United News of Bangladesh

Centre for Policy Dialogue (CPD) on Wednesday said the proposed national budget for FY2026-27 has taken several commendable steps to promote renewable energy but fossil fuels continue to enjoy discriminatory fiscal advantages, potentially undermining the country's energy transition objectives. CPD Senior Research Associate Helen Mashiyat Preoty came up with the observation while presenting  a paper titled "Proposed National Budget for FY2026-27: What is there on the Power and Energy Sector?" CPD Research Director Khondaker Golam Moazzem chaired the presentation event at its Dhanmondi office. The Ministry of Power, Energy and Mineral Resources received a total allocation of Tk 17,345 crore in the proposed budget, a modest 2.3 percent increase from the revised budget of FY2025-26. Of this, the development budget stands at Tk 17,193 crore, while operational expenditure is Tk 152 crore, up 7.8 percent. The think-tank flagged a worrying downward trend, the sector's share in the total national budget has declined steadily from 6.87 percent in FY2015-16 to just 1.85 percent in the proposed FY2026-27 budget. The Power Division received Tk 14,996 crore, a 3.9 percent decline from the revised allocation, while the Energy and Mineral Resources Division saw a sharp 72 percent jump to Tk 2,349 crore, driven largely by increased development expenditure. CPD acknowledged that for the first time, the proposed budget has offered substantial fiscal support to solar-based electricity generation. The government has proposed a zero percent tax rate on the solar power sector until 2035, a 5 percent tax rebate for consumers paying solar electricity bills, and elimination of import duty, regulatory duty, supplementary duty, and advance tax on essential solar components up to June 2030. Tax incidence on assembled solar panels has been proposed to drop from 28.7 percent to 22.2 percent, while that on lithium-ion batteries, critical for energy storage, is set to come down sharply from 61.8 percent to 26.3 percent. However, CPD cautioned that the benefits are tied to a restrictive list of conditionalities, primarily benefitting select solar power generation companies and firms operating under the RESCO model. This effectively excludes 63 percent of the country's electricity consumers, including residential users, small business owners, and rural solar irrigation farmers. “The proposed budget will encourage the private sector to move towards renewable energy transition, however, restructuring the fiscal treatment may be needed for end-user benefits,” the paper noted. Despite the government's stated ambition to reduce dependence on imported fossil fuel, CPD pointed out that LNG imports continue to enjoy full VAT exemption, resulting in a Total Tax Incidence (TTI) of only 9.5 percent for key LNG products. Besides, coal imports by power plants will also continue to enjoy concessionary duty benefits extended until June 2030. CPD recommended that the full VAT exemption on LNG be withdrawn and VAT be restored to 15 percent, arguing that the current arrangement artificially keeps LNG competitive and causes significant revenue foregone for the National Board of Revenue (NBR). The think-tank also raised concern over the budget speech's renewed emphasis on domestic coal exploration, including setting a production target of 6 lakh metric tonnes for FY2026-27 and undertaking new projects for the Barapukuria Second Phase and Dighipara Coal Field. “Such fiscal favours given to dirty coal is nothing but a hindrance towards energy transition,” the paper stated. Analysing the Annual Development Programme (ADP) for FY2026-27, CPD found that fossil fuel projects account for 98 percent of total generation-sector allocations, compared to a mere 2 percent for renewable energy projects. In the current ADP, only five renewable energy-related projects received allocations, three under the Power Division and two under the Energy Division. Notably, no new solar or renewable energy projects have been added in the current ADP, a development CPD described as concerning. Eleven renewable energy projects were left unapproved, including seven solar projects with a combined capacity of 640 MW, three grid modernisation projects, and a 25 MWh Battery Energy Storage System (BESS) pilot project. CPD warned this trajectory makes the government's target of achieving 20 percent renewable energy by 2030 extremely difficult, as it would require installing 1,662 MW of solar capacity per annum between January 2026 and December 2030. CPD said grid and transmission equipment continues to face some of the highest tax burdens in the energy sector, with TTI ranging from 33.6 percent to as high as 93.2 percent. The budget has proposed tariff reductions for only two components out of the full range of grid infrastructure items. Critical assets such as transformers, conductors, towers, and meters remain subject to multiple layers of taxation. The think-tank urged the government to reduce import, customs, supplementary, and regulatory duties on all grid infrastructure components to zero, noting that doing so would lower the TTI by roughly 30 percentage points and reduce the cost of grid expansion needed for renewable integration. The budget has significantly reduced the tax burden on electric vehicles (EVs), with import duties reduced from 93 percent to 64-80 percent depending on vehicle price and type. Import duties on EV charging equipment have been brought down from 39.75 percent to zero, a move CPD described as highly commendable. Annual income taxes on EVs have also been drastically reduced from Tk 2 lakh uniformly to between Tk 25,000 and Tk 1 lakh based on power capacity. Conversely, taxes on internal combustion engine (ICE) vehicles have been increased to discourage their use, with one category of reconditioned cars now facing a TTI of 159.8 percent. CPD expressed disappointment that the budget has given little emphasis to solar irrigation for marginal farmers. The budget speech only mentions the installation of 98 solar-powered irrigation pumps and 27 solar-powered dug-wells. One solar irrigation project with a 40 percent completion rate received no allocation in the current ADP. “There is nothing much for solar irrigation in the proposed national budget FY2026-27,” the paper concluded. The budget proposes Tk 37,000 crore for electricity subsidy, up from Tk 36,000 crore in the revised FY2026 budget, primarily to offset Bangladesh Power Development Board's losses from purchasing electricity from IPPs, rental, and quick rental plants. CPD warned that while the government has signaled plans to rationalise electricity subsidies in coming years, the burden must not be passed on to consumers through tariff hikes. Instead, the government should phase out capacity payments to fossil fuel plants. CPD called on the government to increase allocations in the revised budget for projects nearing completion; approve more renewable energy projects through the revised ADP; shift NBR's fiscal approach from a restrictive entity-based model to an open, component-based zero-tariff framework; introduce targeted subsidies for solar irrigation farmers; and incorporate dedicated green grants for energy transition and smart grid development in the national budget.  

