Economy
Ship purchase, trade support to dominate PM’s crucial China visit
Bangladesh is set to sign agreements with China to procure four large ships including two crude oil mother tankers with Chinese loans during Prime Minister Sheikh Hasina’s upcoming visit to Beijing.
Experts describe the trip as crucial for the country’s regional geopolitics and for maintaining developmental momentum amid economic challenges.
Officials say incorporating these vessels, which also includes two mother bulk carriers for transporting coal, food grains, cement clinkers, and other goods into Bangladesh’s existing fleet, will reduce the country’s dependency on foreign ships for transporting highly sensitive products such as fuel oil.
During the prime minister’s visit, scheduled for 8-11 July, an announcement is expected regarding a trade support package from Beijing in Chinese currency, equivalent to $5 billion, with an interest rate of 1% and a grace period of 20 years.
The Bangladesh Shipping Corporation (BSC) will purchase the ships using financing from trade support at a cost of 1,676.54 million Yuan, which is around Tk2,486 crore.
The government anticipates receiving around $20 billion in funding from China across multiple sectors during the visit, with a significant portion allocated to various development projects.
$2b budget support, CEPA commencement and more
During the Prime Minister’s visit, an announcement may be made regarding China providing reserve support or budget support to Bangladesh, as stated by Chinese Ambassador to Dhaka, Yao Wen. Sources indicate that Bangladesh has requested $2 billion in budget support from China.
Additionally, there could be announcements about the official commencement of the Comprehensive Economic Partnership Agreement (CEPA), along with initiatives related to bilateral trade and investment, the construction of a metro rail, development projects in the southern region including Payra Port, and securing Chinese loans for Bangladesh’s infrastructure development.
According to sources, around 17 Memorandums of Understanding (MoUs), agreements, or letters of intent may be exchanged across various sectors during the visit.
Additionally, Prime Minister Sheikh Hasina and Chinese President Xi Jinping will officially inaugurate several projects in Bangladesh completed with Chinese funding. These include the 1320 MW coal power plant by S Alam Group and the Single Point Mooring with Double Pipeline project.
The Bangladesh Bank may also sign an MoU with China’s National Financial Regulatory Administration to initiate trade in Taka-Yuan.
Mother tankers to transport fuel to single point mooring
Officials from the Bangladesh Shipping Corporation (BSC) said the ships will be purchased with a loan from the Chinese Exim Bank for 20 years with a five-year grace period at an interest rate of 2%. The China National Machinery Import and Export Corporation will supply them.
Each crude oil mother tanker has a capacity of 114,000 deadweight tonnage (DWT), while the mother bulk carriers have a capacity of 81,500 DWT. The construction period for the ships is estimated to be 32-34 months.
A senior BSC official, who wished to remain anonymous, told the news reporter that all the processes for purchasing these four ships with Chinese financing have been completed. A formal agreement signing or announcement in this regard may occur during the prime minister’s visit.
Commodore Mahmudul Malek, managing director of the Bangladesh Shipping Corporation, said the Economic Relations Division (ERD) will sign the agreement on behalf of Bangladesh. The construction of the ships will commence immediately after the contract signing and they are expected to be delivered within two years.
Regarding the crude oil mother tankers, he said the mother tankers will transport oil near the Single Point Mooring with Double Pipeline Project.
Each crude oil mother tanker will cost Tk780.84 crore. The import cost of each mother bulk carrier is Tk462.31 crore.
According to BSC officials, the ships will transport around 20 lakh tonnes of crude oil and 15.2 lakh tonnes of cargo annually.
The BSC currently does not have such large mother tankers. Officials say the government aims to ensure Bangladesh’s fuel supply by transporting crude oil using these new ships.
Previously, the BSC purchased three product oil tankers and three bulk carriers with a loan of Tk1,500 crore from China, which were added to the BSC’s fleet in 2018 and 2019.
MoU on infrastructure and construction
Furthermore, an MoU on Deepening Cooperation in Infrastructure and Engineering Construction is scheduled to be signed between Bangladesh’s Economic Relations Division and China’s Ministry of Commerce during the prime minister’s visit.
Additionally, the Economic Relations Division (ERD) may sign a separate MoU with the China International Development Agency to join the China-led Global Development Initiative. The ERD will also sign another MoU with this Chinese organisation regarding the implementation of the 9th Bangladesh-China Friendship Bridge Project in Bangladesh, funded by China.
A joint statement by the two leaders is expected to announce the completion of the joint feasibility study for the Comprehensive Economic Partnership Agreement (CEPA) and the commencement of bilateral negotiations. Negotiations for the China-Bangladesh Bilateral Investment Treaty are also set to begin.
