Trade Deal Raises Revenue Concerns

A newly signed reciprocal trade agreement between Bangladesh and the United States may result in a notable decline in government revenue during the current fiscal year, according to the Centre for Policy Dialogue, a prominent independent policy research organisation. Analysts from the institution estimate that Bangladesh could lose approximately 13.27 billion taka in customs revenue due to tariff concessions granted under the agreement.

The findings were presented on Tuesday during a roundtable discussion titled “Budget Recommendations for Fiscal Year 2026–27”, organised by the Centre for Policy Dialogue at its office in the capital. The event gathered economists, policy specialists and researchers to examine fiscal challenges and the broader implications of the trade arrangement.

Fahmida Khatun, Executive Director of the organisation, delivered the keynote presentation outlining the economic impact of the Agreement on Reciprocal Trade recently concluded between Bangladesh and the United States. She explained that the agreement obliges Bangladesh to grant duty-free access to approximately 4,500 categories of American products. Furthermore, an additional 2,210 categories are scheduled to receive tariff exemptions gradually over the next five to ten years.

These tariff concessions are expected to significantly reduce the government’s import duty income, beginning in the current fiscal year. Economists warned that the implications of the agreement may extend beyond bilateral trade. Under international trade rules, Bangladesh could face pressure to extend similar benefits to other countries participating in the global trading system, which could further widen revenue losses in the future.

Estimated Tariff Concession Impact

Another issue highlighted during the discussion concerns provisions within the agreement that may require Bangladesh to procure certain goods specifically from the United States. Analysts believe such conditions could increase government expenditure if incentives or subsidies are needed to encourage domestic importers to source products from American suppliers rather than more competitive international markets.

Mustafizur Rahman, an Honorary Fellow of the organisation, stated that the global trading environment has increasingly shifted towards strategic and political considerations. He observed that the growing use of trade policy as a geopolitical instrument has weakened the effectiveness of the multilateral trading system.

Rahman also stressed the importance of making the agreement more transparent. According to him, several provisions may contain financial or regulatory implications that require careful scrutiny before full implementation. Since many aspects of the arrangement depend on private sector participation, the government may need to provide financial incentives if businesses are expected to prioritise imports from the United States.

Key Fiscal Indicators Discussed

The organisation also highlighted broader fiscal challenges confronting the economy. Revenue collection has remained well below the government’s ambitious target, resulting in a substantial deficit. To finance expenditures, the government has increasingly relied on borrowing from the domestic banking sector, a trend that economists warn may heighten financial sector risks and reduce the availability of credit for private businesses.

Inflation has remained above eight percent, continuing to strain household budgets and business operations. Economists noted that ongoing instability in global energy markets, particularly due to conflict in the Middle East, could further increase fuel prices and intensify inflationary pressure, given the country’s reliance on imported energy supplies.

Additionally, implementation of the annual development programme has slowed considerably. By January, spending had reached only 20.3 percent of the annual allocation, marking the lowest implementation rate recorded in fifteen years.

The policy institute urged the government to adopt a more realistic fiscal strategy when preparing the next national budget. Researchers emphasised that ambitious targets must be supported by comprehensive tax reforms, improved revenue administration and stronger measures to curb unnecessary public expenditure.

They also stressed that boosting private investment and employment opportunities will be essential to strengthening long-term economic stability and sustaining growth.