The Bangladesh Bank will issue non-performing loan (NPL) resolution guidelines by December as part of its banking sector reform commitments under the proposed new loan programme with the International Monetary Fund (IMF), according to central bank officials.

The commitment was conveyed to an IMF delegation during a meeting at Bangladesh Bank yesterday (12 July), senior officials familiar with the discussions told The Business Standard. The meeting was attended by the central bank governor and deputy governors.

A senior official who attended the meeting said the central bank is preparing the guidelines primarily for banks with non-performing loan ratios above 10%. "If the guidelines are issued by December this year, they are expected to come into effect from 2027.

The official said the guidelines form part of Bangladesh's commitments under negotiations for a new IMF loan programme and are aimed at reducing bad loans in the banking sector. As of March this year, the country's overall NPL ratio stood at more than 32%.

The IMF delegation, led by Bangladesh Mission Chief Ivo Krznar, arrived in Dhaka yesterday for a five-day visit to assess the feasibility of the proposed $4.5 billion loan programme.

What were discussed at meeting

During yesterday's meeting, IMF officials also sought an update on the repeal of the controversial Section 18(ka) of the Bank Resolution Act. Bangladesh Bank informed the delegation that the government would remove the provision soon, according to officials.

The provision has drawn criticism because it could allow former owners of resolved or merged banks to regain ownership or control. Concerns have been particularly acute over banks previously controlled by the S Alam Group, especially several Islamic banks.

The IMF delegation also sought updates on Bangladesh's overall macroeconomic situation, including inflation, the exchange rate and the central bank's monetary policy stance.

According to officials, the IMF questioned why Bangladesh Bank's US dollar purchases through auctions were consistently clustered within a narrow price range.

The central bank explained that the interbank exchange rate serves as the benchmark, with recent dollar purchases made between Tk122.60 and Tk122.75, while the prevailing interbank rate currently stands at Tk122.85.

The official said the IMF sought an explanation for the central bank's recent decision to lower the interest rate on trade finance. The IMF also asked whether banks would be able to access trade finance at SOFR plus 3% under the revised pricing framework.

Bangladesh Bank officials replied that the decision had been taken after consultations with commercial banks and was intended to stimulate private sector credit growth.

Bangladesh Bank recently issued a circular reducing the interest rate ceiling on trade finance to SOFR plus 3%. Following the announcement, the Association of Bankers, Bangladesh urged the central bank to reconsider the decision in a letter.

The IMF delegation also raised concerns over restrictions on the foreign exchange forward market. Officials noted that during the Iran conflict, importers sought to hedge exchange rate risks by entering into forward contracts while opening letters of credit (LCs).

At the time, Bangladesh Bank verbally instructed banks not to facilitate forward bookings, fearing they could fuel demand for dollars and push up the exchange rate.

The IMF, however, stressed that Bangladesh should develop a more active forward foreign exchange market, arguing that forward contracts are an essential risk management tool that allows businesses to hedge against future currency volatility.

The delegation advised the central bank to facilitate, rather than discourage, the use of forward bookings in the dollar market.

Bangladesh Bank officials said the IMF would review the country's current economic conditions before formally considering the request for a new lending programme.

Bangladesh first secured a $4.7 billion IMF programme in 2023 to help address a foreign exchange reserve crisis. The programme later expanded to $5.5 billion after additional financing was approved under the Resilience and Sustainability Facility (RSF).

After disbursing $3.59 billion in five instalments, the IMF suspended further disbursements last December after Bangladesh failed to meet several programme conditions.

Following the change in government, the BNP administration cancelled the previous programme and applied for a new IMF loan package under revised reform commitments.

Meanwhile, Finance Minister Amir Khosru Mahmud Chowdhury said Bangladesh will pursue the new IMF loan that safeguards public interest and the country's economic security.

The government will not participate in any loan programme that undermines the interests of the people, he said while speaking to journalists at the Secretariat yesterday.

The government's outstanding debt has reached Tk22.06 lakh crore, including Tk9.59 lakh crore in external debt, Finance Minister Amir Khosru Mahmud Chowdhury told parliament today (12 July).

Responding to a question from MP Golam Rasul during the question-and-answer session, the finance minister said the government is pursuing policies to reduce reliance on borrowing by increasing revenue collection and transitioning from a debt-driven economy to an investment-led one.

He said the government is placing greater emphasis on boosting tax and non-tax revenues to cope with the growing burden of domestic and external debt.

"For the current fiscal year, the revenue-to-GDP ratio has been set at around 10.4%, with the primary objective of increasing revenue collection and reducing dependence on borrowing," he said.

The finance minister also said the government has adopted a Medium-Term Debt Management Strategy (MTDS) to lower borrowing costs, mitigate risks and strengthen debt management.

He said the strategy would enable more efficient management of the country's overall debt portfolio.

Referring to the policies announced in the budget for the current fiscal year, Amir Khosru said the government has launched initiatives to transform Bangladesh from a debt-dependent economy into an investment-driven one.

He said higher returns from public investment would help increase government revenue and reduce the need for borrowing to finance budget deficits.

The minister added that the government is also diversifying financing instruments to reduce interest costs, including expanding the use of sukuk and asset securitisation, alongside other alternative financing mechanisms.

While Bangladesh will continue to borrow from bilateral and multilateral development partners, the government will prioritise long-term concessional loans carrying lower interest rates and favourable repayment terms, he said.

In response to another question from MP Shahjahan Chowdhury, the finance minister said the government repaid external loans worth $4.65 billion during the recently concluded FY2025-26.

Of the total repayment, $3 billion was principal, while $1.65 billion was paid as interest, he added.

The minister said the government's election manifesto pledged to transform Bangladesh from a debt-driven economy into an investment-led one, and efforts have been underway since the government assumed office to keep external debt at a sustainable level.

He also said all externally financed projects and related loan proposals are being subjected to rigorous scrutiny before approval to ensure that unnecessary projects are not implemented using foreign borrowing.

The government is also giving priority to ensuring that externally financed projects align with its broader objectives of rebuilding and restoring the economy and implementing its election commitments, the finance minister added.

Bangladesh Bank has increased the cash incentive for exports of domestically sourced textile products to 5% from 1.5% for FY2026-27, aiming to boost local value addition and strengthen export competitiveness, according to a circular issued today (12 July).

The enhanced support will apply to export-oriented domestic textile products receiving alternative cash assistance instead of bonded warehouse and duty drawback facilities.

The move is expected to particularly benefit the country's readymade garment sector by encouraging greater use of locally produced yarn and fabrics.

To qualify for the incentive, exporters must meet specific conditions. Members of the Bangladesh Garment Manufacturers and Exporters Association, Bangladesh Knitwear Manufacturers and Exporters Association, and other relevant trade bodies will be required to submit documentary proof that their raw materials, including yarn and fabrics, were sourced from domestic suppliers.

