Coordination Council to Convene for Tackling Bangladesh’s Macroeconomic Challenges
Dhaka, July 2, 2025 — The Council for the Coordination of Fiscal, Monetary and Exchange Rate Policies (Coordination Council) is set to hold a critical meeting on Thursday to address mounting macroeconomic challenges confronting Bangladesh. A senior official from the Ministry of Finance (MoF) confirmed that this high-level gathering aims to evaluate the country’s current economic strains and formulate strategies to alleviate them.
Key Focus Areas: Balance of Payment Strains and Foreign Aid Shortfall
The meeting is expected to concentrate heavily on the poor disbursement of foreign aid and the escalating trade imbalance, both of which have severely impacted Bangladesh’s balance of payment (BoP). Finance Minister AMA Muhith will preside over the session.
Attendees will include top officials such as the Governor of Bangladesh Bank (BB), the Chairman of the National Board of Revenue (NBR), secretaries from the finance division, banking and financial institutions division, economic relations division (ERD), commerce, and planning ministries — all members of the Coordination Council responsible for aligning fiscal, monetary, and exchange rate policies.
Addressing BoP Difficulties and Government Borrowing
A senior finance official disclosed that the Council will deliberate on measures to overcome current BoP difficulties, curtail government borrowing from the banking system, and manage the burgeoning subsidies bill. The government is grappling with complex internal and external economic pressures causing a marked deterioration in the BoP situation, surging bank borrowings, and rising subsidy expenditures.
Another MoF official underscored the multifaceted nature of the economic challenges, noting that there is no quick remedy.
Potential Sovereign Bond Issuance on the Table
One potential solution under review is the issuance of a sovereign bond in the international market. Recent proposals by The City Bank NA and Standard Chartered Bank suggest that such a bond could provide relief to the BoP and economic challenges. Government officials are currently examining the viability of this option and may seek expert advice from the Coordination Council before making a final decision.
Simultaneously, the Bangladesh Bank has recently expressed deep concern over worsening BoP conditions and urged the government to take proactive steps to attract foreign currency inflows.
Current Account Deficit and Declining Foreign Aid
Data from the first quarter of the current fiscal year show the current account surplus has plummeted to approximately $310 million — less than half of the $622 million surplus recorded in the same period last year. The International Monetary Fund (IMF) projects a possible current account deficit of $849 million for the current fiscal year, a stark contrast to last year’s $995 million surplus.
The financial account also reflects a decline, with a $1.0 billion deficit in the first two months compared to $1.58 billion for the entire last fiscal year.
Disbursement of foreign aid has sharply fallen by 28%, totaling only $246 million in the first three months. This decline is due in part to suspension of funds from major donors like the World Bank and Asian Development Bank related to key projects such as the Padma Bridge, according to an ERD official.
Rising Subsidies and Price Adjustments Under Consideration
Subsidies, originally estimated at Tk 224.70 billion for the fiscal year, could surge to as much as Tk 400 billion without adjustments to sectoral prices. By comparison, subsidies rose from an original estimate of Tk 142.63 billion to Tk 193.99 billion in the revised budget last fiscal year.
MoF insiders suggest that the Coordination Council may recommend further price hikes in power and energy sectors to help manage the expanding subsidies burden.
Government Borrowing Expected to Exceed Targets
Officials warn that the government’s borrowing for fiscal year 2011-2012 is likely to surpass the initial targets by the end of this week, exacerbating concerns about fiscal sustainability.
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This report is published by The Financial Express, an established source of daily finance news in Bangladesh, marking its 31st year of publication. The newspaper provides comprehensive coverage of political, economic, corporate, and trade developments affecting Bangladesh’s economy.
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This article has been prepared for Smart Money Mindset to provide timely and detailed insights on Bangladesh’s current financial landscape.