Announcements regarding the implementation of the sewage collection system under the Dasherkandi STP catchment project for Dhaka city, along with projects for water supply, sanitation, drainage, solid waste management, and faecal sludge management in municipalities funded by China, may be made during the visit.
Additionally, it is anticipated that the two leaders may jointly inaugurate the Modernisation of Telecommunication Network for Digital Connectivity project.
“Primarily national interest”
Shahab Enam Khan, professor of international relations at Jahangirnagar University, said the prime minister’s visit to China is primarily driven by national interests.
“Essentially, economic considerations outweigh geopolitical issues during this tour,” he said.
He, however, added, “Maintaining political balance between the US, China, and Myanmar is also a key aspect of the visit. The Rohingya crisis poses a security threat to the region, prompting Bangladesh to seek China’s assistance in resolving this issue.”
Shabab Khan further said during the visit, the highest priority is being given to forex stability, deferred payment arrangements, and budgetary support. Natural resource management is also a key focus area.
“The government is particularly seeking China’s assistance in managing Bangladesh’s internal water resources. This includes not only the Teesta River but also overall inland water management,” he explained.
Professor Shahab Enam Khan said, “The government aims for Chinese funding to enhance Bangladesh’s infrastructure. This development is not only beneficial for Bangladesh itself but also aims to accelerate infrastructure projects funded by China to improve connectivity with neighbouring countries.”
He further said, “Bangladesh anticipates China’s cooperation in enhancing digital connectivity. Technology transfer from China and Chinese investments will be crucial during the prime minister’s visit. China plays a pivotal role as a development partner coordinating overall development efforts in Bangladesh.”
The International Monetary Fund (IMF) has urged Bangladesh to maintain a tight monetary policy to contain inflation, while stressing that monetary tightening alone will not be enough to restore economic stability.
Inflation in Bangladesh rose to 8 per cent in September, according to the IMF. The Washington-based lender has called for broader reforms in the financial sector, stronger revenue mobilisation and improvements in overall economic management to address the country’s persistent economic challenges.
Sonali Jain-Chandra, deputy director of the IMF’s Asia and Pacific Department, made the remarks in response to a question at a news conference on the economic outlook for Asia and the Pacific, held on the sidelines of the IMF and World Bank Group annual meetings in Bangkok, Thailand.
Asked whether tight monetary policy alone would be sufficient to tackle inflationary pressures that have persisted for more than three and a half years, Jain-Chandra said maintaining a restrictive monetary stance was important, but needed to be accompanied by other reforms.
Bangladesh is currently facing challenges in three key areas: revenue mobilisation, the financial sector and inflation, she said.
The IMF also expressed concern over the fragile state of Bangladesh’s financial sector, saying a credible reform strategy was needed to strengthen the sector’s capacity and ensure stability.
The fund also highlighted the country’s persistently weak revenue collection. Bangladesh’s tax-to-GDP ratio has declined over time and currently stands at around 7 per cent, placing it among the lowest in the world, according to the IMF.
The IMF stressed the need for a coordinated effort to increase revenue collection, saying higher government revenues were essential to finance development expenditure and strengthen the financial sector.
It called for necessary reforms to the revenue system and effective measures to improve the government’s capacity to generate income.
Talks Under Way on New IMF Programme
Meanwhile, discussions are continuing on a potential new lending programme for Bangladesh.
Jain-Chandra said Bangladeshi authorities approached the IMF in May for support under a new programme after deciding not to draw further instalments under the previous arrangement.
In response to the request, an IMF mission visited Dhaka in July to discuss various aspects of Bangladesh’s economic reform agenda.
According to Jain-Chandra, the reform issues discussed during the visit were closely aligned with the recommendations outlined in the IMF’s Article IV consultation for Bangladesh earlier this year.
The IMF has remained in regular contact with Bangladeshi authorities since the July visit, she said.
Jain-Chandra added that the fund remained closely engaged with the authorities and was ready to support Bangladesh in initiating the reforms needed to address its economic challenges.
The International Monetary Fund (IMF) has projected that Bangladesh’s gross domestic product (GDP) will grow by 3.2 per cent in the 2026-27 fiscal year, while average inflation could rise to 10.9 per cent, signalling mounting pressure on the country’s economy.
The projections were outlined in the IMF’s World Economic Outlook (WEO) report, released on Tuesday.
The latest growth forecast marks a significant downward revision from the 4.3 per cent projected by the IMF in April. The fund had subsequently forecast growth of 3.5 per cent in July before lowering its estimate further to 3.2 per cent.
