The Centre for Policy Dialogue (CPD), a leading civil society think-tank in Bangladesh, has sounded an alarm regarding the fiscal implications of a recent reciprocal trade agreement with the United States. According to the organisation, the government is projected to incur a staggering customs revenue loss of approximately £93 million (BDT 1,327 crore) within the current financial year alone due to this bilateral arrangement.
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The Core of the Crisis
During a roundtable discussion titled ‘Budget Recommendations for FY2026–27’ held at the CPD office in Dhanmondi, Executive Director Dr Fahmida Khatun highlighted the immediate challenges. The agreement mandates that Bangladesh provide duty-free access to roughly 4,500 products imported from the US. Furthermore, a phased tariff withdrawal on an additional 2,210 types of goods is scheduled over the next five to ten years.
This sudden shift in trade policy is expected to create a significant hole in the national exchequer. Dr Khatun argued that by granting unilateral duty-free market access to a major economy like the US, Bangladesh might inadvertently violate World Trade Organization (WTO) principles. This could trigger similar demands for preferential treatment from other WTO member states, potentially destabilising Bangladesh’s broader economic framework.
Economic Risks and Strategic Concerns
The CPD expressed concerns that the deal includes clauses requiring the government to purchase specific goods exclusively from US sources, which could lead to inflated public expenditure. Professor Mustafizur Rahman, a Distinguished Fellow at CPD, noted that global trade is increasingly being weaponised for political and strategic leverage, undermining the WTO’s multilateral system. He emphasised that the finer details of this agreement remain opaque and must be scrutinised for financial and policy-driven risks.
Moreover, since the private sector will be the primary executor of this trade, there are questions regarding feasibility. Without government subsidies, private entities may lack the incentive to prioritise US imports over more cost-effective alternatives. Professor Rahman also pointed out that restrictions on trading with third-party nations could infringe upon Bangladesh’s economic sovereignty.
Fiscal Challenges and Macroeconomic Indicators
The timing of this revenue loss is particularly precarious. Bangladesh is already grappling with a massive revenue shortfall, which reached nearly BDT 60,000 crore by the mid-point of the fiscal year. To meet the annual target, a growth rate of 59.4% is required in the remaining months—a feat described by experts as “virtually impossible.”
Key Economic Data (FY 2024-25 Estimates):
| Indicator | Current Status | Target/Requirement |
| Revenue Growth (July–Jan) | 12.9% | 34.5% |
| Required Growth for Remainder | N/A | 59.4% |
| Annual Development Prog (ADP) | 20.3% (15-year low) | 100% |
| Revenue Shortfall | BDT 60,000 Crore | Nil |
| Inflation Rate | Above 8% | 6.5% |
| Tax-to-GDP Ratio | 6.8% | 15% (Electoral Pledge) |
| Export Income Growth | -3.2% (Decline) | Positive Growth |
The Road Ahead
Dr Khatun urged the government to move away from “overly ambitious” budgetary targets and focus on realistic fiscal reforms. With the government increasingly relying on bank borrowing (taking BDT 59,655 crore by December) to cover the deficit, the flow of credit to the private sector is being stifled. Coupled with rising global energy prices due to Middle Eastern tensions, the Bangladeshi economy faces a turbulent period. The CPD recommends a formal renegotiation of the trade pact terms with Washington to safeguard the nation’s fiscal health.