Dr Debapriya Bhattacharya, Distinguished Fellow at the Centre for Policy Dialogue (CPD) and Convener of the Citizen's Platform on Monday said the budget's fiscal architecture remains "devoid of realism" despite its welfare-oriented rhetoric. The national budget, while thoughtfully designed in its policy framework, falls critically short in reaching the country's most disadvantaged citizens, he said while presenting a detailed analysis at a media briefing at BRAC Centre in Mohakhali. "The real budget question is not how much we are spending, but whose vulnerabilities we are choosing to protect," he said. Debapriya said FY26 economic growth of 4.14 percent became "exclusionary", failing to lower prices, raise real wages or create jobs where disadvantaged people actually work. He noted that headline CPI inflation reached 9.42 percent in May 2026 while wage growth stood at only 8.13 percent, leaving real wages negative and domestic savings also fell sharply from 25.76 percent of GDP in FY23 to 21.38 percent in FY26, weakening household resilience. Large-scale manufacturing growth collapsed to 1.76 percent in FY26, he said, while RMG export receipts fell 1.9 percent between July and April, threatening livelihoods across a sector employing millions of low-income workers, particularly women. The budget targets revenue mobilisation at 10.2 percent of GDP and public expenditure at 13.7 percent, while aiming to contain the deficit at around 3.5 percent of GDP. Debapriya described the macroeconomic framework as prepared "without proper professionalism," noting the budget requires a 52.9 percent revenue growth from a base that missed its FY26 target by 22.7 percent. He raised concern over the revenue mix, pointing out that 59 percent of incremental revenue relies on indirect taxes: VAT, customs duty and supplementary duty, which burden all consumers equally regardless of income. VAT alone accounts for 32.9 percent of the FY27 revenue target, with an incremental share of 41.2 percent. "This raises serious concerns about tax justice and equity," he said. On the positive side, Citizen's Platform acknowledged that 59.5 percent of the incremental budget has been directed toward education, health, and social security marking what it called a "decisive shift" in expenditure priorities. Social protection allocation has risen to 2.11 percent of GDP and 15.39 percent of the national budget, the highest share on record. The platform welcomed the consolidation of social security programmes from 95 to 90, the expansion of the Government-to-Person (G2P) digital payment system to over 3.26 crore beneficiaries across 29 programmes, and the introduction of the Family Card and Farmers Card as pro-poor flagship initiatives. However, it cautioned that civil service pension alone accounts for 24.51 percent of the social protection budget, an occupational entitlement for government employees rather than a universal right. Combined education, health and social protection spending amounts to only 4.82 percent of GDP, roughly 15 percent of the benchmark maintained in welfare states, the platform noted. The budget raises the tax-free income threshold from Tk 3.5 lakh to Tk 3.75 lakh and removes import duties on 60 essential food items including rice, wheat, fish, potatoes, and edible oil, steps the platform acknowledged may ease inflationary pressure on low-income households. Duty exemptions were also extended on 21 categories of assistive devices for persons with disabilities, 51 active pharmaceutical ingredient inputs and nine cancer drug raw materials. But Debapriya said persons with disabilities, the third gender, Dalit communities, indigenous peoples, climate-vulnerable households and urban slum dwellers, the most marginalised groups received the least targeted support. He also flagged that doubling of advance tax on savings certificates from 5 percent to 10 percent and reduction of the tax rebate on listed securities investments would hurt middle-income savers who depend on such instruments. The platform criticised the budget for leaving wealth tax and inheritance tax untapped as revenue sources while offering no unemployment insurance for workers who lose jobs, and no dedicated social protection architecture for urban or informal sector workers. "Bangladesh is deploying welfare state vocabulary without a welfare state fiscal architecture," Debapriya said. He called on the government to publish credible real-time data, require the Finance Minister to present quarterly statements to parliament under the Public Finance and Budget Management Act 2009, and ensure that Leave No One Behind remains a guiding principle across all fiscal decisions. The Citizen's Platform said it has set up a Reform Tracker to monitor progress not only in fiscal terms but against the reform measures and their outcomes.

The Centre for Policy Dialogue (CPD) has identified the target to achieve the proposed revenue collection of Tk 695,000 crore and bringing inflation down to 7.5 percent as the biggest challenges in implementing the national budget for fiscal year 2026-27. Finance Minister Amir Khosru Mahmud Chowdhury on Thursday unveiled a record Tk 938,000-crore budget, the largest in Bangladesh's history. Giving instant reaction to the budget at a press briefing at CPD’s Dhanmondi office later in the day, CPD Executive Director Fahmida Khatun said budget targets must be realistic to ensure effective implementation. “If the targets are not realistic, it will be difficult for the government to implement the budget, which could undermine economic discipline.” She described the revenue target as particularly ambitious, noting that Bangladesh has historically struggled to meet its revenue collection goals. “Although high revenue targets are regularly set, they often remain unattained. The proposed target requires a significant jump in revenue mobilisation, which will be a major challenge for the government,” Fahmida said. She warned that failure to achieve the revenue target could make it difficult to contain inflation within the projected 7.5 percent level. “Average inflation in the current fiscal year is around 9 percent. Bringing it down by about 1.5 percentage points within a year will be challenging. If the government falls short in revenue collection and resorts to increased bank borrowing, the task will become even more difficult.” The CPD executive director said inflation control would require a stable exchange rate, improved food and energy supply systems, and prudent monetary management. “Bangladesh is currently pursuing a contractionary monetary policy. In this context, policymakers will need to strike a careful balance to stimulate investment. Greater coordination between fiscal and monetary policies is also necessary.” While describing the proposed GDP growth target as ambitious, she said it was not unattainable given the size of Bangladesh’s economy and population. The budget projects economic growth at 7.5 percent, compared to an estimated 6.5 percent growth in the current fiscal year. “To achieve this target, private investment and productivity must increase, while exports need fresh momentum. At the same time, ongoing reforms must continue. Given the current investment climate, the condition of the financial sector and persistent energy challenges, achieving the target will be quite difficult,” Fahmida said. She also observed that the budget could have placed greater emphasis on economic stability rather than growth. However, the CPD executive director welcomed tax incentives for solar panels and electric vehicles, as well as the budget's focus on skills development, agriculture, and small and medium enterprises (SMEs), describing them as positive measures for the economy. CPD Distinguished Fellow Mustafizur Rahman was also present at the briefing.

