Bangladesh Bank’s foreign exchange reserves fell to $31 billion. Reserves fell to $3,115 million after Asian Clearing Union (ACU) paid off its liabilities last Tuesday. About $105 million has been repaid for Akur’s debt. Besides, other debts have also been repaid. Earlier on March 1, the reserve was 3 thousand 233 million dollars.
Reserves have now fallen to their lowest level in the last 6 years following the repayment of Aku’s debt. 6 years ago in January 2017, reserves crossed $3 billion for the first time. This information is known from Central Bank sources.
Sources said that in the recent past due to payment of import debt and foreign loan installments and decline in foreign exchange earnings in the export and remittance sector, the pressure on the country’s foreign exchange reserves has increased. As a result, the reserve is decreasing. Reserves have been declining since August 2021. It had increased before. In August 2021, the reserves increased to a maximum of 4 thousand 806 million dollars. Since then the reserves started to decrease. That trend still continues.
Import costs have been controlled to reduce pressure on reserves. The repayment period of foreign loans has also been extended. Even so, the pressure on the reserves cannot be reduced. In 2022, import spending peaked at around $8.5 billion per month. Now it has been reduced to 420 million dollars. Due to decrease in imports, there has been a negative impact on the industry and commodity prices of the country. As the value of the dollar has increased, the purchasing power of people has also decreased. Meanwhile, the International Monetary Fund (IMF) had forecast that reserves would decline in March. Reserves may increase in June.
Reserves are expected to increase by June, the central bank said. Because the remittance flow may increase in April due to fasting and Eid. This trend will continue until next Eid al-Adha. This will increase the reserves due to the effect of remittances till June. However, import costs may also increase. In that case, the leading economists of the country have expressed doubts about how much the reserve will increase.
According to central bank sources, the two main sectors of foreign exchange earnings of the country are export earnings and remittances. Export earnings had earlier crossed the $5 billion mark a month. Now it has fallen below 5 billion dollars. Export income has been decreasing for the last 2 months. Remittances also fell in February.
Meanwhile, the cost of imports has been reduced somewhat by reining in. Imports increased by more than 46 percent in July-January of the last financial year. It has decreased by 5.5 percent during the same period of the current financial year. But in January it decreased by about 23 and a half percent. In January last year, there was an increase of 15 percent.
As a result of import controls and suspension of foreign loan installments, the country’s current account deficit in foreign currency income and expenditure has decreased slightly. During July-January of the last financial year, there was a deficit of 1,260 million dollars. In the same period of the current financial year, the deficit has reduced to 504 million dollars.
Eight countries including Bangladesh import and export goods to the rest through the Asian Clearing Union. Reconcile import-export accounts every 2 months. Through this, Bangladesh imports more than exports, so the debt has to be paid every month. Due to this, the reserve is under pressure. 105 million dollars have been paid for the debt of January-February 2. In the last installment, $1.12 billion was disbursed for November and December. Compared to the last installment, this time the cost of import has decreased by 7 million dollars.
Akura member countries are Bangladesh, India, Iran, Nepal, Pakistan, Myanmar, Bhutan and Maldives. However, Sri Lanka has been excluded from the list due to its failure to pay its debts. Earlier Sri Lanka was a member. Unable to pay its regular dues due to economic downturn, withdrew its name from the organization.