United News of Bangladesh

The government has initiated the process to remove Bangladesh Bank Governor Ahsan H Mansur and appoint a new chief of the central bank, according to officials at the Ministry of Finance. They said a proposal has already been sent to the Prime Minister’s Office seeking approval for the appointment of a new governor. According to the sources, a faculty member from a US university is being considered for the post. The proposal is currently awaiting the final clearance, and the officials indicated that the appointment could be finalised later in the day once the formalities are completed. Meanwhile, Financial Institutions Division Secretary Nazma Mobarek met the Finance Minister at his office at around 1:45pm, fuelling the speculation over the impending change in leadership at the central bank. New govt to continue reforms in banking sector: Bangladesh Bank governor When approached by reporters after the meeting, Nazma Mobarek declined to comment on the matter. “Please wait. I do not want to say anything right now. You will know if there is anything,” she said. There was no official statement from the Ministry of Finance or Bangladesh Bank regarding the development at the time of filing this report. Further details about the prospective appointee, including the individual’s identity and professional background, were not immediately available. Any change in the leadership of Bangladesh Bank is considered significant, given the central bank’s role in framing and implementing monetary policy, regulating banks and financial institutions, managing foreign exchange reserves and ensuring financial stability. While talking to an Adviser to the Prime Minister over telephone, he declined to comment on the matter, but he hinted that a change is imminent.

The Ministry of Finance on Tuesday dismissed as baseless a Facebook event created in the name of State Minister for Finance Md Zonayed Abdur Rahim Saki, urging the public not to be misled by rumours circulating on social media. According to an official press release, the event was created on Facebook using the state minister’s name under the title: “Torch procession led by Jonaed Saki demanding the resignation of the Home Minister over the alleged harassment of a University of Dhaka student by Ramna Zone Police DC Masud at Suhrawardy Udyan.” Finance Minister Khosru pledges ‘revolutionary’ shift in economy, stock market The ministry clarified that the state minister has no involvement whatsoever with the event and described it as entirely fabricated and misleading. Officials said the event falsely claimed that Saki would lead a torch procession at Suhrawardy Udyan in protest against an alleged incident involving a student of the University of Dhaka. The ministry stressed that the event was created without his knowledge, consent, or authorisation. In the statement, State Minister Saki urged citizens not to believe or spread such false and unverified information. Economic policy to be inclusive and fair, says new finance minister He also called on social media users to remain cautious and responsible while engaging with online content. “The public is requested to stay alert and not to be misled by rumours and baseless posts using my name,” he said through the press release.

The Ministry of Finance has warned all to stay alert against a smear campaign on social media by a vested quarter regarding the ongoing bank merger process. In a media release issued on Monday, the ministry urged investors not to pay heed to any misinformation about the merger of Islamic banks. “A vested group has recently been spreading rumours on social media, claiming that investors will be harmed due to the merger of five Islamic banks. The matter has come to the attention of the government,” the release says. The government has not taken any decision that could hurt the interests of investors, says the statement, adding, “All possible measures are being taken to safeguard investors’ interests while examining the merger process.” Bank merger: BSEC urges central bank to protect interests of investors Terming the claim ‘completely baseless and false’, the ministry called upon all to remain cautious about such misleading information circulating online. On October 9, the Council of Advisers gave its policy approval to merge five Islamic banks — First Security Islami Bank, Social Islami Bank, Global Islami Bank, Union Bank, and EXIM Bank — into a single Shariah-based institution. At a subsequent press briefing, Chief Adviser’s Press Secretary Shafiqul Alam said that no employees would lose their jobs, and the deposits of customers would remain fully protected under the merger plan. The new bank will initially operate under state ownership, managed by the Finance Division, and will later be transferred to private ownership at an appropriate time.

Activities of six ministries including the Finance Ministry have been going on temporarily at several government establishments in Dhaka following the massive fire at the Secretariat. The activities of the ministries of Road, Transport and Bridges, Post and Telecommunication, Local Government, Rural Development and Cooperative are going on at Railway Bhaban on Abdul Gani Road, GPO Bhaban, South City Corporation Bhaban in Phulbaria respectively, said sources at the ministries. Moreover, the ministries of Youth and Sports, Labour and Employment and Finance are carrying out their activities at National Sports Council, Labour Bhaban and Finance Adviser’s office respectively. The Building No-7 of the Secretariat  caught fire on December 26 and offices, equipment, files, documents and furniture were badly damaged. Read: Secretariat fire sabotage or accident still not known: Fire service DG The fire destroyed vital documents of five key ministries. Two committees were formed to assess the damages to the Labour and Employment Ministry’s documents . One of the probe bodies is scheduled to submit an initial report to Chief Adviser Prof Muhammad Yunus today (Monday).

