28. At present, individuals can earn up to Tk 3.5 lakh a year without paying income tax.The official also said the government is likely to drop the proposed requirement for a Taxpayer Identification Number (TIN) to open a bank account.

The budget proposed making TIN mandatory for opening bank accounts, but the measure drew opposition from various stakeholders, who argued that it could discourage financial inclusion.

The advance income tax (AIT) on business-to-business (B2B) transactions, which was proposed to be at 0.2 percent in the budget, is likely to remain unchanged, the official said.The government is also planning to cut the capital gains tax on gold to 5 percent from the current 15 percent.In the proposed Finance Bill, profits from the sale or transfer of gold, silver, jewellery, precious stones, diamonds, coins, digital currencies, artworks, antiques and club memberships declared in a taxpayer return would be treated as capital gains and taxed at 15 percent.

Capital gains from securities would also be taxed at 15 percent, including treasury bills, bonds, savings instruments, debentures, sukuk and other shariah-based securities, as well as shares and stocks issued by companies and other entities.

The proposal to tax gains from gold and jewellery comes at a time when gold prices have risen sharply in recent years.

In another planned change, the corporate tax rate for private universities is likely to be cut to 5 percent from 10 percent.

The 10 percent rate currently applies to private universities, medical colleges, dental colleges, engineering colleges and institutions dedicated solely to ICT education.

No changes are being considered for real estate developers, the official added.

The National Board of Revenue (NBR) has set a target to raise the country's revenue-to-GDP ratio to 10.7% by the fiscal year (FY) 2028-29 to strengthen domestic resource mobilisation and sustain economic development, according to the government's Medium-Term Macroeconomic Policy Statement (2026-27 to 2028-29).

The policy statement identifies increasing the revenue-to-GDP ratio as a key prerequisite for maintaining development momentum and addressing structural weaknesses in the economy, noting that Bangladesh's revenue-to-GDP ratio remains among the lowest among comparable economies.

According to the document, the overall revenue-to-GDP ratio stood at 8.3% in FY 2023-24, before declining to 8.0% in FY 2024-25 due to structural weaknesses in tax administration, tax exemptions on essential commodities aimed at containing inflation, and lower import-related revenue amid global economic uncertainties.

The government projects the ratio to increase to 10.2% in FY 2026-27, 10.5% in FY 2027-28, and 10.7% in FY 2028-29.

NBR tax revenue, which accounted for 6.7% of GDP in FY 2024-25, is projected to rise to 8.8% in FY 2026-27, 9.1% in FY 2027-28, and 9.3% in FY 2028-29.

The policy statement notes that total revenue figures include foreign grants, while non-NBR tax revenue is expected to remain between 0.3% and 0.4% of GDP during the period.

In his budget speech for FY 2026-27, Finance and Planning Minister Amir Khosru Mahmud Chowdhury said the government's medium-term objective is to raise the country's tax-to-GDP ratio to 10%, with a long-term target of 15% by 2035.

He said the government aims to establish a fair, technology-based, universal and predictable tax system while creating a stronger economic cycle driven by investment, production, employment, consumption and improved revenue collection.

To achieve the targets, the NBR plans to implement wide-ranging reforms, including the full digitisation of tax administration, strengthening transparency and accountability to encourage voluntary compliance, broadening the tax base through increased economic activity, and establishing a more predictable revenue framework.

The policy statement says higher domestic revenue mobilisation will reduce dependence on deficit financing and bank borrowing, complement the government's contractionary monetary policy in controlling inflation, and strengthen the economy's resilience against domestic and external shocks.

Former Bangladesh Bank governor Mohammed Farashuddin today (25 June) criticised the size and implementation strategy of the national budget for fiscal 2026-27, calling for a major overhaul of the country's taxation and administrative framework to support economic requirements.

Speaking at a seminar titled "National Budget: Insights and Perspectives" at East West University, Farashuddin, also an economist, argued that the current fiscal blueprint falls short of what the economy needs.

Unless the politician-bureaucrat nexus can be broken – and I don't see any provision in the budget for that – I don't see any result.

Mohammed Farashuddin, former governor, Bangladesh Bank
He contended that the budget should have been at least Tk14 lakh crore – equivalent to 20% of gross domestic product (GDP) – instead of its current allocation, which stands at just 13.7% of GDP.

Bureaucratic inertia and waste

The former central bank governor strongly criticised the lack of progress in administrative reforms and automation, asserting that entrenched inefficiencies continue to hinder effective budget execution.

He noted that efforts to automate tax administration began as early as 1983, yet little meaningful progress has been achieved over the last four decades.

"The automation has remained where it was," Farashuddin said. "Unless the politician-bureaucrat nexus can be broken – and I don't see any provision in the budget for that – I don't see any result."

He also alleged that public resources continue to be wasted through prolonged project timelines and unnecessary administrative expenditures. Alongside these systemic inefficiencies, he expressed deep concern over widening wealth inequality despite the country's broader economic progress.

Pointing out that the Gini coefficient – a metric used to measure income inequality – has risen from 0.32 in 1972 to 0.5 at present, he remarked that the country is going the other way around from the founding ideals of the 1971 independence.

He stressed that economic growth alone is insufficient unless wealth distribution becomes more equitable.

Radical tax restructuring proposed

Farashuddin directed sharp criticism at the National Board of Revenue, accusing it of failing to broaden the tax base and instead placing additional burdens on existing taxpayers. Citing data from the Boston Consulting Group, he noted that around 25 lakh people in Bangladesh have annual per capita incomes exceeding $5,000, yet a large portion of this affluent population remains outside the tax net.

To encourage greater tax compliance, he proposed a revised, tiered tax structure with lower rates across different income slabs. Under his proposal, a 5% tax would apply to the first Tk5 lakh after the tax-exempt threshold, followed by 10% on the next Tk10 lakh, 15% on the following Tk15 lakh, and 20% on the next Tk20 lakh, with a maximum rate of 22% on all remaining income.

"All finance ministers I have spoken to believe higher tax rates bring higher revenue. This is completely wrong," he asserted, arguing that lower rates stimulate better compliance.

LDC graduation and competition

Turning to global trade, Farashuddin opposed any move to delay Bangladesh's graduation from Least Developed Country (LDC) status.

The economist argued that the country should embrace international competition rather than postpone the transition. "We should have gone for the graduation, faced the challenge, and opened the economy to competition."

The seminar also featured a keynote presentation by Professor Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD), and AK Enamul Haque, the director general of the Bangladesh Institute of Development Studies (BIDS).

Questioning the revenue assumptions underpinning the budget, Mustafizur said projected revenue growth appeared disconnected from actual collection trends.

He also warned that the government's plan to borrow Tk1.12 lakh crore from the banking system to finance the budget deficit could place additional pressure on an already stressed financial sector.

"We must stop relying solely on banks and instead look toward the equity market and securitisation of profitable infrastructure assets such as the Metro Rail or Padma Bridge," he said.