Foreign Currency Bond: A Cart Before The Horse

Foreign currency bond will set a new course, Without true reform,this is just a cart before the horse.

News broke out that Bangladesh govt formed committee to issue bonds in foreign currencies across different international markets. Funds raised through such foreign currency bonds will be used to finance development projects(see "High Level Panel Formed To Assess Feasibility of Issuing Panda,other Foreign Currency Sovereign Bonds", Abul Kashem & Rafiqul Islam,Daily Business Standard, July 28,2026,https://www.tbsnews.net/economy/high-level-panel-formed-assess-feasibility-issuing-panda-other-foreign-currency-sovereign). This is the first time govt is exploring foreign capital markets to finance domestic initiatives.The news also says govt is mulling regulatory changes to allow purchase of such bonds by Bangladeshi nationals who under current regulatory set up cannot purchase such bonds.

Question is whether there is a drastic change in governance and macroeconomic indicators that call for contemplating launch of such foreign currency bonds. The very same day this news came out another report says S&P Global Ratings revised Bangladesh's outlook on long-term sovereign credit rating from stable to negative. The agency attributed reasons for the revision to weak banking sector,poor revenue collection, external factors and high likelihood of delayed recovery (see "S&P Revises Bangladesh Outlook To Negative On Banking Sector,Fiscal Risks",The Business Standard, July 18,2026,https://www.tbsnews.net/economy/sp-revises-bangladesh-outlook-negative-banking-sector-fiscal-risks-1499791). The agency observed that non performing loan in the banking sector reached about 40% of total loans, govt revenue collection accounts for 8%-9% of GDP and interest payments represent 30% of govt revenue. That means revenue collection is still inadequate and more than a quarter of that revenue goes for paying up the the interest of govt debt.

In this backdrop, govt is pondering to draw money from foreign debt market. Govt is not increasing the pace of domestic revenue collection to meet the existing debt servicing obligation but embarking on issuing bonds that will require more revenue money to pay the interest/ coupon.

Proper use of the raised fund is another issue otherwise whole initiative will be jeopardized. Indonesia is an example. Foreign investors account for 14% of Indonesian govt debt and 40% traded stocks. Money raised through foreign bonds often goes to spending on public projects with inefficient outcomes and leakages. Free school meal program is marred with corruption as vendors ,contractors embezzled funds by submitting swollen bills and delivering poor quality food items that caused illness to the students. This kind of politically motivated projects plus subsidy already pushed up budget deficits beyond legal threshold of 3% of GDP,worrying foreign investors about sustainability of govt programs. They pulled out $3.9 billion from Indonesian market this year. Plus $46.1 billion of govt debt comes to fruition this year. This puts tremendous pressure on Indonesian Rupiah,which already witnessed 10% depreciation against USD("Why Indonesia's Economy Is Under Pressure", Nik Martin, Deutsche Welle,July 15,2026,https://www.dw.com/en/indonesia-economy-prabowo-emerging-market-status/a-77847180).

Point is unaccountable public spending programs coupled with lack of regulatory checks may hurt the very spirit of the funding objective. In addition, when foreign currency bond will mature, it will put pressure on local currency Taka if macroeconomic situation is not in favor. Any rapid depreciation of Taka may result in worsening the inflation.

Foreign investors seek detail and clear information on bond issuer economy. They will certainly not bank on info like Bangladesh never fails to pay back its debt and its low debt-to-GDP ratio(38.9% according to CEIC data). They will certainly inquire about why the country fails to provide gas to the new factories. They will seek information about banking sector reform,distress asset management.Vital reforms should be carried out to draw attention of foreign investors to foreign currency bonds.