Bangladesh’s fiscal structure heavily favours fossil fuels over renewable energy, artificially suppressing the competitiveness of clean energy technologies and undermining the country's energy transition goals, the Centre for Policy Dialogue (CPD) said on Sunday. Presenting the findings of a new study at a media briefing at the CPD's Dhanmondi office, its Research Director Dr Khondaker Golam Moazzem said the country's tax and tariff regime imposes far lower burdens on fossil fuel imports than on technologies critical for integrating renewable energy into the national grid. “LNG imports face a total tax incidence of only 9.5 percent, with zero VAT and only 2 percent advance income tax while lithium-ion batteries face 61.8 percent and electric vehicles face up to 93.16 percent,” he said. “This is not a neutral tax structure. It is discriminatory, and it is costing Bangladesh its energy future.” The briefing, titled “Fiscal Discrimination between Fossil Fuel and Renewable Energy: Alternate Solutions to Address the Energy Crisis,” was presented by the CPD Power and Energy Study Team. The study examined 50 energy-sector products across seven technology categories: solar, wind, energy storage, electric vehicles, grid and transmission infrastructure, fossil fuels, and fossil-fuel-based power generation equipment, and calculated the Total Tax Incidence (TTI) for each using National Board of Revenue’s tariff for FY2025-26. It found that while solar and wind power generation equipment face TTIs of around 28-31 percent, broadly comparable to fossil fuel power generation machinery, the enabling technologies indispensable for renewable integration face dramatically higher fiscal burdens. Grid transformers are taxed at 61.8 to 93.16 percent, energy storage systems at 61.8 to 93.2 percent, and three-wheeled electric vehicles at 93.16 percent. “Renewable generation equipment alone is not the primary challenge,” the study noted. “The enabling technologies are.” Advance tax at 7.5 percent and high Customs Duty of up to 25 percent are the principal drivers of the elevated burden on clean energy technologies. In contrast, LNG products such as propane, butane, and natural gas in liquefied form carry zero VAT and only 2 percent Advance Income Tax, making them among the most fiscally privileged imports in the entire energy sector. Through a revenue foregone analysis, CPD estimated that the preferential fiscal treatment of LNG is causing NBR to forego at least Tk 1,059 crore to Tk 1,293 crore annually compared to what would be collected if wind or solar-equivalent tax rates were applied. For coal, the foregone revenue ranges between Tk 241 crore and Tk 664 crore. A separate fiscal incentive analysis found that LNG importers are receiving financial benefits worth approximately Tk 1,672 crore solely from full VAT exemption, a privilege not extended to solar or wind businesses. The study’s producer subsidy analysis, based on Bangladesh Power Development Board plant-wise electricity purchase data for FY2024-25, revealed that the average subsidy for oil-based power generation stands at Tk 20.18 per kilowatt-hour, the highest among all fuel types, while the average subsidy across all fossil fuel plants is Tk 7.48 per kWh. Renewable energy plants receive an average subsidy of Tk 8.93 per kWh. Oil-based plants receive both capacity payments and high fuel cost support, with some plants such as United-Anowara (300MW) receiving a per-unit subsidy gap of Tk 39 per kWh. Renewable energy plants, by contrast, receive no capacity payments and carry high upfront capital costs, partly driven by elevated import taxes on solar equipment and batteries. The discriminatory fiscal stance is mirrored in public spending. CPD found that fossil fuel-based projects account for 87 percent of the total power and energy sector project budget and 79 percent of the revised FY2026 ADP allocation. Renewable energy projects, by contrast, receive only 3 percent of the total PE project budget and 4.6 percent of the revised allocation. The FY2025-26 budget provided no new incentives for solar or other renewable energy technologies and omitted the Tk 100 crore allocation for renewables that had been included the previous year. “From FY16 through RFY26, fossil fuel-based projects have consistently absorbed more than 90 percent of the power and energy development allocation,” the study noted. “This structural bias has persisted despite repeated clean energy pledges.” CPD Recommendations CPD put forward a series of fiscal reforms, urging the government to act in the upcoming budget cycle: The think tank called for immediate removal of the 7.5 percent Advance Tax on solar and wind equipment, reduction of Customs Duty on lithium-ion batteries from 25 percent to 5 percent, and elimination of the 20 percent Supplementary Duty on energy storage batteries. It also recommended reducing Customs Duty on grid infrastructure components, including transformers, conductors, and transmission towers from 25 percent to 5 percent, and eliminating the Supplementary Duty on medium-sized transformers and low-voltage conductors. On fossil fuels, CPD called for the full withdrawal of VAT exemption on LNG imports, restoring the standard 15 percent rate, and an end to capacity payments for fossil fuel-based power plants. It also urged the government to introduce dedicated green subsidies and grants for energy transition in the FY2026-27 budget, increase ADP allocations for renewable energy and grid modernisation, and pursue climate-responsive budgeting across the Ministry of Finance and Ministry of Power, Energy and Mineral Resources. “The current fiscal framework creates a disconnect between Bangladesh's renewable energy ambitions and the incentives embedded in the tax system,” Moazzem said. “Strategic reforms targeting advance tax, regulatory duty, and selected customs duties could reduce transition costs while improving policy coherence.”

