Bangladesh’s Forex Reserves Fall to $34.47Bn

After paying $1.3 billion import bills for September and October to the Asian Clearing Union, Bangladesh’s foreign currency reserves have fallen to $34.47 billion, a level seen two and a half years ago. 

The dollar reserves were $33.4 billion in May 2020 before it rose past $36 billion the next month. The rise continued and the reserves reached $48 billion in August 2021. Finance Minister AHM Mustafa Kamal hoped at the time the reserves would cross $50 billion by the end of 2021.  

Despite bolstered efforts to boost exports and inward remittances, and to cut expenses, high import costs amid a global economic crisis due to the Russia-Ukraine war continued to increase pressure on the dollar reserves. 

“We made $1.3 billion ACU payments from the $35.77 billion reserves on Monday,” said Bangladesh Bank spokesman Abul Kalam Azad.

After crisis-hit Sri Lanka left ACU, Bangladesh Bank asked banks to refrain from transactions  with Sri Lanka in October. Bangladesh is set to make the next ACU payments in January 2023. 

According to international standards, a country needs enough reserves to pay for imports for three months. Bangladesh’s current reserves are enough to pay import bills for four months. 

Bangladesh imported goods worth $19.34 billion in the first quarter of 2022-23 fiscal year, but exports were $11.8 billion while inward remittances fell to $5.67 billion. 

With the dollar reserves dwindling, the government and the central bank have taken a series of steps to rein in rising import costs, such as limiting the imports of non-essential goods. It also cut fuel purchase which is causing rolling power outages. 

The central bank also started to review applications for LCs to import goods worth more than $3 million to stop over-invoicing, through which fraudulent businesses smuggle money out of the country. 

Now the government hopes the effects of the measures will be visible in January 2023._bdnews24