Industry stakeholders said the higher incentive would encourage the use of local inputs, increase domestic value addition and enhance the competitiveness of Bangladesh's export sector in global markets.

Finance Minister Amir Khosru Mahmud Chowdhury today (Sunday) said that any future partnership with the International Monetary Fund (IMF) would be pursued only if it safeguards public interest and protects the country's economic security.

"The government would not join any IMF programme that goes against the interests of the people," he said while speaking to reporters at the Secretariat, BSS reports citing a press release.

Referring to the previous IMF programme undertaken by the former government, the minister said that it included a number of conditions that the present elected government considered inconsistent with its policy priorities and, therefore, decided to withdraw from that arrangement.

He said the government's objective is not merely to secure external financing but to ensure economic stability while protecting the interests of the people.

Any future engagement with the IMF, he added, would be based on terms that fully safeguard Bangladesh's national interests.

The minister also said the government is working to modernise the country's visa policy as part of its broader vision of building a modern Bangladesh.

He said the existing visa regime would be simplified to facilitate greater tourist arrivals, attract foreign investment and strengthen international confidence in Bangladesh's economy.

During the briefing, Amir Khosru also expressed deep sorrow at the death of Barrister Jamiruddin Sircar, former Speaker of the Jatiya Sangsad and former Acting President of Bangladesh.

He described Jamiruddin Sircar as a capable and principled statesman, saying his contributions to the country's politics would be remembered with respect and that his death is an irreparable loss to the nation.

The government has intensified discussions with the BRICS-led New Development Bank (NDB), the World Bank, the Asian Development Bank (ADB) and other multilateral development partners to secure budget support and concessional financing, Finance Minister Amir Khosru Mahmud Chowdhury told parliament yesterday (12 July).

Responding to a question from MP Md Fazle Huda of Naogaon-3 during the question-and-answer session, the finance minister said the initiative is aimed at easing pressure on the country's foreign exchange reserves while ensuring adequate financing for priority development projects.

He said the government is exploring alternative sources of funding to maintain the continuity of development activities without placing additional strain on foreign exchange reserves.
"To this end, discussions are underway with the BRICS-led New Development Bank and other multilateral lending institutions on the possibility of obtaining budget support and loans on more flexible terms," the minister said.Khosru added that successful negotiations with development partners would strengthen the government's financial capacity and make it easier to secure funding for the implementation of priority development projects.

Bangladesh’s inward remittance recorded a robust double-digit growth at the start of the new fiscal year 2026–27, with US$1.15 billion in the first 11 days of July, according to the latest data released by Bangladesh Bank.

This marks a significant 11.6 percent monthly growth compared to the corresponding period of the previous fiscal year, when the country received $1.03 billion between July 1 and July 11, 2025.

The central bank’s detailed breakdown indicates that the flow of foreign currency picked up pace significantly toward the end of the first week of July. In just a three-day window between July 9 and July 11, 2026, Bangladeshi expatriates sent$191 million through banking channels.

Financial analysts and central bank officials attribute this strong upward trajectory to the recent stabilization of the interbank foreign exchange market and competitive exchange rates offered by commercial banks. The steady use of banking channels instead of informal networks (like Hundi) has significantly buoyed the state’s incoming foreign currency receipts.

The sustained surge in remittance inflows brings a much-needed sigh of relief for macroeconomic policymakers.

This steady influx is expected to provide a crucial buffer to Bangladesh’s gross foreign exchange reserves and help ease the ongoing balance of payment pressures during the first quarter of the current fiscal year.

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) will launch a series of roadshows in major trading hubs, including Hong Kong, Singapore and Dubai, to attract global apparel buyers that currently do little or no business with Bangladesh.

The initiative will begin with a roadshow in Hong Kong, while HSBC will support the programme by helping identify and engage potential buyers and encouraging them to participate in the events. The announcement was made at a programme held at the BGMEA headquarters in Dhaka yesterday (12 July).

To formalise the collaboration, BGMEA and HSBC signed a MoU. The agreement was signed by Mahmud Hasan Khan Babu, president of BGMEA, and Md Mahbub ur Rahman, CEO of HSBC Bangladesh, on behalf of their respective organisations.
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Speaking at the event, Shah Rayeed Chowdhury, a BGMEA director, said the initiative would begin in Hong Kong before expanding to other global trading centres. "We will start with Hong Kong, but later we will also go to places such as Singapore and Dubai," he said.

After the event, he told TBS that BGMEA's current focus was largely on major existing buyers, but the organisation now wanted to showcase Bangladesh's capabilities to brands that either do not source from the country or have only a limited presence.

"We want to let those buyers know how Bangladesh's capabilities have evolved. Our main objective is to strengthen Bangladesh's brand image," he said.

Explaining why Hong Kong had been chosen as the first destination, Chowdhury said it was an important global trading hub where many international brands have a presence.

"We will target those brands there. Singapore and Dubai are also global trading hubs, so we will organise similar programmes there in the future and engage with buyers. There will also be matchmaking sessions," he said.

He added that the events would be jointly organised by BGMEA and HSBC.

Explaining HSBC's role, Chowdhury said many global brands already work with the bank because of its international reputation.

"Global brands work with trusted and reliable institutions like HSBC. Partnering with them will also strengthen our credibility," he said.

Speaking at the event, HSBC CEO Mahbub said understanding buyers' changing priorities would be key to the initiative.

"We need to research what customers want and where they are heading. We want to identify three to five priorities over the next five years. We will set our priorities based on customers' needs," he said.

BGMEA President Babu called on HSBC to help attract brands that have yet to source products from Bangladesh. He said one international brand that previously did not purchase from Bangladesh had now decided to start sourcing from the country.

He also said BGMEA planned to expand business with Japan and would establish a dedicated help desk at the association to support that effort.

Agreeing with the HSBC chief executive, Babu said Bangladesh had many world-class garment factories, but negative images often affected buyers' perceptions.

"There are many excellent factories in Bangladesh. But when images of the polluted waters of the Turag River are shown abroad, many premium brands become reluctant to place orders in Bangladesh," he said.

For the local bike market, the recently concluded fiscal year was dull, as retail sales were almost unchanged from the previous year, due mainly to weak economic conditions, sluggish farming activity and fuel price shocks.

Even in the subdued market, Japanese brands posted double-digit sales growth, while their Indian rivals struggled.

Sellers said the demand for Japanese motorcycles in the entry and mid-segment was strong, driven by fuel efficiency, low running costs, competitive pricing and practical features.

In contrast, Indian brands said the absence of new product launches in FY26 eventually hurt their sales.

Industry data showed that 422,655 motorcycles were sold in FY26, almost unchanged from 422,593 units in the previous fiscal year. Companies blamed weak demand for the stagnant market.