Bangladesh is facing mounting economic challenges as weak revenue collection, persistent inflation, banking sector fragility and rising energy costs weigh on the economy, the Centre for Policy Dialogue (CPD) said on Thursday. Presenting the third reading of its Independent Review of Bangladesh's Development (IRBD) FY2025-26 at its office in Dhaka, the think tank said the economy is grappling with a combination of macroeconomic, financial, sectoral and social challenges despite signs of resilience in some areas. The report, titled “State of the Bangladesh Economy in FY2025-26: Multidimensional Challenges during the Transition Period,” was presented by CPD Executive Director Dr. Fahmida Khatun, who said recent developments reflect a mixed picture of resilience and vulnerability. Revenue and Public Finance Bangladesh's revenue mobilisation grew by only 6.9 per cent during July-March of FY26, against a target growth rate of 29.3 per cent. CPD said meeting the annual target would now require an improbable 84.6 per cent growth in the final quarter, calling the revenue mobilisation target “operationally unrealistic.” NBR tax collection fell short of the target by BDT 104,533 crore during July-April FY26, with growth of 10.6 per cent against a target of 34.5 per cent. Closing the gap by June would require 128.6 per cent growth in May-June, a figure the think tank described as near-impossible. ADP implementation stood at just 35.4 per cent during July-April FY26, significantly below the FY17-FY24 average of 49.8 per cent. To finance the widening deficit, the government leaned heavily on bank borrowing, which reached BDT 102,442 crore or 98.5 per cent of the full-year target by March FY26, up 20 per cent from the same period of FY25. CPD warned this could crowd out private sector credit and dampen investment. Inflation and Living Costs Inflation rose to 9.04 per cent in April 2026, up from 8.71 per cent in March, with non-food inflation reaching 9.57 per cent. The Strait of Hormuz blockade triggered sharp fuel price increases between December 2025 and May 2026: diesel rose 15 per cent to BDT 115 per litre, while octane and petrol each surged over 20 per cent. The price of a 12 kg LPG cylinder jumped 40.57 per cent, from BDT 1,341 in March 2026 to BDT 1,885 in June 2026. A CPD market survey of around 1,000 agents across 10 commodities identified green chilies, onions, pulses and brinjals as carrying the highest markups in the supply chain, driven largely by the dominant role of urban aratdars. Banking Sector The banking sector's capital adequacy ratio fell to a historic low of negative 2.93 per cent. Specialised banks collapsed to a CRAR of negative 87.9 per cent in September 2025. While the gross NPL ratio declined from 35.73 per cent in September 2025 to 32.26 per cent in March 2026, CPD said the improvement reflects rescheduling and restructuring rather than any real asset quality recovery. Private sector credit growth fell to a record low of 4.72 per cent in March 2026, constraining investment and job creation. Excess liquidity as a share of total liquid assets rose from 43 per cent in May 2025 to 55 per cent in March 2026, a sign of cautious lending and weak economic activity, CPD said. On regulatory measures, CPD flagged concern over a proposed amendment that would allow former owners of distressed banks to regain control, calling it an accountability risk that could weaken resolution credibility. It also raised concern over a Bangladesh Bank circular raising the single-borrower exposure limit from 15 per cent to 25 per cent of capital until June 2028, warning it could amplify systemic risk. External Sector Bangladesh's overall balance of payments shifted from a deficit of USD 1.1 billion in FY25 to a surplus of USD 3.6 billion in FY26 during July-March, an improvement of USD 4.8 billion. Remittances rose 19.8 per cent during July-April FY26, continuing to serve as a critical external stabiliser. Forex reserves stood at USD 34.57 billion on 23 May 2026. However, CPD cautioned that the BoP improvement was driven largely by debt-creating financial account inflows of USD 3.2 billion, not a genuine improvement in the current account. Exports fell 2.02 per cent during July-April FY26, far below the 14 per cent target. RMG exports declined 2.8 per cent, with knitwear falling 3.7 per cent. Bangladesh lost ground in both the US and EU markets, while Vietnam gained. External debt stood at USD 113.2 billion as of June FY25. Debt servicing costs have more than doubled in five years, from USD 3.2 billion in FY20 to USD 7.2 billion in FY25. The IMF in January 2026 moved Bangladesh to moderate risk from low risk, while Fitch revised its outlook to negative in May 2026. Labour Market CPD said factory closures since August 2024 left between 100,000 and 300,000 workers unemployed. Real wages declined throughout January 2025 to April 2026, with industrial workers bearing real wage contractions of up to 2.1 per cent. Wage-related labour unrest incidents rose from 59 in 2023 to 204 in 2025. Workplace deaths stood at 1,190 in 2025, with at least 186 recorded in the first quarter of 2026 alone. Overall unemployment is expected to remain at 3.8 per cent in 2026, while youth unemployment is projected to rise from 9.1 per cent to 9.7 per cent. Energy Crisis and Haor Floods The Strait of Hormuz blockade exposed Bangladesh's deep vulnerability to imported fuel dependency. CPD estimated that the government will need BDT 31,122 crore in additional subsidies for the energy sector by the end of FY26. The Haor floods of April 2026 damaged an estimated 49,000 hectares of boro cultivation, affecting 236,811 farm households. CPD's own estimate placed rice losses at 339,449 metric tonnes, significantly higher than the official DAE revised figure of 214,000 MT. The government's compensation of BDT 7,500 per farmer, CPD said, covers only 14-18 per cent of per-household production loss. Measles Outbreak CPD characterised the 2026 measles outbreak as a case study in health sector governance failure. Between 15 March and 2 June 2026, the outbreak produced 74,572 suspected cases, 9,191 lab-confirmed cases and 601 deaths. About 72 per cent of cases were among zero-dose children. CPD attributed the outbreak to vaccine stockouts in 2024-2025, the absence of a nationwide MR campaign since 2020, and procurement failures. Recommendations CPD called for broad structural reforms, including expanding the tax base, curbing illicit financial flows and improving ADP implementation. It urged stricter loan classification, greater transparency in rescheduled loans and an end to political influence in banking. The think tank also recommended accelerating gas exploration, expanding rooftop solar, digitising the fuel supply chain, improving agricultural loss assessments, increasing compensation for flood-hit farmers and providing a 12-month loan moratorium. “Bangladesh's recovery requires credible governance reform beyond macroeconomic stabilisation,” said Fahmida Khatun, stressing the need for stronger institutions and accountability to achieve the government's development goals.