Indonesia's Patriot Bond allows undisclosed wealth to enter the economy. The govt even passed a law that says investors are not obliged to provide any info on investment on the bond that can be used to prosecute them later. Such provision is a boon for money laundering activity and poses risks for the financial sector(see "The Hidden Amnesty In Indonesia's Cut-Rate Patriot Bond",Ronny P Sasmita,Asia Times,June 24,2026,https://asiatimes.com/2026/06/the-hidden-amnesty-in-indonesias-cut-rate-patriot-bonds/). Bangladesh should avoid such provision in issuing foreign bonds. And greater transparency in issuing will thwart money laundering activity.

Without serious commitment to implement reform in financial sector, revenue collection and governance, the initiative of issuing foreign currency bond seems like cart-before-the-horse case. In this era of free-flow-of-information govt backed assurance will not convince the foreign investors to rest their trust on Bangladeshi foreign currency bonds. Deeper reform,fiscal prudence and accountable public spending may set the context for any such future initiative.

La Semaine Dernière A Mes Yeux

(25 juillet --- 31 juillet)

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Ma Semaine Gastronomique

Date	Petit déjeuner	Déjeuner	Dîner	Snacks,Sucreries,Boissons et Fritures
25	Pain,Yardlong beans,Œuf	Riz,Purée de sésame, Purée de feuilles de Moringa,Sec ruban avec haricot rouge et graine de jaque	Riz,Sec ruban avec haricot rouge et graine de jaque	Riz gonflé,Pois chiches ,Tchanatchur
26	Pain,Pomme de terre	Riz, Latya poisson, Sec ruban avec haricot rouge,Feuilles de taro	---	Riz gonflé, Pois chiches,Tchanatchur,«Pianju»,«Tchop»
27	Pain,Pomme de terre,Œuf	Riz,Poulet,Feuilles de taro,Courge amère,Sec ruban avec haricot rouge	---	--

Empire Of Football

A navigating star called football Connects cultures and mesmerizes all.

FIFA World Cup 2026,the greatest show on Earth,was over. Euphoria surrounding it subsided. But bondage,passion and connections the festival created do not wither away. This year too Bangladeshi football fans stole the show and became news items of world media. Rooftops in Bangladesh decorated with flags of Latin American countries. Fans from all walks of lives donned jerseys of Brazil,Argentina, Portugal and Spain. And their love did not go unrecognized! Brazil has an embassy here long before the Qatar World Cup 2022. After the World Cup 2022,Argentina reopened its embassy, which was closed back in the 80's, in Dhaka to show solidarity with the Bangladeshi football fans. Travel bloggers of both the countries visited the two countries and made special vlog on football love. In Bangladesh, Argentina, Brazil, France and US ambassadors acknowledged football love of the Bangladeshis before the press.

Just after the 2022 World Cup ,I wrote a piece titled "Latin America's Asian Colony" ,published here on December 23,2022, where I argued the crazy euphoria for football should have some meaning to know(see https://hoquestake.blogspot.com/2022/12/latin-americas-asian-colony.html?m=1). Bilateral trade with the South American countries grew manifolds in the last 5 years. But Brazil is way ahead of Argentina and dominates the bilateral trade with Bangladesh. In 2021,Bangladesh imported $1.74 billion worth of goods from Brazil and exported $90 million worth of goods to the country. In 2025, Bangladesh's import from Brazil grew to $2.64 billion and Bangladesh's export to the country grew to $190 million. Meanwhile, in 2021,Bangladesh [imported] $620 million worth of goods from Argentina and exported $10 million worth of goods to the country. In 2024, import from Argentina grew to $780 million and export to the country increased to $20 million.Bangladesh imports mostly sugar,cotton,oilseeds, wheat etc from Brazil. Meanwhile imported items from Argentina includes mostly soybean, sunflower oil,wheat, corn etc. Bangladesh mainly exports RMG, leather, leather goods,footwear etc to these countries (see "Argentina'r Cheye Brazil Egiye(Argentina Way Ahead of Brazil)", Shafiqul Islam,Daily Prothom Alo,p-6,June 28,2026).