“The industry should have reached annual sales of 700,000 to 800,000 motorcycles by now, but remained below 500,000 units, discouraging deeper localisation and investment in domestic component manufacturing,” said Subrata Ranjan Das, deputy managing director of ACI Motors.

ACI Motors is the sole distributor of Japanese brand Yamaha in Bangladesh.

He said the market had failed to realise its potential because weak economic conditions, sluggish agricultural activity in the northern region and policy uncertainty curbed demand.

Yamaha retained its position as the country’s best-selling motorcycle brand after retail sales rose 19 percent year-on-year to 95,531 units, giving it a 23 percent market share.

Another Japanese brand Suzuki ranked second with sales of 90,657 units, up 10 percent, while Honda recorded the fastest growth among these three Japanese brands. Its sales jumped 18 percent to 83,122 units, lifting its market share to 20 percent.

Together, the three brands accounted for nearly two-thirds of all motorcycles sold in Bangladesh during the last fiscal year.

Several competitors, particularly Indian manufacturers, struggled to maintain their position.

Hero’s sales fell 6 percent to 73,762 units, although it remained the fourth-largest player with a 17 percent market share. Bajaj posted a steeper decline of 22 percent to 63,256 units, while Royal Enfield’s sales slipped 9 percent to 7,568 units.

TVS recorded the sharpest decline among the major manufacturers, with sales plunging 67 percent to 6,370 units from 19,167 a year earlier.

Sales by smaller brands grouped under the “Others” category edged up 3 percent to 2,389 units.

Industry executives said weak economic conditions, policy uncertainty and subdued consumer spending continued to weigh on the market despite strong performances by a handful of brands.

“At the current volume, it is difficult to justify deep manufacturing or build a competitive vendor base. We need a market of at least 10 lakh units,” Subrata Ranjan Das of ACI said.

He noted that Pakistan’s motorcycle market stands at around 25 lakh units despite having a population only slightly larger than Bangladesh’s.

Das also said Bangladesh remains one of the least-penetrated motorcycle markets in South Asia, with roughly one motorcycle for every 80 people, compared with about one for every two people in India.

He attributed Yamaha’s continued market leadership to the company’s customer-centric approach, strong after-sales service, reliable braking performance, fuel efficiency and high resale value.

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He also credited regular customer engagement and follow-up services with helping build long-term trust and customer loyalty.

TVS Auto Bangladesh Chief Executive Officer Biplob Kumar Roy said the absence of new product launches, coupled with weak economic conditions, had hurt the company’s performance.

“We could not introduce any new products, so our business did not perform as expected,” he said.

He added that the broader economic slowdown and prolonged uncertainty had further dampened consumer demand.

“The industry could not grow the way it was expected to,” Biplob said, adding that the sector still has significant growth potential, but subdued consumer sentiment has prevented it from reaching that trajectory.

Honda, however, bucked the broader market trend.

Shah Muhammad Ashequr Rahman, chief marketing officer at Bangladesh Honda Private Limited (BHL), attributed the company’s sales growth to strong demand for its entry and mid-segment motorcycles, particularly the 110cc and 125cc models.

Popular commuter models such as the Dream 110, Shine 100, Shine 100 DX and SP 125 have continued to attract buyers because of their fuel efficiency, low running costs, competitive pricing and practical features, said Ashequr.

“We are resolving customer issues much faster than before. Our motorcycles offer advanced technology at competitive prices with low running costs,” he said.

He added that Honda’s strengthened brand image had also contributed to the company’s improved sales performance.

Heavy to very heavy rain, flash floods, flooding and waterlogging have affected 28,610 hectares of crops across 12 districts.

Preliminary data from the Department of Agricultural Extension (DAE) showed that Aush rice, Aman seedbeds and summer vegetables were the most affected.

The DAE assessment covered 5,34,570 hectares under the listed crops in the affected districts.DAE officials said the figure was preliminary. The actual extent of the damage would become clearer after floodwater receded, while the affected area could increase if rain continued.

Md Obaidur Rahman Mondal, director of the DAE's Field Services Wing said farmland in Chattogram, Rangamati, Khagrachhari, Bandarban and eight other districts had been affected by heavy rain.

"Continuous rain and standing water have affected Aush rice, Aman seedbeds, seasonal vegetables and betel leaf farms," he said.

He added that officials were continuing to collect field-level information to determine the full extent of the damage.

District-wise data showed that 3,495 hectares were affected in Rangamati, including Aush, summer vegetables, ginger, turmeric, Aman seedbeds and orchards.

In Khagrachhari, 1,031 hectares of Aush, summer vegetables, Aman seedbeds and orchards were affected.

In Bandarban, around 945 hectares under nine crop categories were affected, including Aman seedbeds, Aush, summer vegetables, orchards in the plains and hills, jhum Aush, ginger and turmeric.

Chattogram recorded 6,591 hectares of affected Aush, 565 hectares of Aman seedbeds and 4,167 hectares of summer vegetables.

Aush, Aman seedbeds, summer vegetables and betel leaf farms were affected in Cox's Bazar.

In Naogaon, 4,340 hectares of Aush were affected. Habiganj recorded 1,259 hectares of affected Aush, 150 hectares of Aman seedbeds and 233 hectares of vegetables.

Different areas under Aush, jute, chilli, banana, Aman seedbeds and summer vegetables were also affected in Jashore, Chuadanga, Meherpur, Sirajganj and Sunamganj.

Agriculture officials said Aush, summer vegetables and Aman seedbeds had so far faced the greatest impact.

If Aman seedlings are destroyed, farmers in many areas may have to prepare new seedbeds, delaying the cultivation schedule. Damage to vegetables still in the fields could also reduce supplies and raise prices, they said.

Meanwhile, the Flood Forecasting and Warning Centre (FFWC) said yesterday (12 July) that the flood situation in the north-eastern region could worsen over the next 24 to 72 hours.

Water levels in the Khowai, Manu, Kushiyara and Surma rivers were rising rapidly. The Kushiyara was already flowing above the danger level at Markuli in Sunamganj and Fenchuganj in Sylhet.

Water in the Sari-Gowain, Someshwari, Jadukata and Bhogai-Kangsha rivers could also cross danger levels at several points.

This could inundate more low-lying farmland in Sylhet, Sunamganj, Habiganj and Moulvibazar, officials said.

Mohammad Nazmul Kabir, additional deputy director for crops at the DAE's Sunamganj office, said relatively low rainfall in Cherrapunji had so far prevented major flooding.

"However, the area remains highly vulnerable to flash floods," he said.

Vegetable importer Farhan Hossain said actual supplies often declined during disasters, while artificial shortages were also sometimes created to raise prices.

Transport disruption could quickly push up the prices of green chillies, potatoes and other essential vegetables, he said.