Dr. Fahmida Khatun, Executive Director of the Centre for Policy Dialogue (CPD), on Saturday warned that the government’s practice of borrowing from the central bank to meet budget deficits is ‘suicidal’ for the national economy. Such borrowing fuels inflation and severely erodes the purchasing power of general public, she said at a shadow parliamentary debate organised by Debate for Democracy at the Bangladesh Film Development Corporation (FDC). She urged the government to prioritise international sources instead of banking channels to mitigate deficit pressures. Addressing the upcoming FY 2026-27 budget, Dr. Fahmida advocated for a ‘cost-effective’ budget with clear policy directions. She called for a transition from wholesale subsidies to a target-based system, specifically prioritising sectors like agriculture, irrigation, and public transport. "Wholesale subsidies in power and energy often benefit capable individuals who do not require them," she said suggesting that these funds be diverted to ensure food security. The CPD chief lauded the government’s initiatives like the Family Card and Farmer’s Card under social safety net programmes but stressed the need for transparency. "To reap the real benefits, accountability in beneficiary selection must be ensured to prevent the irregularities and corruption seen in the past," she added. Dr. Fahmida recommended temporary waivers on VAT and taxes for imported essential goods to provide relief to citizens amidst global market volatility. She cautioned that the impact would be limited if market management remains weak. She also suggested adjusting domestic fuel prices in sync with the global market to ensure reductions reach consumers when international prices drop, increasing revenue through digital compliance rather than bank borrowing, boosting allocations for productive sectors and skill development programmes to address unemployment. She also emphasised the need to enhance energy storage capacity to manage emergency situation. Debate for Democracy Chairman Hasan Ahmed Chowdhury Kiron highlighted the severe economic challenges facing the country. He noted that the current BNP government assumed office while grappling with the lingering impacts of the Russia-Ukraine war and the ‘economic scars’ left by the previous government. “The government is struggling with an energy crisis, rising inflation, low investment, and a high volume of non-performing loans and foreign debt,” Kiron said. He noted that while the government attempted to stabilise the market without raising fuel prices, it was eventually forced to adjust prices for diesel, petrol, octane, and kerosene in line with the global market. Kiron revealed that the government incurred a loss of Tk 165 crore daily on fuel sales, totaling a loss of Tk 4,300 crore in April alone. Without the price adjustment, the subsidy requirement would have reached Tk 12,000 crore by June, he added. Debaters from Kabi Nazrul Government College (Government side) and Dhaka College (Opposition side) participated in the shadow parliament. Trophies, crests, and certificates were awarded to the participants. The panel of judges included Professor Abu Mohammad Rais, Dr. S.M. Morshed, Dr. Tajul Islam Chowdhury Tuhin, and journalists Abul Kashem and Maidur Rahman Rubel. Kabi Nazrul Government College was declared the winner of the debate.

Bangladesh’s ongoing energy crisis may ease temporarily but it cannot be fully resolved without a decisive shift to renewable energy, said the Centre for Policy Dialogue (CPD) on Monday. “We must think beyond fossil fuels,” CPD Research Director Dr Khondaker Moazzem said at the 4th Bangladesh-China Renewable Energy Forum organised by CPD under the theme “Transforming Crisis into Opportunities: Renewable Energy Development under the New Government”, at a hotel in Dhaka. “The crisis that fossil-fuel dependency has created across the world is not something that will be resolved overnight. Bangladesh needs to seriously consider alternatives in its energy sector,” he said. The veteran economist underscored China's pioneering role in the global renewable energy revolution and called for maximising bilateral cooperation in the sector. “China is at the forefront of renewable energy through its innovations. Chinese investment in Bangladesh's renewable energy sector is already substantial. This forum will deliberate on how to further enrich that investment going forward,” he said CPD's presentation introduced a conceptual framework: ‘3F-3R’: ‘Fallen Fossil Fuel, Rising Resilient Renewables’, to describe the structural shift Bangladesh must make. The think tank warned that even if the ongoing Middle East conflict subsided and the Strait of Hormuz reopened immediately, Bangladesh would continue bearing the economic burden of energy-supply disruptions for years to come. Using econometric modelling, CPD projected that geopolitical oil shocks would inflict limited but persistent macroeconomic damage through multiple channels: GDP losses in the range of 0.21 to 0.53 percent, inflationary pressure between 0.6 and 13.6 percent, and taka depreciation of 0.56 to 4.5 percent in the medium to long term. The BNP government has announced a target of generating 10,000 megawatts of electricity from renewable sources by 2030, and CPD estimated the associated investment requirement at approximately USD 9.36 billion, spanning utility-scale solar, rooftop and distributed solar, wind, and biomass and biogas installations. The 4th Forum, unlike its three predecessors, drilled down specifically on Power Purchase Agreements (PPAs) as the central contractual instrument through which investment either flows into or is repelled from Bangladesh's energy sector. CPD's research found that Bangladesh's PPAs have progressively deteriorated in terms of investor protection. The country's first renewable energy PPA, drafted with external legal expertise, contained strong sovereign guarantees, well-structured international arbitration clauses, and balanced risk coverage. Subsequent revisions have steadily tilted the framework in the government's favour, the think tank said. Compounding the problem, the interim government's decision to discontinue Implementation Agreements, which had previously provided sovereign backing for investor commitments removed a critical layer of payment security precisely when renewable investment was beginning to scale. No credible substitute mechanism has since been introduced, it observed. CPD flagged that Chinese investors account for over 50 percent of total foreign direct investment in Bangladesh's renewable energy sector, making the health of PPA arrangements disproportionately consequential for Sino-Bangladeshi energy cooperation. The forum presentation catalogued a series of persistent contractual and institutional failures that have deterred investment across four successive forums since 2023. On the contractual side, normal payment cycles of two to three months routinely stretch to five to eight months in practice. Payments are nominally denominated in local currency with US dollar equivalence, yet the PPA structure provides no compensation for exchange rate depreciation during the payment gap, a growing liability as the taka weakens. In at least one documented case, investors who had signed both a PPA and an Implementation Agreement and completed construction subsequently faced government attempts to revise the agreed tariff, with no contractual remedy available to them. On the institutional side, approvals required from multiple agencies, including BPDB, PGCB, REB, SREDA, and local authorities, proceed sequentially rather than in parallel, with no coordinated timeline or accountability mechanism for delays, said CPD. Land deemed officially cleared at the central level has in multiple cases faced challenges from local actors, with different ministries operating in silos and unaware of approvals issued by others, it added. The cancellation of 31 solar project Letters of Intent by the interim government, representing approximately 5.68 gigawatts and USD 6 billion in prospective investment, with USD 300 million already committed through banking channels and 15 companies having purchased land was cited as a particularly damaging