Bangladesh Faces Rising Debt & Remittance Growth

• Bangladesh’s Interest Payments Increase: Interest payments surged by 24.5% in FY24, reaching USD 8.4 billion, surpassing the initial allocation of USD 7.93 billion. Foreign loan interest payments rose by 60.53%. Source

• Post-Least Developed Country (LDC) Survival Plan Finalization: The transition plan will focus on economic transformation and export diversification. It includes USD 15.8 billion in subsidies for agriculture and fisheries while phasing out export incentives by 2026. Source

• Budget Execution at 79%: The fiscal year 2024 saw a 79% budget execution rate, with actual spending at USD 50.6 billion, short of the target of USD 63.9 billion. The budget deficit reached USD 16.2 billion. Source

• United Arab Emirates Tops Remittance Sources: Remittances from the UAE reached USD 4.63 billion in FY24, up from USD 3.03 billion the previous year, making it the top source of remittance. Source

• Ready-Made Garments (RMG) Sector Rush: The RMG sector is operating at full capacity to meet tight deadlines, with concerns that 10% of orders could shift to India and Vietnam due to missed deadlines. Source

• Global Rice Prices Drop: Following India’s resumption of non-basmati white rice exports, global rice prices decreased, stabilizing international supply chains. Source

• Steel Sales Decline: Steel sales in Bangladesh have fallen by 50% due to government project delays and reduced demand from the private sector, impacted by high interest rates on home loans. Source

• Energy Imports: Bangladesh approved two consignments of liquefied natural gas (LNG) from Gunvor Singapore, totaling USD 107.5 million, to meet its growing energy demand. Source

• Global Stock Market Shock: Global stock markets fell after rising tensions in the Middle East, with oil prices climbing due to concerns over supply disruptions. Source

• External Debt Servicing Rises: Bangladesh’s external debt servicing rose by 47% year-on-year in the first two months of FY25, adding further strain to the country’s financial position. Source

Economy

• Bangladesh’s Rising Interest Payments
  Bangladesh’s interest payments surged by 24.5% in FY24, reaching USD 8.4 billion. This increase was driven by a sharp rise in foreign loan interest payments, which grew by 60.53%, putting pressure on the country’s fiscal management and debt servicing. Source

• Post-Least Developed Country (LDC) Transition Strategy
  Bangladesh is preparing to finalize its post-LDC survival plan by October. This strategy focuses on export diversification and economic transformation. The plan includes USD 15.8 billion in subsidies for agriculture and fisheries, with a phased reduction of export incentives by 2026. Source

• China Considers USD 142 Billion Injection for State Banks
  China is considering a capital injection of USD 142 billion into large state-run banks, marking the first major injection since the 2008 financial crisis. This move aims to counter recent economic challenges, including sluggish domestic consumption, a prolonged property debt crisis, and high youth unemployment at 18.8%. Source

• UN Launches USD 134 Million Humanitarian Appeal
  The UN launched a USD 134 million appeal to assist 18.4 million people affected by four major climate disasters in Bangladesh. The plan aims to reach 2.5 million people across 28 districts, with only 28% of the required funding received so far. Priority areas include child protection, healthcare, food security, and rebuilding infrastructure. Source

Trade & Commerce

• Steel Sales Decline
  Steelmakers in Bangladesh have seen sales decline sharply by 50% since July 2024. This is mainly due to halted government projects, as the public sector accounts for 60% of the country's annual steel consumption. Higher interest rates on home loans have further reduced private sector demand for steel. Source

• RMG Sector Scramble
  Bangladesh’s ready-made garment (RMG) sector is racing to meet tight deadlines for autumn-winter orders after delays earlier in the year. Concerns are rising that 10% of orders could shift to India and Vietnam if delays persist. Source

• Potato and Onion Prices Fall After Duty Cuts
  Potato prices dropped by 1.79% to USD 0.45-0.47 per kg, while local onion prices fell by 6.52% to USD 0.88-0.92 per kg after the government cut import duties to 5% for onions and 15% for potatoes, effective until November 30. Source

• Interim Government to Revise Export Targets
  Bangladesh’s interim government is set to revise the "Export Policy 2024-27" due to its unrealistic target of USD 110 billion in export income by 2027. The review includes offering 5-10% rebates on electricity bills, waiving duties on capital machinery imports, and providing low-interest loans. Source

Banking

• Banks Rely on Treasury Investments
  Banks in Bangladesh have turned to treasury bills and bonds to maintain liquidity as borrowing to finance the budget deficit rises. Between March and June 2024, bank borrowing from the central bank increased by BDT 370 billion, with investments in government securities providing a return of over 11.65%. Source

• Call Money Rate Rises After Policy Hike
  The call money rate jumped to 9.55% after a 50-basis-point policy rate increase by the central bank. Inter-bank call money market turnover rose sharply, reflecting tightening liquidity conditions in the financial sector. Source

• BB Increases Refinance Scheme for Small Traders
  Bangladesh Bank expanded its refinance scheme for small traders and low-income people from USD 4.2 million to USD 6.3 million. Women borrowers are allocated 25% of the loans, with a maximum loan of USD 42,000 for individuals and USD 168,000 for groups of five. Source

Corporate

• ACI Motors Launches Yamaha FZS Version 4.0
  ACI Motors launched Yamaha’s FZS Version 4.0, priced at USD 2,517. This model, featuring a 150cc engine, is part of Yamaha's successful FZS series, which has been a strong player in the Bangladesh market since 2008. Source

• Sky Bees to Build Drone Factory
  Sky Bees is investing BDT 550 crore (USD 45.83 million) to establish a drone factory in Mirsarai. The factory will produce drones for firefighting, surveillance, mapping, and other uses, with exports expected to begin in early 2025. Source

International

• India Lifts Ban on White Rice Exports
  Global rice prices fell after India lifted its ban on non-basmati white rice exports. This move stabilized global supply chains, with other major rice exporters like Vietnam and Thailand also lowering their prices by at least USD 10 per ton. Source

• Oil Prices Rise Amid Middle East Tensions
  Oil prices increased as tensions between Israel and Iran-backed forces raised concerns about potential supply disruptions from the Middle East. Brent crude rose to USD 72.49 per barrel, as markets anticipated further price fluctuations. Source

• World Bank to Provide USD 300 Million for Clean Air Project
  The World Bank is set to provide USD 300 million to Bangladesh for the Clean Air Project, aimed at reducing emissions and improving air quality management. The project includes an IDA credit and a potential grant for clean cooking initiatives. Source