Faruk Ahmed, director of the research wing at the Bangladesh Agricultural Research Institute, said most summer crops had been harvested before the monsoon, reducing the risk of a major impact on overall food production.

"However, vegetables, green chillies and newly prepared Aman seedbeds still in the fields could affect the market in the short term," he said.

He added that farmers in waterlogged areas could use the pyramid method, under which crops are grown on raised, pyramid-shaped beds, to improve drainage and reduce the risk of root rot.

Defaulted loans from Bangladesh's nine state-owned banks have risen to nearly Tk 1.89 trillion, prompting the government to begin overall banking-sector overhaul, the finance minister told parliament on Sunday.)

A series of short-, medium- and long-term reforms are being carried out for restoring discipline in the banking sector, said Amir Khasru Mahmud Chowdhury.

Responding to a supplementary question from reserved-seat lawmaker Sabikunnahar during the 23rd sitting of the second session-the first budget session under this government-of the 13th Jatiya Sangsad, the finance minister said total default loans from the state-owned banks stood at Tk 1,88,701.75 crore as of May 31.

The figures were compiled using data submitted to the Bangladesh Bank's Credit Information Bureau (CIB) by the nine state-owned lenders: Agrani Bank PLC, Janata Bank PLC, Rupali Bank PLC, Sonali Bank PLC, BASIC Bank PLC, Bangladesh Development Bank PLC, Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank and Probashi Kalyan Bank.

Presided over by Speaker Hafiz Uddin Ahmed, the parliamentary session heard the finance minister stress that reducing the high volume of non-performing loans is essential to restoring order in the banking sector.

He notes that the issue has been given special importance in the government's election manifesto.

To address the problem, Bangladesh Bank has adopted a comprehensive reform strategy.

In the short term, the central bank is preparing guidelines on classified loan- resolution strategies and updating its credit-risk-management framework in line with international standards.

The medium-term plan includes implementing the International Financial Reporting Standard (IFRS-9), introducing accredited institutions to assess collateral value, updating agricultural loan-rescheduling policies, providing incentives to bank officials for recovering defaulted loans, and strengthening reward schemes for regular borrowers.

Long-term measures include setting a cap on the total amount an individual borrower can obtain from the entire banking sector, taking stricter action against willful defaulters, appointing experienced bankers to panels of judges in Money Loan Courts, preventing delays in loan recovery caused by writ petitions, and enacting legislation to establish private-sector asset-management companies.

The finance minister also has said the government has enacted the Bank Resolution Act 2026 to ensure effective management of troubled banks. In addition, it is preparing the Deposit Protection Act 2026 to safeguard depositors' interests.l

And amendments to the laws governing Bangladesh Bank, the Insurance Development and Regulatory Authority (IDRA), Bangladesh Securities and Exchange Commission (BSEC), as well as revisions of the Negotiable Instruments Act, have strengthened the legal framework for addressing cheque fraud and improving the adjudication of cheque-dishonour cases.

"The government is working to restore discipline in the financial sector through a stronger legal framework, a transparent bank-resolution process and enhanced protection for depositors," he told the House.

To another supplementary from Gazipur-4 lawmaker Salauddin, the finance minister said investigations were underway into irregularities, corruption and large-scale financial misappropriation that occurred in the banking sector over the past several years, including at Probashi Kalyan Bank.

He reaffirms that restoring order in the financial sector remains one of the government's highest priorities and describes the ongoing reforms as a comprehensive "cleaning process" across the sector.

During the session, Salauddin alleged that under the previous government, billions of taka had been siphoned off from Probashi Kalyan Bank through "politically influenced loan approvals, bribery and syndicate-based corruption".

As a result, he claims, nearly 61 per cent of the bank's loans have become non-performing. He also alleges that the same syndicates continue attempting to influence loan approvals and disbursements, calling for a thorough investigation and the dismantling of the nexus.

In response, the finance minister makes it clear that the investigation is not limited to a single institution but covers multiple banks.

He notes that action has already been taken against a number of individuals and acknowledges that the financial sector's longstanding irregularities cannot be eliminated overnight, but pledges that the cleanup drive would continue.

Bangladesh's creative economy needs supportive policies, structural reforms and measurable performance benchmarks to emerge as a sustainable driver of economic growth, experts said at a discussion on Saturday.

They welcomed the government's first dedicated budget allocation for the sector but said its success would depend on effective implementation, regulatory reforms and stronger public-private collaboration.

The observations came at a webinar titled "Creative Economy: Slogan or Untapped Potential?" organised by the Power and Participation Research Centre (PPRC).

In a major policy shift, the FY2026-27 national budget has, for the first time, earmarked a Tk 8.0 billion work plan for the creative economy. The package includes Tk 3.0 billion in direct budgetary support and another Tk 5.0 billion from Bangladesh Bank's corporate social responsibility (CSR) fund.

The initiative aims to increase the sector's contribution to GDP, create nearly 500,000 jobs and build a "Created in Bangladesh" brand across industries such as film, music, publishing, digital content and design.

The discussion was moderated by PPRC Executive Chairman Hossain Zillur Rahman. Participants included filmmaker and creative entrepreneur Tanim Noor, Chorki CEO Redwan Rony, Bengal Foundation Director General Luva Nahid Choudhury, playwright and actor Bakar Bakul, UPL Managing Director Mahrukh Mohiuddin, and Classical Handmade Products (CHP) Managing Director Md. Tauhid Bin Abdus Salam.

Tanim Noor called for a dedicated tax policy for the creative economy, saying targeted incentives would help attract greater investment.

"Providing tax incentives, such as a 50 per cent tax exemption for the film industry, could significantly increase investment in Bangladeshi cinema, making the sector more attractive to both existing and new investors," he said.

Redwan Rony said the government should prioritise infrastructure development alongside reforms to taxation and licensing policies to strengthen the film industry.

He noted that Bangladeshi content produced for over-the-top (OTT) platforms is currently taxed under the general corporate tax structure, while no dedicated policy framework exists for the sector.

As a result, global streaming platforms such as Netflix and Amazon generate revenue from Bangladeshi audiences without facing the same tax obligations as domestic OTT platforms, leaving local companies at a competitive disadvantage, he said.

Luva Nahid Choudhury said Bangladesh has no shortage of creative talent, but the ecosystem needed to nurture, commercialise and scale that talent remains underdeveloped.

Summing up the discussion, Dr Hossain Zillur Rahman said Bangladesh now needs a policy ecosystem that reflects the creative economy's growing potential.

"A one-dimensional infrastructure approach will not take us forward. We need quality infrastructure backed by sustainable management models based on public-private partnerships," he said.

He also called for policy reforms covering taxation, royalty sharing, copyright protection and licensing.