This world cup also witnessed how ticket prices of [a] match varied with popularity and interest to the match. Resale opportunity and more interest to a particular match drove prices of ticket up. This dynamic pricing plus sponsorships and other fees swelled FIFA's revenue to $15 billion. FIFA plans to spend part of the revenue behind football associations of the poor countries.

Apart from revenue, no other sports generates so much pride and prestige. Besides the 2 million people gathered in Madrid to celebrate the return of the champions, hundreds of thousands of people descended into streets to welcome their football heroes in Cabo Verde,Egypt,Norway and other parts of the world. In Norway, Parliament and the Army performed viking row in solidarity with the Norwegian football team. Former UK prime minister Keir Starmer announced to call a day public holiday if England would win the world cup. Belgian Parliament asked for a probe on President Trump's alleged intervention in cancelling red card against US footballer Balogun. UK complained to FIFA,which do not allow political manifestation,about Argentine team's display of messages about Falklands. President Trump requested FIFA,according to some news reports,to host again the Football world cup in the US soil in near future discarding Canada and Mexico. In Bangladesh, during President Ershad's time, Parliament passed a bill denouncing referee's action against Argentina! I do not know any other sport that causes this much upending reaction at the national and international level.

This world cup is no short of interesting things. "Promise","Providence","La Margarita" are names of few players. I think in future world cups, we may see "Patience","Perseverence","Joy","Victory" will run on the football pitch! Kids barely know what football is perform victory moves of CR7,know Mbappé! Peruvian parents of the newborns are naming their children after the name of Scandinavian football star [Haaland] whom I thought a tall white came all the way from another world to help Norwegians win their first world cup! Local Bangla press is full at what [Haaland] ate daily: 4 scrambled eggs,yogurt, beef steak,chicken and many more things. God must be crazy that a Texan raccoon(stuffed) chased Braut [Haaland] all the way to Norway. Argentina brought 500 kg of Argentine beef to feed their players in the USA. A 400-foot long jersey is flying over the head in some neighborhood of Dhaka. Argentine footballer Antonino Rattín was behind the incident that saw introduction of yellow card and red card in football.

Despite so many goals, I think the pace of the match is held back by offside rules. In cricket, people go to field to see six and four are being scored at regular intervals. To make the sport more popular, International Cricket Council changed restrictions on field settings, introduced shorter version of the game. Nowadays T20 sees more sixes and fours. Similarly in football, people go to the field to watch more goals being scored. To make that happen, setting the number of offside is a must. Say, each side can have at most two offsides in a match. Number of player can present before the D-box can also influence the game. At the same time,making the game shorter will make the game more popular.30 minutes for each half and 15 minutes for extra time will seal the fate of the game in 1 hour 15 minutes instead of current 120 minutes!

Currently, China,India,Bangladesh, Pakistan, Indonesia do not play at the world cup stage. They are half of the world's population and their economies matter a lot. It is indeed a good news that FIFA is contemplating to increase the number of participating countries from 48 to 64. If that happens, then these countries will have greater chance to play in the world cup. Shorter version of the game will increase that chance even more.

Football is bigger than Olympic! No other sport draws this much crowd,causes this much sensation. It has a language and appeal that cross border and culture.In galaxy [Milky Way] if there is a planet called earth, then it has only one popular sport. It is called football.

La Semaine Dernière A Mes Yeux

(18 juillet --- 24 juillet)