signal to the investment community. CPD benchmarked Bangladesh's PPA template against those of India, Pakistan, Kenya, Tanzania, Vietnam, the Philippines, and Saudi Arabia. The analysis revealed that Bangladesh's BPDB tender document, unlike frameworks in Pakistan, the Philippines, and Saudi Arabia, lacks payment security instruments, Implementation Agreement-equivalents, and lender step-in rights, provisions considered standard in bankable renewable energy contracts internationally. The think tank's diagnostic assessment found that enforcement was the single weakest dimension of Bangladesh's PPA architecture, followed by an imbalanced risk allocation that structurally disadvantages the investor. “In a fair ecosystem, these two dimensions cannot be weak simultaneously.” Reform Roadmap: Immediate and Medium-Term In the immediate term, the think tank called for the introduction of a revolving Letter of Credit covering three to six months of payments, backed by a sovereign guarantee or central bank support, describing it as the single most important bankability improvement available within the existing PPA structure. CPD also recommended that when BPDB extends a Commercial Operations Date deadline, the corresponding Ready for Commercial Operations Date must be extended in parallel, a structural inconsistency that currently exposes developers to liquidated damages for delays of the government's own making. Over the medium term, CPD urged the establishment of an Inter-Agency Task Force with binding standard operating procedures and time-stamped approval responsibilities; the development of a dedicated Renewable Energy Procurement Guideline covering the post-award phase; the incorporation of lender step-in rights and a Dispute Adjudication Board into the standard BPDB template; and the restoration of a credible sovereign commitment mechanism functionally equivalent to the discontinued Implementation Agreement. CPD also called on the government to declare the power and energy sector a national priority sector, expand company courts with specialised commercial law expertise, and introduce mandatory tax and duty exemptions on renewable energy equipment, particularly inverters and batteries, on which import levies currently stand at around 61.8 per cent. On the financing side, the think tank urged Bangladesh Bank to establish a dedicated low-cost fund for rooftop solar and advocated for the use of land from cancelled fossil-fuel power plants and upcoming stranded assets to host renewable energy installations. It also highlighted the potential of Chinese technology, including solar panels, inverters, and lithium iron phosphate batteries and the possibility of establishing local battery assembly facilities in partnership with Chinese companies to reduce both cost and import dependence. The EU's Carbon Border Adjustment Mechanism, taking effect in 2027, was cited as an additional structural incentive for urgency: Bangladesh's export-oriented garment and textile sector would be required to demonstrate green energy sourcing to avoid carbon levies and maintain market access in Europe. CPD noted that the Bangladesh Investment Development Authority is set to open its first overseas office in China within approximately six months, a step expected to directly facilitate Chinese investment inquiries in Bangladesh's renewable energy sector. Power, Energy and Mineral Resources Minister Iqbal Hassan Mahmood attended the event as the chief guest. The forum was also attended by Chinese investors, development finance institutions, government officials, and energy sector stakeholders.  

Centre for Policy Dialogue (CPD) on Saturday urged major reforms in tax collection, business climate, trade deals and foreign investment management, warning that without evidence-based decisions and strong accountability, Bangladesh’s post-election economic transition could be at risk. CPD said Bangladesh must urgently overhaul its revenue system, ease the cost of doing business, review recently signed trade agreements and strengthen foreign direct investment (FDI) facilitation to ensure sustainable growth and smooth graduation from Least Developed Country (LDC) status. Presenting the study titled ‘New Government’s Priorities in Addressing Socio-economic Challenges: Introducing Knowledge-based Decision Making in the Executive and Legislative Process’ at its Dhanmondi office, CPD Research Director Dr Khondaker Golam Moazzem highlighted structural weaknesses in Sections 3, 4, 5 and 6 of the report covering revenue mobilisation, business environment, trade policy and FDI. Tax-GDP Ratio CPD said Bangladesh’s tax-to-GDP ratio has fallen to approximately 6.8 percent, the lowest in South Asia, significantly weakening fiscal capacity at a time of rising development needs. The newly elected government has pledged to raise the ratio to 10 percent in the medium term and 15 percent by 2035. But CPD cautioned that revenue sustainability would remain uncertain without prioritising tax justice and plugging systemic leakages. The study identified ‘leaking revenue’ as the weakest area across all decision-making indicators. To address regressivity and inefficiency, CPD recommended consolidating the current eight VAT slabs into a simplified three-tier structure: standard, reduced and zero rates, with a long-term transition toward a two-tier system. It also proposed eliminating tax exemptions for non-essential services, including exclusive clubs and stock market-related entities, and phasing out tax cut incentives for fossil fuel-based power producers. Mandatory digital tax return submission, establishment of a digital tax dispute resolution system within 30–45 days and performance-based corporate tax incentives were among the key recommendations. CPD further suggested linking revenue gains from VAT rationalisation to direct transfers for low-income households instead of broad reduced-rate exemptions. Business Environment The report noted that Bangladesh’s business environment continues to suffer from transport-logistics bottlenecks, unreliable utilities, regulatory complexity, corruption, weak human capital alignment and fragile banking systems. It warned that corruption in administrative processes remains the most severe constraint to ensuring an enabling business environment. Despite digital reforms such as the partial launch of “BanglaBiz” and activation of the Bangladesh Single Window system, CPD found that transparency and accountability remain weak. The study recommended full backend digital integration across agencies under a unified document management framework to eliminate duplication of business licensing requirements. It also called for establishing both a Tax Ombudsman and a Banking Ombudsman to address grievances and strengthen institutional accountability. CPD raises concerns over power overcapacity, pushes for 'no new fossil' fuel policy In the financial sector, CPD flagged high non-performing loans (NPLs) and limited SME access to financing as major barriers. Although reforms such as the Bank Resolution Ordinance 2025 and Deposit Protection Ordinance 2025 were introduced, the think tank said credit allocation decisions lack transparency and efficient implementation. It urged Bangladesh Bank to innovate credit assessment models, develop inclusive SME financing options with lower collateral requirements and exercise caution in interest rate reduction to avoid inflationary pressures. US-Bangladesh Trade Agreement CPD raised serious concerns over the recently signed “Agreement on Reciprocal Trade” between Bangladesh and the United States, saying several clauses may restrict Bangladesh’s trade policy autonomy. The study alleged that the agreement includes discriminatory provisions relating to import licensing, technical standards and digital trade. According to CPD, Bangladesh would be required to gradually eliminate tariffs on US-origin goods while facing potential additional tariffs if deemed non-compliant. The report also claimed that Bangladesh would not be allowed to impose digital service taxes on US companies or introduce customs duties on electronic transmissions. Other provisions cited include restrictions on retaliatory VAT measures, limitations on agreements with