"The government has expressed an interest in taking the sector forward. But to ensure sustainable results, stakeholders within the sector must also come together independently to develop a strategic roadmap for its future," he added.

Non-performing loans (NPLs) in banks with significantly higher trade-finance exposure range between 40 per cent and 50 per cent, according to a study of the Bangladesh Institute of Bank Management (BIBM).
And the rate exceeds 80 per cent in banks having both high overall NPLs and substantial trade-finance exposure, it revealed.

The study paper titled 'Trader Services Operations of Banks' was presented at a review workshop organised by the BIBM at its campus at the city's Mirpur area on Wednesday.

Presenting the findings, he said discussions with banks having significant trade finance exposure indicate that asset quality pressure has already become evident in trade-related portfolios.

The BIBM also identified the conversion of non-funded liabilities into forced loans as one of the principal drivers of trade finance-related Non-Performing Loans (NPLs).

Besides, financing associated with imports of capital machinery, raw materials such as cotton, commodities including sugar and fertiliser, fuel, and scrap vessels has significantly contributed to the deterioration of asset quality, it revealed.

The workshop brought together senior bankers, policymakers, regulators, academics, and researchers to deliberate on the emerging challenges and future direction of trade finance in Bangladesh.

Dr. Md. Ezazul Islam, Director General of BIBM presided over the workshop while the keynote paper was presented by Dr. Shah Md. Ahsan Habib, Professor (Selection Grade), BIBM, on behalf of the research team.

The research further identified structural weaknesses in export finance. Findings from the opinion survey showed that nearly all bankers considered the use of back-to-back letters of credit (LCs) without legally enforceable sale-purchase contracts to be a major cause of NPL formation.

According to the study, while back-to-back LC arrangements are designed to support export production by linking input procurement with confirmed export orders, weak or disputed underlying contracts can undermine the financing chain.

Delays or failures in realising export proceeds may quickly transform transaction-based trade finance facilities into forced loans, eliminating their self-liquidating nature and leaving banks exposed to significant credit risk.

In his address, Ezazul Islam emphasised the need for modernising the legal and digital infrastructure for electronic trade documents to facilitate faster, more secure, and paperless trade transactions.

He also stressed the importance of strengthening Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) measures and reinforcing controls against Trade-Based Money Laundering (TBML), while ensuring efficient and customer-friendly banking services.

Dr. Ezazul Islam further highlighted the importance of expanding the access of Small and Medium Enterprise (SME) to trade finance through innovative financial products and risk-sharing mechanisms.

He also underscored the need for improving product-level data, strengthening risk management practices, and enhancing asset quality monitoring.

He also called for stronger coordination among Bangladesh Bank, commercial banks, customs authorities, and other relevant stakeholders to develop a resilient, transparent, and efficient trade finance ecosystem capable of supporting Bangladesh's growing international trade.

The keynote paper was jointly prepared by Dr. Shah Md. Ahsan Habib, Professor (Selection Grade), BIBM; Tofayel Ahmed, Assistant Professor, BIBM; Rahat Banu, Assistant Professor, BIBM; Rajib Kumar Das, Lecturer, BIBM; Mohammad Arafat Ali, Additional Director, Foreign Exchange Policy Department-1, Bangladesh Bank; and A.T.M. Nesarul Hoque, Executive Vice President, Mutual Trust Bank PLC. All members of the research team were present at the workshop.

The workshop also featured comments from distinguished panellists, including Md. Ali Hossain Prodhania, Supernumerary Professor, BIBM and Chairman, NRBC Bank PLC; Mahmudur Rahman, CDCS, Deputy Managing Director, Islami Bank Bangladesh PLC; . Syed Sazzad Haider Chowdhury, Deputy Managing Director, Prime Bank PLC; and Faruk Ahmed, Deputy Managing Director, City Bank PLC.

The event concluded with an interactive open-floor discussion, where senior executives from commercial banks, Bangladesh Bank, and other stakeholders exchanged their views on strengthening trade finance operations and improving asset quality in the banking sector.

Bangladesh Economic Zones Authority (BEZA) is seeking approval for a Tk19.18-billion infrastructure-development project to carve out three sub-zones in the National Special Economic Zone (NSEZ) in Mirsarai ready for industrial operations.

The Prime Minister's Office has sent the development project proposal (DPP) titled "Infrastructure Development at Sub-Zones 6, 11 and 12 in National Special Economic Zone Project" to the Planning Commission for approval, officials say.

The proposed scheme will cover 1,292.08 acres of land, where investors have already received industrial plots but have been unable to set up factories for the absence of essential infrastructures, including roads, electricity and gas facilities, according to the DPP.

The proposed investment comes as BEZA is already implementing five projects for the NSEZ with a combined estimated cost of Tk57.55 billion, raising concerns over project-execution capacity and resource utilisation.

Experts have called for prioritising completion of ongoing schemes and ensuring effective use of public funds before taking up new projects to maintain discipline in public investment.

Under the proposed project, BEZA will construct 35.26 kilometres of roads, 49.36 kilometres of drainage networks and 51.11 kilometres of footpaths, along with bridges, to improve connectivity within the economic zone.

The scheme also includes a 22-kilometre gas-distribution network with two District Regulating Stations (DRS), a 21.15-kilometre electricity network with three substations, and development of 1.13 million cubic metres of land for industrial use.

Besides utility infrastructure, two residential buildings and a complex area will be developed for officials and employees working in the zone.

The DPP says, "The project aims to create an investment-friendly environment by ensuring basic services needed for factory establishment."

The NSEZ, being developed close by the port city of Chattogram, is the country's largest economic zone. BEZA has already acquired or received allocation of around 17,000 acres of land for the zone, which has been divided into 30 sub-zones under a master plan.

The authority expects the development to accelerate industrial expansion and create employment opportunities in Mirsarai and Sitakunda of Chattogram and Sonagazi of Feni.

However, the new project is being proposed while several major NSEZ-related schemes remain under implementation.

These include Tk7.62 -billion water-treatment plant and deep tube-well project launched in July 2019, Tk2.74-billion road and drainage infrastructure project started in April 2020, and Tk41.40-billion NSEZ development project initiated in January 2021.

The continuation of multiple large-scale schemes highlights the infrastructure needs of the country's largest economic zone but also raises questions over coordination, implementation efficiency and timely completion.

Dr Mustafa K Mujeri, former director-general of Bangladesh Institute of Development Studies (BIDS), says the government should prioritise completing ongoing projects and ensuring proper utilisation of existing investments before taking up new ones.

"Taking up a large number of projects at the same time creates pressure on public resources and reduces the expected economic benefits. Effective project selection, timely implementation and stronger monitoring are essential to maintain discipline in public investment," he adds.