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Ma Semaine Gastronomique

Date	Petit déjeuner	Déjeuner	Dîner	Snacks,Sucreries,Boissons et Fritures
18	Pain,Gourde serpent,Œuf	Riz,Latya,Épinard malabar,Soupe aux lentilles	---	Mangue,«Chapli pitha»
19	Pain,Œuf	Riz, Petit poisson, Purée de sésame, Purée de feuilles de coriandre	Pois chiches,Riz gonflé	Mangue
20	Pain,Œuf	Riz,Gobie aux yeux barrés,Purée de graine de jaque,Purée de sésame,Soupe aux lentilles	Pois chiches,Riz gonflé	Mangue,Jaque
21	Pain,Œuf	Riz,Latya poisson, Purée de sésame, Épinard malabar,Soupe aux lentilles,Tige de taro avec graines de jaque	---	Mangue,«Sondesh»,Jaque
22	Pain,Œuf	Riz,Gobie aux yeux barrés,Tige de taro avec graine de jaque,Gourde blanche,Soupe aux lentilles	Cacahouète,Riz gonflé	Goyave
23	Pain,Pomme de terre	Khichuri,Poulet	Riz,Sec ruban poisson avec graine de jaque	Mangue,«Sondesh»
24	Pain,Gourde blanche,Œuf	Riz,Sec ruban avec graine de jaque,Purée de feuilles de moringa,Purée de sésame,Soupe aux lentilles	---	Mangue,«Sondesh»,Riz gonflé,Tchanatchur

Apparel Export Faces New Challenge

Bangladeshi apparel export loses market share, Exposing weakness that labor query just lays bare.

Data divulged by WTO revealed that Bangladesh gains little in RMG export from the tariff debate. Bangladesh registered a growth of only 0.89% in apparel export in 2025. Vietnam registered 10.53% growth. While Cambodia posted a growth of 16.88%, Pakistan, Indonesia and India recorded growth of 6.83%, 5.79% and 5.47% respectively (see "Bangladesh posts 0.89% apparel export growth in 2025, lowest among Asian rivals: WTO", The Business Standard,July 13,2026,https://www.tbsnews.net/economy/rmg/bangladesh-posts-089-apparel-export-growth-2025-lowest-among-asian-rivals-wto-1487416).

China's market share of global apparel exports fell from 31.71% to 27.35% since 2021. The country is subject [to] severe tariff from the Trump administration. Bangladesh's total RMG export stood at $38.82 billion in 2025. Despite the fact that Bangladesh retains 2nd position in the US market, Bangladesh ceded market share to rivals like Vietnam and Cambodia. This is an worrying development.

Recently, USTR opens an investigation on 60 economies in the issue of forced labor. Traces of forced labor could land Bangladesh facing tariff up to 12.5% (see "US announces new tariffs over forced labour concerns",Mitchell Labiak,BBC News,3 June 2026,https://www.bbc.com/news/articles/cq6pe7nvldmo). Bangladesh is still reeling from the reciprocal tariff (19% for Bangladesh) while the forced labor related punitive tariff has the potential to augment the tariff burden.

If this punitive tariff really comes into effect, Bangladesh's apparel market share may further shrink. In addition, erosion of export earning resulting from the punitive tariff may worsen the current account balance. Any export loss amid austerity measures will pose severe challenges to macroeconomy including pressure on the exchange rate of Taka.

One of the domestic way to confront this challenge is to depreciate the currency. But look at the sheer size of the tariff, 12.5%. Depreciation of this magnitude will not pose serious problem to the economy but could aggravate the inflationary pressure by increasing the prices of imported goods, which is not a priority for the govt. So depreciation of Taka by 12.5% is not compatible with the economic priorities of the govt. However, a 2% or 3% depreciation will not bring that much pressure.

Forced labor related tariff already casts shadow over govt's employment creation goals. Govt envisages to create 2.5 million jobs through the central bank led stimulus package. At the heart of this stimulus is reopening of [closed] garment factories. Many of which are small in size and survive on subcontracting. Further labor related compliance will strain the production cost of the factories and many simply cannot comply with the new standards. Moreover, punitive tariff may shrink work order and thereby shrink future subcontracting opportunities for these factories.

While Bangladesh is still coping with the ensuing situation from reciprocal tariff, forced labor related investigation puts its apparel export share into precarious situation. This new challenge even threatens govt's job creation goal. Depreciation of Taka, to some extent, may mitigate the adverse effects.