The country will need some Tk 5,824 billion as deficit financing in the next two fiscals where the domestic bond market is under focus of development to meet the need. Of the total amount, some Tk 2785 billion will be needed for the next 2025-26 fiscal while some Tk 3039 billion will be needed for 2026-27 fiscal, according to an official document of the Finance Ministry. In the running 2024-25 fiscal the deficit financing is estimated at Tk 2559 billion. The document said that Government of Bangladesh remains committed to sustaining a prudent fiscal policy while efficiently financing its development projects. In the medium-term, the government's approach to deficit financing and debt management aims to secure its financing needs and meet its payment obligations at the lowest possible cost, consistent with a prudent degree of risk. Stock Regulatory measures on several market manipulators caused a plunge last week: Analysts A central focus of this strategy is the development of a vibrant bond market, providing a stable and efficient funding source for the government, the document said. Through disciplined fiscal management, the government seeks to bolster investor confidence, deepen the capital market, and support the nation's overall economic growth. As per the document, Tk 940 billion will come from foreign sources for 2025-26 fiscal according to the projection while Tk 800 billion for 2026-27 fiscal. The estimation for the running fiscal is Tk 950 billion. From the internal sources of financing, the government has estimated to gather Tk 1609 billion for the running fiscal, while Tk 1845 billion for the next 2025-26 fiscal and Tk 2239 billion for 2026-27 fiscal. In the running fiscal, the government has estimated to collect Tk 1275 billion from banking sector, Tk 334 billion from non-banking sector, Tk 254 billion from savings certificates and Tk 80 billion from other sectors. 18 banks at risk due to potential loan defaults by top 3 borrowers: Bangladesh Bank The projection for the 2025-26 fiscal is Tk 1679 billion from banking sector, Tk 166 billion from non-banking sector, Tk 105 billion from savings certificates and Tk 61 billion from other sectors. In 2026-27 fiscal, the government would collect Tk 1847 billion from banking sector, Tk 302 billion from non-banking sector, Tk 323 billion from savings certificates and Tk 69 billion from other sectors. The document mentioned that the historical trend and medium-term projection on deficit financing in Bangladesh from FY22 to FY27 indicates a planned increase in total net financing, rising from Tk 1,831.2 billion in FY22 to Tk 3,039 billion in FY27. While total net financing as a percentage of GDP starts at 4.6 percent in FY22 and falls to 4.4 percent in FY27, indicating a path towards fiscal consolidation, the sources of financing show distinct trends. City Bank to introduce inflation-adjusted wages in payroll External net financing decreases as a percentage of GDP, from 1.7 percent in FY22 to 1.1 percent in FY27, indicating a declining dependence on external sources. In contrast, domestic net financing exhibits a growing emphasis on domestic sources, particularly through marketable securities. It rises from 2.9 percent of GDP in FY22 to 3.2 percent of GDP in FY27, suggesting a shift towards promoting the bond market and strengthening the capital market. However, fluctuations in non-bank financing are observed during the period. These variations primarily stem from the government's deliberate efforts to reduce financing from high-cost National Savings Certificates (NSCs), resulting in reforms in the NSCs system. By diversifying its funding sources, including non- bank instruments, the government aims to achieve a more balanced and sustainable financing mix while controlling financing costs and risks.

The Ministry of Finance has proposed the appointment of new managing directors (MDs) for 10 state-owned banks as part of ongoing reforms in the banking sector, officials announced on Monday. Once the proposal receives approval from top government officials, an official notification will be issued, according to ministry sources. The interim government recently removed the MDs of six state-owned banks and four specialized banks, leaving these key posts vacant for over a month. The move is part of a broader effort to revamp the banking sector. Among the proposed appointments, Shawkat Ali Khan, currently the MD of Bangladesh Krishi Bank, has been recommended for the top position at Sonali Bank. Probashi Kallyan Bank MD Mojibur Rahman has been proposed as MD of Janata Bank, while Anwarul Islam, former deputy managing director of Janata Bank, is recommended for Agrani Bank. Finance Ministry appoints MDs at 4 state-owned specialised banks Other recommendations include Abdur Rahim, Deputy Managing Director of Rajshahi Krishi Unnayan Bank, for Rupali Bank; Jasim Uddin, former deputy managing director of Janata Bank, for Bangladesh Development Bank; and Kamruzzaman Khan, former deputy managing director of Janata Bank, for the role of MD at Basic Bank. In addition, the ministry has proposed new MDs for four specialized banks. Sonali Bank Deputy Managing Director Mir Mofazzal Hossain is recommended for Ansar-VDP Development Bank, while Salma Banu, Deputy Managing Director of Bangladesh Krishi Bank, is set to take the helm at Palli Sanchay Bank. Furthermore, Sonali Bank Deputy Managing Director Sanchita Binte Ali has been recommended as MD of Bangladesh Krishi Bank, and Bangladesh Krishi Bank Deputy Managing Director Chanu Gopal Ghosh has been proposed for the top position at Probashi Kallyan Bank. This latest reshuffling comes after the previous MDs of these banks were collectively removed on September 19, as part of the government’s efforts to reform the banking sector.