A high-level International Monetary Fund (IMF) delegation will arrive in Dhaka tomorrow (12 July) for a five-day fact-finding mission to assess the feasibility of a fresh loan package worth nearly $4.5 billion proposed by the government.

On the first day of the visit, IMF officials are scheduled to hold meetings with representatives from the finance ministry, Bangladesh Bank and other relevant agencies.
During the mission, which runs through 16 July, the delegation, led by IMF Bangladesh Mission Chief Ivo Krznar, will assess the government's economic reform agenda, policy priorities and the current macroeconomic situation.In tomorrow's meetings, the IMF is expected to seek the government's position on its reform plans, revenue mobilisation, subsidy reforms, banking sector restructuring, exchange rate policy and broader macroeconomic objectives.Finance ministry officials said the IMF will review Bangladesh's current economic conditions before deciding whether the institution will formally consider the country's request for a new lending programme.
Finance ministry officials expect that, if the current mission delivers a favourable assessment, formal negotiations on a new lending programme could begin after the IMF-World Bank Annual Meetings in October.During the five-day visit, the IMF will also review the BNP government's FY2026-27 budget, the medium-term budget framework, the Annual Development Programme (ADP) and major infrastructure projects.

The discussions will also cover revenue collection, tax policy, public expenditure, social safety net programmes, public sector wages and recruitment, as well as subsidies for electricity, gas, fuel, fertiliser and food. Officials will also discuss power sector capacity payments, banking reforms, implementation of the Bank Resolution Act, financing of state-owned enterprises, external debt management, commercial borrowing and risks related to foreign financing.

The IMF delegation is also scheduled to hold a separate roundtable discussion on Bangladesh's banking sector.

In an email sent on 26 June to the finance secretary and the Bangladesh Bank governor, Ivo Krznar wrote: "This is not a loan negotiation mission, but rather a 'fact-finding staff visit'. The purpose of the visit is to gain a direct understanding of the government's policy objectives, reform agenda and priorities, and to prepare the IMF's internal assessment based on that information."

Krznar added: "The information gathered during this visit will form the basis for the IMF's macroeconomic assessment and policy assumptions before any potential loan negotiations begin. It will also help determine where technical assistance may be required."

In 2023, the then Awami League government signed a $4.7 billion loan agreement with the IMF to address Bangladesh's foreign exchange reserve crisis. During the tenure of the interim government, additional financing under the Resilience and Sustainability Facility (RSF) increased the total programme size to $5.5 billion.

However, after disbursing $3.595 billion in five tranches, the IMF suspended further disbursements in December last year because Bangladesh failed to meet programme conditions. After taking office, the BNP government cancelled the previous programme and applied for a new loan package after accepting those conditions.

In his email, the IMF mission chief also referred to recommendations made in the latest Article IV Consultation report, which called for stronger revenue mobilisation, rationalisation of subsidies, accelerated banking sector reforms and a more market-based exchange rate regime.

The letter said the mission will examine how the current government plans to implement those recommendations, making the issue one of the central topics of the visit.

Krznar also wrote that the IMF primarily wants to listen to the government's views. The delegation will seek to understand the government's policy priorities, reform plans and responses to recent global and regional economic developments.

A senior finance division official, speaking on condition of anonymity, told The Business Standard that the government will highlight progress on adopting a market-based exchange rate, modernising monetary policy, implementing the Bank Resolution and Deposit Protection Act, introducing risk-based supervision and advancing climate-related reforms.

Several finance ministry officials said that if the mission's assessment is positive, formal negotiations on a new lending programme could begin after the IMF and World Bank Annual Meetings in Thailand in October. The government is seeking between $4 billion and $4.5 billion under the new programme.

A finance division official said, "If the IMF concludes that the government's reform agenda is realistic, its economic policy direction is credible and the foundation for a new programme has been established, it may send a negotiation mission to Bangladesh after the IMF-World Bank Annual Meetings in October. Formal discussions would then begin on the size of the new lending programme, reform conditions and the disbursement schedule."

The government should craft a single, comprehensive strategy covering every sector of the creative economy, from film and theatre to crafts and publishing, according to industry insiders.

Building a supportive policy ecosystem and setting clear result benchmarks are central to unlocking the sector’s potential nationally, they said at a virtual event organised by the Power and Participation Research Centre (PPRC) today.

The national budget for FY2026-27 has, for the first time, set aside Tk 800 crore for the creative economy -- Tk 300 crore in direct allocation and a further Tk 500 crore through Bangladesh Bank’s CSR fund.

The initiative aims to lift the sector's GDP contribution, create jobs for nearly five lakh people, and build a "Created in Bangladesh" brand spanning film, music, publishing, digital content, and design.

Redoan Rony, film director, producer, and CEO of streaming platform Chorki, said the country needs “a core strategy across all sectors, not just film or theatre, but crafts as well.”

He believes that Bangladesh has many talented people, but they need better skills development and training based on successful international models “We have a large workforce and low labour costs, from film to every other area. We can do this.”

Tanim Noor, film director and producer, said a dedicated taxation policy, such as a 50 percent tax exemption for the film industry, could significantly boost investment in Bangladeshi cinema.

He noted that nearly 200,000 people were directly employed in the industry during its golden era in the 1970s and '80s, counting cinema halls and related sub-sectors. Today, combining OTT platforms, cinema halls, and technologies like post-production and VFX, the sector could employ up to 10 lakh people.

The market size of this sector could be expanded to Tk 5,000 to Tk 10,000 crore, he said, adding that this would generate Tk 500 to Tk 1,000 crore in annual government revenue.

Luva Nahid Choudhury, director general of Bengal Foundation, called structural reforms and a central commission essential for the sector's sustainable development, along with legal enforcement of artists' intellectual property rights and royalties.

She noted that Indian artists have a right to non-transferable remuneration, while Bangladesh lacks proper copyright enforcement.

Mahrukh Mohiuddin, managing director of publishing company University Press Limited, said piracy, both traditional and digital, particularly the illegal spread of books online, has taken on epidemic proportions, breaking the backbone of publishers.

She blamed the country's “weak” copyright law and lack of proper enforcement for the rise in the illegal activity.

Bakar Bokul, playwright and creative director of theatre troupe Tarua, said governments have historically used the arts as a "propaganda machine," implementing their own agendas under the guise of cultural activism while genuine artists go unsupported, leaving theatre and other art forms trapped in this cycle.

Tauhid Bin Abdus Salam, managing director of Classical Handmade Products BD Limited, said expanding handicrafts into international markets requires blending traditional skills with designs and colours that meet global demand.

Hossain Zillur Rahman, executive chairman of PPRC, said Bangladesh's creative economy now needs a policy ecosystem to match its potential.

"A one-dimensional infrastructure approach will not take us forward. We need quality infrastructure supported by sustainable management models built on public-private partnerships," he said.