La Semaine Dernière A Mes Yeux

(11 juillet --- 17 juillet)

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Ma Semaine Gastronomique

Date	Petit déjeuner	Déjeuner	Dîner	Snacks,Sucreries,Boissons et Fritures
11	Pain,Yardlong beans,Œuf	Tehari rice	---	Datte,Riz gonflé
12	Pain,Yardlong beans,Œuf	Riz, Latya poisson, Citrouilles et Papaye	---	Mangue,Pomme, Datte
13	Pain,Citrouilles et papaye,Œuf	Riz,Haricot rouge avec sec ruban	Riz,Haricot rouge avec sec ruban	Puri
14	Pain,Yardlong beans,Œuf	Riz,Haricot rouge avec sec ruban,Crevettes,Latya	Lait,Riz gonflé	Mangue,Puri
15	Pain,Yardlong beans,Œuf	Riz,Haricot rouge avec sec ruban,Aïr poisson,Yardlong beans	---	Mangue,Riz gonflé
16	Pain,Citrouilles et papaye	Riz, Aïr poisson,Épinard d'eau,Soupe aux lentilles	Riz gonflé	Mangue
17	Pain,Poulet	Riz,Gourde serpent,Latya,Soupe aux lentilles	---	Mangue,Gâteau,Sambosa du fromage,Sondesh

Weakening Of Taka: When Desirable

Competitiveness through depreciation, Desirable when there is less inflation.

For the major part of the FY 2026,Taka remained stable against the USD. There is an overall balance in the Balance of Payment. And foreign exchange reserve is continuously increasing. Till June 2026, forex reserve stood at $31.74 billion. According to MPS, reference exchange rate was Tk 123.18/USD in June 2026,registering 0.39 % depreciation in FY 2026.

The depreciation rate is decent. But further weakening of Taka could be good for economy. Inflation is the obstacle in the path of major depreciation. Inflation in June was 9.14%, a slight decrease from 9.42% in May 2026. A larger depreciation may aggravate the inflation.

Export and remittance are the two sectors that enjoy greater benefit of depreciation. But the two jointly account for around 16% of GDP. Meanwhile, dollars earned and received go for paying up the import bills and foreign debt repayments. Our import was $61 billion in 2025 and external debt was around $112 billion (source: Wikipedia). They jointly account for 33.92% of GDP. Crux of the matter is sectors benefitted from large depreciation of Taka account lesser percentage of GDP than sectors affected by such depreciation. Large depreciation may spike the imported inflation and increase our debt service payment in Taka amount.

But depreciation is related to export competitiveness. So when competitiveness is top priority depreciation is the way. Vietnam, where export accounts for 90% of GDP, witnessed around 0.11% depreciation of its Dong in the first six months in 2026. Since a communist regime is in charge of running the country and export accounts for a huge percentage of GDP, Vietnam is in a comfortable position to use its currency to increase its export competitiveness.

Even India witnessed 10% depreciation of Rupee in one year and large part of it happened in the first six months of 2026. In India, export and remittance jointly account for 23.97% of GDP while import and external debt jointly account for 41.95% of GDP.

I think slow and gradual depreciation is ok for our economy. 1% or 2% depreciation will not aggravate the inflation that much. Regular intervention of the central bank,therefore, in the forex market is necessary. According to MPS,in FY 26,central bank spent $6.43 billion in forex market intervention.

Steady flow of remittance and BB's intervention translated into 0.39% depreciation of Taka. This is why central needs to hold lots of Taka. That is why it is not right to use central bank's money in other purposes, particularly in meeting political pledges. Central bank plans to spend Tk 19000 crore of its money as part of stimulus package. Central bank needs money to emergency intervention and that is why its money should be untouched.

Use of local currency to boost export competitiveness is indeed good for the economy. Timing and priority are the two factors that influence the decision regarding the depreciation. Since fuel price is rising amid high inflation at the local market, this is not high time for big depreciation. However, central bank's intervention ,which requires huge amount of money at its disposal, in the forex market at right time can thwart any appreciation pressure on Taka and ensure export competitiveness.