The IMF has also sharply revised its inflation outlook for Bangladesh. In April, it projected average inflation of 6 per cent for the 2026-27 fiscal year. The latest estimate raises that figure to 10.9 per cent.
The combination of slower economic growth and persistently high inflation points to continued pressure on Bangladesh’s macroeconomic stability.
Bangladesh growth outlook trails other forecasts
The IMF’s latest growth projection for Bangladesh is lower than those of other major international development institutions.
The World Bank has forecast GDP growth of 3.4 per cent for Bangladesh in the 2026-27 fiscal year, while the Asian Development Bank (ADB) has projected growth of 4 per cent.
According to the IMF, Bangladesh’s economy grew by 3.6 per cent in the 2025-26 fiscal year, following growth of 3.5 per cent in the preceding fiscal year.
India, Bhutan expected to grow faster
The IMF has projected stronger economic growth in neighbouring countries, with India’s economy expected to expand by 7 per cent and Bhutan’s by 6.9 per cent in the relevant fiscal year.
The contrasting forecasts highlight the challenges facing Bangladesh as it seeks to restore economic momentum while tackling persistent inflation.
The IMF’s latest projections come as the annual meetings of the IMF and the World Bank Group are underway in Bangkok, Thailand.
Bangladesh’s economic situation, reform programmes and efforts to secure financing from development partners are among the key issues receiving attention during the meetings.
The World Bank supports the Bangladesh government’s policies to address the country’s current economic challenges, restore stability and implement medium- and long-term development plans, Finance Minister Amir Khasru Mahmud Chowdhury said on Tuesday.
He said the global lender was broadly aligned with Bangladesh’s economic programmes and policy priorities and would continue to support the country’s economic recovery and future development.
The finance minister made the remarks while speaking to journalists after a meeting with a World Bank managing director in Bangkok, Thailand, on October 13.
Amir Khasru said Bangladesh’s economy was facing significant challenges when the current government took office. Alongside dealing with the financial and economic burdens inherited from the previous period, the country was also having to navigate global economic disruptions caused by ongoing wars and geopolitical tensions.
He said the World Bank understood the realities facing Bangladesh and supported the government’s policy approach to overcoming the economic difficulties.
“The World Bank is aligned with the programmes and policy direction we have set to restore economic stability and ensure future development,” the minister said, adding that both sides would continue working together.
He said the World Bank was willing and prepared to provide the assistance Bangladesh needed.
No decision yet on proposed $10 billion in additional assistance
Clarifying reports that Bangladesh had sought an additional $10 billion in assistance from the World Bank, the finance minister said no final decision had been made.
He said discussions with the lender were ongoing and that possible proposals would be reviewed in light of those discussions. The process could take several months to complete, he added.
“No decision is being made at this stage. I have seen several inaccurate reports here and there. This is a discussion, and there will be follow-up based on these talks. It is a process that will continue over the next few months,” he said.
The minister stressed that the ongoing discussions should not be interpreted as a final agreement. Rather, they were intended to establish a basis for determining the next steps and considering possible decisions.
Further discussions would also take place in Dhaka, he said.
Expressing satisfaction with the progress of the talks, Amir Khasru said Bangladesh was in a favourable position to establish a framework for future cooperation.
He reiterated that the government’s economic policies, programmes and medium- and long-term development plans were broadly aligned with the World Bank’s position.
Government’s economic agenda aligned with BNP manifesto
The finance minister also said the World Bank’s position was consistent with the government’s economic plans and the Bangladesh Nationalist Party’s (BNP) election manifesto.
He said discussions were underway on how to address the country’s economic challenges and achieve the government’s development objectives.
According to the minister, the government has submitted a written proposal outlining a framework for partnership with the World Bank. Discussions on the proposed framework will continue.
He said the World Bank had provided various recommendations and suggestions, while Bangladesh had also presented its own proposals and recommendations.
Further discussions would be based on these submissions, he added.
Government optimistic about inflation and GDP targets
Asked about forecasts by the World Bank and the Asian Development Bank (ADB) on inflation and gross domestic product (GDP) growth, and how they compared with the government’s targets, the finance minister said the government did not intend to dispute the projections made by other institutions.
He said the institutions had prepared their forecasts based on their own calculations and analyses, adding that the country’s economic performance would become clearer as progress on key indicators was assessed over time.
“We do not want to dispute anyone’s projections. They have made their estimates based on their own calculations. We are carrying out our work, and they are doing theirs. What matters most is that the cooperation we need continues,” he said.
The minister expressed optimism that the government would be able to meet the inflation targets set out in the national budget.
He said the government was working to restore economic stability through continued engagement with the World Bank, implementation of its economic policies and progress on medium- and long-term development plans.