The Insurance Development and Regulatory Authority (IDRA) has won the top innovation award in the regulatory agency category at the Innovation Showcasing 2025-26 for its mobile app, Insuplaint, which digitises insurance complaint management and claims monitoring.

Finance Minister Amir Khosru Mahmud Chowdhury handed over the award to IDRA Chairman Mir Nadia Nivin at the programme organised by the Financial Institutions Division (FID) on July 6.

Launched on June 23, the app enables policyholders across the country to submit insurance claims and lodge complaints remotely without visiting the regulator's office. Users can also track the progress of claim settlements and complaint resolution through the mobile application.

The platform also allows IDRA to monitor whether insurance companies are resolving customer complaints and claims in a timely manner, strengthening regulatory oversight and improving service delivery.

As part of its broader digital transformation efforts, IDRA is also implementing Bima Tathya App, a centralised digital platform designed to verify insurance policy information. The platform is expected to simplify policy verification, prevent fake and duplicate policies, enhance public confidence in the insurance sector and support higher premium collection.

The Innovation Showcasing 2025-26 featured 25 innovation initiatives from agencies and organisations under the Financial Institutions Division. Five organisations received awards in five separate categories.

The other award-winning initiatives were Janata Bank's "Janata-Pay" under the state-owned commercial bank category, Probashi Kallyan Bank's "e-Migration Loan Service" under the specialised bank category, Bangladesh House Building Finance Corporation's automated deed return process under the financial institution category, and Palli Karma-Sahayak Foundation's GIS-based Supervision and Monitoring System under the other institutions category.

Bangladesh could see its trade with the European Union (EU) expand significantly over the next three to four years, but the country may not be fully prepared to capitalise on the opportunity, warned MA Razzaque, chairman of the Research and Policy Integration for Development (RAPID).

"Trade relations between Bangladesh and the EU are likely to deepen over the next three to four years in a way not seen over the past five decades. The question is whether Bangladesh has the capacity to absorb those opportunities," he said.

Razzaque was speaking at a seminar titled "The changing landscape of Bangladesh-EU trade relations: LDC graduation, preference erosion and intensifying competition", jointly organised by RAPID and the Friedrich-Ebert-Stiftung (FES) in Dhaka today.

He said Bangladesh has not been able to effectively present its own demands to the EU, even though the bloc has put forward extensive expectations on trade, governance and sustainability.

Referring to Bangladesh's graduation from the United Nations' least developed country (LDC) category, Razzaque said the Committee for Development Policy (CDP) had recommended a short deferment of the graduation process, which is currently scheduled for November this year.

"If the United Nations does not grant an extension, Bangladesh will graduate this year," he said.

Razzaque noted that Bangladesh currently exports around $22 billion worth of goods to the EU under duty-free access, making the bloc the country's largest export destination.

"Bangladesh definitely needs duty-free market access," he said, stressing that retaining preferential access to the EU market is crucial for sustaining the country's export competitiveness after LDC graduation.

He also highlighted the EU's broader economic contribution, saying around 30 percent of Bangladesh's foreign direct investment (FDI) originates from EU member states, while the bloc has provided about $3.4 billion in development assistance over the past five years.

Although Bangladesh does not enjoy duty-free access to the US market, Razzaque said the country still has scope to secure greater benefits from the EU market if it strengthens its competitiveness and preparedness.

"To remain competitive after LDC graduation, we will have to reduce our production costs," he said, adding that improving productivity and lowering business costs would be essential to maintaining Bangladesh's position in the EU market.

He added that the EU imports about 21 percent of its readymade garment products from Bangladesh under duty-free arrangements, while China's share of the EU apparel market has been declining, creating additional opportunities for Bangladeshi exporters.

Bangladesh retained its position as the second-largest apparel supplier to the United States in the first five months of 2026, despite a dip in shipments, as American buyers continued to pivot away from China, official data showed.

According to the US Office of Textiles and Apparel (OTEXA), Bangladesh's garment exports to the US fell 8.1% year-on-year to $3.25 billion during the January-May period. However, the drop outperformed the overall US apparel import market, which contracted by 9.3%.

Vietnam extended its lead as the top supplier to the US, with exports rising 1.5% to $6.39 billion. Meanwhile, shipments from China plunged 42.8% to $2.80 billion, signaling an accelerating shift in global retail supply chains driven by US tariffs and diversification strategies. In volume terms, China's shipments sank nearly 30%.
Indonesia and Cambodia were among the biggest beneficiaries, recording growth of 5.5% and 14.9%, respectively, while India's shipments dropped 26.4%.Although Bangladesh maintained its market ranking, the figures indicate the country has yet to capture a significant share of the orders shifting away from China, with regional competitors expanding faster.The latest monthly data, however, showed a more encouraging sign. Bangladesh's exports to the US increased 6.0% in May from a year earlier, compared with a 2.8% rise in total US apparel imports, indicating demand may be recovering after a weak start to the year.In volume terms, Bangladesh shipped 1.09 billion square metre equivalents (SME) during the January-May period, down 6.2%, while its average unit price slipped 2% to $2.99 per SME, suggesting exporters largely maintained pricing amid softer demand.China suffered a dramatic collapse, both in value and volume. China saw nearly a 43% drop in value and nearly 30% in volume as the country continues to lose market share rapidly, largely because of US tariffs and sourcing diversification.

Indonesia rose as a big challenger as the country recorded 5.49% growth in value and over 13% in volume. While Cambodia emerged as the fastest-growing apparel exporter to the US as the country achieved nearly 15% in value growth and over 18% in volume growth.

Price comparison:

Bangladesh's garment export prices to the US market remained stable despite weaker demand, hinting exporters largely avoided deep discounting to retain orders.

The average unit price of Bangladesh-made apparel slipped 2% year-on-year to $2.99 per square metre equivalent (SME) during January-May 2026, compared with the global average of $3.14.

OTEXA data shows Bangladesh continued to command higher prices than China ($1.43), Pakistan ($2.59) and Cambodia ($2.91), but trailed Vietnam ($3.39), India ($3.41), Honduras ($3.64), Indonesia ($3.77) and Mexico ($4.45).

China recorded the lowest unit value among major suppliers, reflecting its focus on lower-priced, high-volume products, while Mexico maintained the highest average price, supported by its proximity to the US market and a greater share of value-added apparel. Bangladesh's relatively stable pricing indicates that the decline in exports was driven more by lower shipment volumes than by price erosion.

The Asian Development Bank (ADB) has lowered Bangladesh’s economic growth forecast, projecting the country’s gross domestic product (GDP) to expand by 3.7 per cent in fiscal year (FY) 2026 and 4.5 per cent in FY2027.

The revised projections were published in ADB’s Asian Development Outlook (ADO) July 2026, released on Thursday, UNB reports.