third countries that conflict with US standards and preferential access for certain US goods. CPD warned that such clauses could severely jeopardise Bangladesh’s smooth transition strategy (STS) for LDC graduation, particularly in negotiating balanced free trade agreements (FTAs) and economic partnership agreements (EPAs). It urged the government to withdraw from the agreement before formal notification exchange and revisit other deals, including the EPA with Japan, particularly provisions related to duty-free LNG imports that may delay energy transition. FDI Reform CPD identified six major structural challenges in attracting and retaining foreign investment, including fragmented approvals, policy unpredictability, institutional overlap, slow dispute resolution, land access bottlenecks and weak data systems. The report said investment approvals remain sequential rather than parallel, even after the launch of BanglaBiz offering over 100 services and fast-track foreign loan approvals up to USD 10 million for export-oriented firms. CPD recommended mandatory API-based integration among the Bangladesh Investment Development Authority (BIDA), National Board of Revenue, Registrar of Joint Stock Companies, Customs, BEZA and BEPZA to ensure simultaneous processing and real-time tracking. The think tank called for converting profit repatriation commitments — including the 30-working-day resolution target — into binding legal standards through legislative amendments. It also proposed designating specialised commercial benches within the High Court within 180 days and establishing a full-fledged International Commercial Court within 24 months. To enhance transparency, CPD recommended creating a unified national FDI monitoring dashboard linked to the government’s target of raising FDI to 2.5 percent of GDP, with quarterly public reporting. A national readiness audit of economic zones, including litigation-free land and confirmed utility capacity, should be completed within 180 days, the study added. Dr Moazzem said that raising tax revenue, reducing business costs, negotiating trade agreements and attracting FDI must be guided by knowledge-based decision-making and parliamentary oversight. He stressed that without structural reforms in fiscal governance, regulatory transparency and institutional accountability, policy initiatives may remain fragmented and ineffective. “The new government has a strong electoral mandate. The challenge is to translate it into evidence-based, transparent and accountable decision-making,” he said. CPD’s findings come as the government prepares to implement its first 180-day priority agenda following the February 12 national election.

Centre for Policy Dialogue (CPD) Executive Director Dr Fahmida Khatun on Monday underscored the need for comprehensive economic reforms, stronger institutions and a greater focus on employment generation to sustain Bangladesh’s development momentum. She said this while speaking at a programme titled “Macroeconomic Insights: An Economic Reform Agenda for the Elected Government” held at a hotel in the capital this afternoon. The Policy Research Institute of Bangladesh (PRI) and Department of Foreign Affairs and Trade (DFAT) of the Australian Government jointly organized the event. The discussion was attended by Finance Adviser Dr Salehuddin Ahmed as chief guest, along with leading economists, policymakers and representatives from development partners. Presided over by Chairman of the PRI Dr. Zaidi Sattar, Dr. KAS Murshid, Former Director General of Bangladesh Institute of Development Studies (BIDS), Clinton Pobke, Deputy High Commissioner, High Commission of Australia to Bangladesh, spoke as special guests. Dr. Ashikur Rahman, Principal Economist, PRI, made the keynote presentation. Dr. M. Masrur Reaz, Chairman and CEO, Policy Exchange Bangladesh (PEB), spoke as distinguished panelists. Dr Khatun said Bangladesh’s development achievements over the years — including reductions in poverty, improvements in per capita income and social progress — had long been recognised internationally as a success story. Despite governance limitations, the country managed to make notable gains in economic and social indicators. “But the momentum weakened over time due to inherent structural weaknesses,” she said, pointing to low investment efficiency, a weak tax system and inadequate attention to reforms. She observed that reforms are often unpopular and require strong political commitment and bold leadership to implement successfully. Referring to ambitious economic targets set by political parties, she said achieving a one trillion-dollar economy by 2034 would require around 9 percent sustained annual growth for nearly a decade. Similarly, reaching a two trillion-dollar economy by 2040 would demand even higher growth over a longer period. She questioned whether Bangladesh currently has the institutional strength, governance standards, skilled human resources and technological readiness needed to sustain such high growth rates. “Without structural reforms, these targets will remain difficult to achieve and the economy will continue to move in circles,” she said. Highlighting key reform areas, Dr Fahmida Khatun mentioned public finance management, fiscal framework, trade and investment climate, and the financial sector. She, however, placed special emphasis on employment, describing it as one of the most pressing challenges. She said recent public movements had been largely driven by demands for jobs, noting that the public sector can absorb only about 5 percent of total job seekers, while the economy has failed to generate sufficient employment opportunities. “Growth without jobs has little meaning,” she said, adding that inequality has also increased alongside economic expansion. She referred to the Gini coefficient approaching 0.5, indicating widening income disparity. She pointed out that about 40 percent of the labour force is still engaged in agriculture, much of it seasonal and informal. While the service sector contributes over half of GDP, it has not created enough quality jobs. The manufacturing sector, which could provide stable and better-paid employment, has also fallen short in generating adequate opportunities. She noted that a significant portion of Bangladeshi migrant workers are employed abroad in low-skilled or semi-skilled roles, which limits income potential and long-term benefits. Stressing the need for labour market reform, she said the country must prioritise manufacturing expansion and skill development to create decent jobs. She also raised concerns about the mismatch between education and employment. Although about two million young people enter the job market each year, employers often struggle to find suitably skilled candidates. Youth unemployment remains significantly higher than the national average, and the rate among those not in employment, education or training is even higher. “The higher the level of education, the higher the unemployment rate in some cases. This shows a serious skills mismatch,” she said. Dr Fahmida Khatun called for increased budget allocations for education and improvements in quality, governance and training facilities. She made similar observations about the health sector, saying low spending and poor utilisation of resources weaken the workforce’s productivity. She also highlighted the importance of social protection, particularly at a time when inflation has remained high since 2023 while wages have not increased at the same pace. With investment slowing and job creation lagging, she said support for low-income groups is essential. However, she warned that expanding social protection requires adequate fiscal space. The declining tax-to-GDP ratio remains a major challenge in mobilising resources for social programmes. Referring to various election pledges, including family cards and farmer support schemes, she said such initiatives would require a strong fiscal strategy and comprehensive public finance reforms to ensure sustainable funding. Dr Fahmida Khatun concluded by stressing the need for an integrated reform agenda focused on employment, education, health and fiscal management to support long-term economic stability and inclusive growth.  