Six major state-owned banks—Sonali, Janata, Agrani, Rupali, BASIC, and Bangladesh Development Bank (BDBL)—have been operating without managing directors (MDs) for nearly a month, creating a leadership vacuum in these key financial institutions. The Ministry of Finance sent a letter on September 19, officially canceling the contracts of the MDs for these banks. In response, the chairmen of the banks have urged Finance Adviser Dr. Salehuddin Ahmed to expedite the appointment of new MDs. Banks hit by liquidity crunch: Limited cash withdrawals spark nationwide frustration In a meeting on Monday, Sonali Bank Chairman Mohammad Muslim Chowdhury, Agrani Bank Chairman Syed Abu Nasser Bakhtiar Ahmed, and Rupali Bank Chairman Nazrul Huda met with the finance adviser to discuss the urgent need for leadership in the banks. They stressed the importance of filling the vacant MD positions as soon as possible. A chairman who attended the meeting confirmed that they had formally requested new MD appointments, and the finance adviser assured them that the matter would be reviewed. Finance Adviser urges banks to ensure rigorous loan scrutiny and inclusive lending Since the September 19 letter, the MDs have been officially removed from office, leaving the banks to operate without their top executives.

The Finance Ministry has highlighted low revenue collection as a major obstacle to effective debt management, restricting the government's ability to invest in infrastructure and development projects. According to a document from the ministry, the lower revenue-to-GDP ratio adversely impacts debt sustainability. "This issue is further exacerbated by the LDC graduation deadline in 2026, which will affect the country's access to concessional financing from international sources," the document states. The finance ministry's document, titled ‘Medium Term Macroeconomic Policy Statement (2023-24 to 2025-26)’, also identifies the high-interest rate environment both domestically and internationally as another significant challenge. This situation is increasing borrowing costs and straining public finances. Despite zero investment, govt earning Tk14 crore revenue from Nagad: Palak The rising need for government funding to support critical infrastructure, social safety nets, and other development initiatives compounds the problem. Additionally, the presence of segmented debt offices within various agencies has created coordination challenges in debt management, potentially affecting the country's fiscal sustainability. Recommendations for Improvement To address these challenges, the Finance Ministry recommends a comprehensive and integrated approach to debt management, improved revenue collection, and exploring alternative financing mechanisms to reduce reliance on debt. It is crucial to address these issues promptly to ensure that the country's public debt remains sustainable, the document asserts. Steps Toward Financial Efficiency The Finance Division has already undertaken measures to enhance the efficiency and transparency of the financial system. One key initiative is the introduction of secondary market transactions of government securities, facilitated by a memorandum of understanding (MoU) signed among Bangladesh Bank, the Bangladesh Securities and Exchange Commission (BSEC), the Dhaka Stock Exchange (DSE), the Central Depository Bangladesh Limited (CDBL), and the Central Counterparty Bangladesh Limited (CCBL). Despite zero investment, govt earning Tk14 crore revenue from Nagad: Palak This move aims to increase the scope and depth of the secondary bond market, allowing both institutional and household investors to participate in government securities transactions. It is expected to help finance the government’s deficit more efficiently and contribute to capital market development and overall economic growth. Additional Reforms The automation of the National Savings Certificate (NSC) issuance process represents another critical reform aimed at increasing efficiency and reducing paperwork. This measure supports the implementation of policy measures such as slab-based interest rates and individual investment ceilings, aligning with the government’s financing strategy and reducing investment in NSC. Furthermore, the publication of the Debt Bulletin ensures transparency in debt data, benefiting various stakeholders including other ministries, research organizations, the business community, the international community, and the general public. 34% of Bangladesh's revenue spent on debt repayment: CPD Moderate Debt Levels, Significant Challenges Despite Bangladesh maintaining a moderate level of public debt and a low risk of external debt distress due to strong growth and prudent macroeconomic management, the document stresses that significant challenges remain. Addressing these challenges is essential to maintaining sustainable public debt and supporting the country's development objectives.