The latest forecast reflects weaker export performance, sluggish private investment, elevated energy costs, persistent inflation, and a more challenging external environment.

“Bangladesh’s economy continues to show resilience amid a difficult global and domestic environment, supported by strong remittance inflows and steady services activity,” said Akira Matsunaga, Deputy Director (Officer-in-Charge) of ADB’s Bangladesh Resident Mission.

He said sustained reforms to strengthen macroeconomic stability, improve the investment climate, enhance financial sector governance, and address energy and infrastructure constraints would be critical to supporting a stronger and more inclusive recovery.

Such reforms would also help attract greater private investment, create quality jobs, and strengthen the country’s economic resilience, he added.

ADB expects inflation to remain high at 9.0 per cent in FY2026, unchanged from its April forecast, as recent increases in domestic petroleum, gas, and electricity prices continue to feed through to transport, utility, and other consumer costs.

Inflation is projected to ease slightly to 8.8 per cent in FY2027, higher than the 8.5 per cent forecast in April, owing to second-round effects from higher energy and transport costs, exchange rate pass-through, and persistent food and services inflation.

The report said economic growth in FY2026 would be supported by strong remittance inflows, steady expansion of the services sector, and targeted credit easing measures for priority sectors despite an overall tight macro-financial environment.

However, it noted that high inflation continues to erode household purchasing power and restrain private consumption, while weak exports and moderate import growth indicate subdued external demand and sluggish private investment.

On the supply side, export-oriented manufacturing is expected to remain under pressure from high energy prices, weak global demand, and structural bottlenecks. Agriculture also faces risks from fertiliser shortages, although the services sector is likely to support growth through remittance-backed household spending.

For FY2027, ADB expects moderate inflation, simplified business regulations, improved governance, tax administration reforms, and continued remittance incentives to support stronger consumption and investment.

Nevertheless, vulnerabilities in the banking sector, energy shortages, and weak competitiveness are expected to keep economic expansion gradual.

ADB also warned of significant downside risks to the outlook.

It said any further escalation of the conflict in the Middle East could push up global energy and shipping costs, intensify external pressures, weaken growth through higher inflation, and reduce remittance inflows.

The report added that higher global oil prices could widen Bangladesh’s import bill and increase fiscal pressure through larger energy subsidies, while higher tariffs, broader trade restrictions, or weaker growth in major economies could further dampen export demand and prolong weakness in the manufacturing sector.

Persistent exchange rate pressures, tight external financing conditions, and climate-related shocks also remain key risks to the country’s economic outlook.

Bangladesh's financial architecture is facing significant pressure as the state-backed contingent liabilities for underperforming State-Owned Enterprises (SOEs) and autonomous bodies reached Tk 400.12 billion in sovereign guarantees till the last fiscal year, officials say.

This massive debt pile, triggered by heavy overseas and domestic borrowing by core public sectors like Biman Bangladesh, Bangladesh Power Development Board (BPDB), and state-run fertiliser companies, has surfaced as a major macroeconomic threat, they add.

A series of independent reviews and global assessments warn that these liabilities are pushing public finances toward an unsustainable path.

A recent World Bank study jointly produced with the Policy Research Institute (PRI) reveals that structural inefficiencies, operational leaks, and subsidies to these SOEs cost the national exchequer nearly Tk 882 billion in a single fiscal year.

This massive drain accounts for roughly 1.7 per cent of the nation's gross domestic product (GDP), suffocating the budget available for critical sectors like education, healthcare, and social safety nets.

According to official sources, the concentrated accumulation of debt centres heavily on three capital-intensive sectors - power (BPDB and power plants), aviation (Biman Bangladesh), and agriculture (fertiliser/ Bangladesh Chemical Industries Corporation).

The energy and power sector stands as the single largest contributor to this fiscal risk with the highest amount of sovereign guarantees, bleeding the heaviest losses across the economy.

Driven by controversial contracts, independent power producer (IPP) capacities, and delays, the government has extended over Tk 416.9 billion in guarantees to back 16 massive projects, including the Patuakhali, Payra, and Rampal 1,320MW thermal plants.

Compounding the crisis, Energy Minister Iqbal Hassan Mahmood recently said in parliament that the state was legally bound by these sovereign guarantees, meaning the complex contracts could not be easily modified or cancelled, tying the government's hands over late payment fees and capacity charges.

The national flag carrier represents the second-highest consumer of government-backed security, officials say.

Biman Bangladesh Airlines has accumulated Tk 109.09 billion across 15 aircraft acquisition and engine procurement projects.

Despite massive state backing, the airline remains classified under "high to very high risk" due to operational mismanagement and poor revenue returns, officials say.

To insulate local farmers from international price volatility and ensure a steady domestic food supply, Bangladesh Chemical Industries Corporation (BCIC) and various state-run fertiliser entities secured Tk 64.38 billion in state-guaranteed loans, they say.

Operating on high-cost imports combined with heavily subsidised retail distribution, these corporations have been fundamentally unable to generate the independent revenues needed to clear their commercial liabilities. The Finance Division's latest audit outlines a bleak picture of the institutional stability of public assets.

Over 81 per cent of Bangladesh's SOEs are currently operating under moderate to very high levels of financial risk, the report says.

The World Bank performance index ranks Bangladesh's public enterprises significantly lower than its regional neighbours.

While state-backed entities in India recorded a positive 9.7 per cent return on assets (ROA) and Vietnam achieved an 11.9 per cent return, Bangladesh's non-financial SOEs crashed into the negative, posting a negative 5.2 per cent return on assets.

A Ministry of Finance official says amid a declining tax-to-GDP ratio, rising inflation, and tight foreign exchange reserves, the ministry has launched aggressive damage-control policies to rein in the long-term exposure like the Sovereign Guarantee Penalty Fees to disincentivise unchecked reliance on state cushions, while the government has introduced a 0.25 per cent upfront fee on all sovereign loan guarantees for state, autonomous, or government-controlled entities.Finance

A senior finance ministry official says although there was no incident of sovereign loan default by the SOEs, the government plans to amend the existing guideline to streamline the process and further strengthen the debt payment capacities of the SOEs.

While the total outstanding sovereign liabilities showed a microscopic dip by late last year due to temporary bank repayments, economists warn that without deep corporate governance changes, these Tk 400-billion-plus structural safety nets remain a critical ticking clock for the national economy.

Policy Exchange Bangladesh Chairman Masrur Reaz tells The Financial Express that although sovereign guarantees by the government of developing nations are not very unusual, the fruitful utilisation of the borrowing will have to be ensured.

If the return on the loans, where the government provides guarantees, is high, only those should be considered for providing the security, he says.Banking

He also says if the government goes for providing guarantees for the less important projects or programmes of the SOEs and autonomous bodies, the country's fiscal governance as well as the rating will be downgraded.