A nationwide survey by Centre for Policy Dialogue (CPD) has found a significant gap between voters’ expectations and political parties’ priorities in building a green and sustainable society, even as environmental concerns increasingly shape public aspirations ahead of the national election. The study titled ‘State of and Expectations on ‘Green and Sustainable Economy’ in Electoral Constituencies: Survey Findings on Voters and Candidates’ was released on Saturday.  CPD Research Director Khondaker Golam Moazzem presented it at the BRAC Centre in the capital. Conducted in 150 environmentally vulnerable constituencies, the study found that voters overwhelmingly prioritise cleaner air, safe drinking water and stronger environmental protection. Political parties, however, continue to frame development largely around traditional infrastructure such as roads and bridges, paying limited attention to structural green reforms. The findings are based on interviews with 1,200 voters and 450 political party representatives across all eight divisions, focusing on perceptions of environmental, economic and social dimensions of a green society. According to the survey, environmental degradation is already a lived reality for voters in climate hotspot areas. More than 73 percent of voters identified air pollution as a major problem, followed by flooding and cyclones. In drought-prone Barind regions, 81 percent of voters reported rising temperatures, while 90 percent of voters in haor areas cited worsening air quality. River erosion, groundwater depletion and frequent health problems were also reported widely, particularly in areas exposed to overlapping climate risks such as river systems combined with urban or coastal features. Political party representatives broadly acknowledged these challenges, especially air pollution and health impacts. But, sharp mismatches emerged in northern drought-prone areas, where only about one-third of party respondents recognised rising temperatures as a serious concern, despite overwhelming voter consensus. Around 61 percent of voters consider environmental restoration to be highly important in their localities. Tree plantation and reducing plastic use were identified by both voters and party representatives as the main tools for restoration. CPD researchers, however, noted a clear disconnect between diagnosed problems and proposed solutions. While air pollution and rising temperatures were identified as the most pressing issues, both voters and candidates showed limited emphasis on fossil fuel phase-out, emissions control or cleaner energy transitions. The survey also revealed low confidence in environmental governance. More than 70 percent of voters said existing environmental laws and regulations are insufficient, while nearly two-thirds believe the government is not doing enough to protect the environment. Political party respondents expressed similar dissatisfaction, pointing to weak enforcement and excessive centralisation. Nearly half of voters described themselves as moderately aware of renewable energy, with awareness higher among younger age groups. Political party representatives showed comparable levels of awareness, particularly among major parties, and largely agreed that renewable energy is important for Bangladesh’s development. Despite this, renewable energy was rarely linked to environmental restoration or green behaviour. Instead, voters and parties alike associated green behaviour mainly with tree planting, conserving water and electricity, and reducing plastic use. When asked to choose between environmental protection and economic growth, more than 93 percent of voters said environmental protection should be prioritised. However, most were unwilling to place it above traditional infrastructure projects such as bridges and roads, a position mirrored by political parties. While nearly 80 percent of voters said they prefer sustainable economic growth over traditional growth, their understanding of development remains heavily infrastructure-focused. More than three-quarters equated development with building roads and bridges, followed closely by employment generation. Political parties showed slightly greater emphasis on human capital, identifying quality education and healthcare as key elements of sustainable growth. Voters, by contrast, placed stronger weight on poverty reduction and immediate economic relief. Bangladesh edging towards ‘debt trap’, warns CPD’s Mustafizur Rahman Both groups agreed that eco-friendly practices could reduce long-term costs, but were reluctant to absorb short-term increases in expenses associated with green transitions. The social dimension of a green society emerged as the least developed in public perception. Voters identified poverty, low income and lack of education and skills as the main barriers to a green transition. Political parties, meanwhile, placed greater emphasis on people’s mindset and resistance to change. Gender inequality was ranked as a relatively minor obstacle by both groups, a finding CPD described as concerning given the role of women’s participation in sustainable development. Community engagement on environmental and social issues was reported as fragmented, with more than 60 percent of both voters and party representatives saying there are not enough awareness programmes at the local level. Looking ahead, voters expressed clear aspirations for environmental improvement. About 61 percent said improving air quality should be the top priority, followed by ensuring clean drinking water. These preferences remained consistent across regions and age groups, suggesting a demand for basic environmental improvements rather than location-specific solutions. Voters also expect Members of Parliament to lead environmental restoration through policy formulation, budget prioritisation and stronger monitoring and accountability. On the economic front, investment in renewable energy emerged as the most frequently cited priority for the next government, alongside sustainable agriculture, job creation and SME development. The CPD study concludes that although environmental awareness among voters is rising, electoral politics remains anchored in conventional development narratives. The mismatch between voter aspirations and party priorities, particularly on clean energy, governance reform and social inclusion, risks weakening the credibility of green commitments in election manifestos. The think tank recommended that political parties integrate clearer, cost and locally relevant green policies into their programmes, strengthen local government capacity and align development promises with the lived environmental realities of voters.