In an effort to promote a robust domestic debt market, the Bangladesh government is strategizing to increase its share of marketable securities in the coming years. According to a recent Finance Ministry document, the administration is also committed to continued issuance of Islamic securities Sukuks but has currently shelved plans for Eurobond issuances on the global market. As fiscal deficits loom, with projections showing a deficit of Tk 2792.3 billion for FY 2024-25 and Tk 3170.7 billion for FY 2025-26—equating to 5% of GDP each year—the government underscores the need for strategic domestic borrowing. The focus remains on minimizing borrowing costs through traditional external creditors, which are preferred, the document detailed. The strategy for addressing deficits includes an ambitious target of collecting Tk 1200.3 billion from external sources in FY 2024-25 and Tk 1306.4 billion in FY 2025-26, each constituting 2.1% of GDP. Domestic sourcing is expected to contribute significantly more, with plans to collect Tk 1677.7 billion and Tk 1864.4 billion over the same periods, representing 2.9% of GDP. UK's BII supports MSMEs, women entrepreneurs in Bangladesh with $50m debt commitment to BRAC Bank Significantly, the banking sector is anticipated to contribute Tk 1384.9 billion in FY 2024-25 and Tk 1547.3 billion in FY 2025-26. In comparison, non-banking sectors will contribute Tk 292.8 billion and Tk 317.1 billion respectively. Savings certificates will add Tk 191.4 billion and Tk 190.3 billion, while other sources are projected to contribute over Tk 100 billion annually. The government maintains a prudent deficit financing policy to stave off debt distress, keeping the deficit steady at around 5% of GDP and maintaining a stable debt level at around 33% of GDP in recent years, the finance ministry document explained. This balanced approach aims to mitigate the risks associated with deficit financing while prioritizing sustainable economic development. In terms of the medium-term outlook, the government expects domestic borrowing to remain stable at 2.9% of GDP. However, the approach to marketable securities will see a significant nominal increase, with a planned reduction in the reliance on higher-cost National Savings Certificate instruments, which will see a gradual decrease in their contribution to the financing mix. External financing is also projected to increase nominally between FY 2023-24 and FY 2025-26, driven by greater disbursement for large projects and increased budget support, though dependent on the pace of project implementation. Finance ministry to cut corporate tax for industries, consumer goods in upcoming budget Bangladesh has received considerable budget support from external sources in recent years, a trend expected to continue in the medium term, the document stated, highlighting the ongoing commitment to leveraging both domestic and international financial strategies to meet fiscal challenges.

The Finance Ministry has highlighted the crucial need for a balanced approach to budgetary allocations between recurrent and capital expenditure, recognizing their collective impact on the country's growth prospects and social welfare. This perspective is outlined in the ministry's document, the 'Medium Term Macroeconomic Policy Statement (2023-24 to 2025-26)', which underscores the different priorities of developed and developing nations in terms of government spending. Developed countries often prioritize transfers and subsidies, whereas developing economies are more inclined towards investing in social and community services. Despite the positive outcomes from income transfers in enhancing citizens' lives, there is a pressing need to ramp up capital expenditure to cater to the increasing public investment demands and foster the creation of productive assets. Budgetary classifications broadly categorize government spending into recurrent and capital expenditures. Recurrent expenditure encompasses wages, goods and services purchases, subsidies, transfer payments, and interest on loans. In contrast, capital expenditure is directed towards building and enhancing productive assets, including developments under the Annual Development Program (ADP) and non-ADP initiatives. Sikder Group responds to allegations following ACC case against directors The trend in capital expenditure, representing a portion of the total expenditure, has seen an upward trajectory, albeit with fluctuations, while recurrent expenditure has shown a gradual decrease. The revised budget for the fiscal year 2022-23 allocated 59.1 percent to recurrent expenditures, with projections indicating a slight reduction over the next three years. Meanwhile, capital expenditure is set to rise from 40.9 percent in the 2022-23 fiscal year to 41.3 percent by 2026, reflecting an ongoing commitment to bolstering public investment. The increase in recurrent expenditure from 56.7 percent in FY 2017-18 to 59.4 percent in FY 2021-22 was influenced by various stimulus packages introduced to support vulnerable groups during the combined challenges of the COVID pandemic and the Russia-Ukraine conflict. Conversely, capital expenditure through the ADP, a critical component of the budget, has experienced modest growth from 4.5 percent of GDP in FY18 to an estimated 5.1 percent of GDP in FY 2022-23. This strategic focus on balancing recurrent and capital expenditures aligns with the government's objectives to drive sustainable economic growth while ensuring the welfare of its citizens through prudent fiscal management. Eid holiday: Trade activities through Benapole port to be suspended for 5 days