Dihan Marchi
Dhaka, July 16 (bdnews24.com) ? The Bangladesh Bank is facing a crisis of foreign currency reserve due to a hike in import costs.
It has apparently become difficult for the central bank of the country to pay for the import spending in the next three months with the current reserve.
Admitting pressure on the reserve, governor Atiur Rahman told bdnews24.com that he is hopeful of resolution of the crisis soon.
Former advisor to the caretaker government A B Mirza Azizul Islam suggested staying alert about the matter.
The foreign currency reserve of the central bank was $10 billion on Thursday, which is $1 billion less than the last week's reserve.
The reserve fell sharply as the bank paid $838 million to the Asian Clearing Union (ACU) last week. The payment was a record as Bangladesh imported most from ACU countries.
Mirza Azizul told bdnews24.com on Saturday that a difficult situation would emerge if the reserve was not raised and the increasing trend of import expense continued.
"We have to spend more for import as the value of Taka against Dollar has decreased. It has become a matter of great anxiety for us," he said.
"The flow of our foreign aid is also not so good. Many of them are stuck in the pipeline. They aren't getting cleared. The foreign currency reserve crisis will ease if the aids are cleared," he added.
The former caretaker government advisor said that the Bangladesh Bank and the government should take steps to increase flow of remittances and discourage import of luxury goods.
He also suggested checking imports over invoices.
However, Atiur tried sounding positive, "The import sector has been decreasing since June and the flow of remittance has also started looking up."
"We are discouraging import of luxury goods. I hope the import expenditure will decrease and so will the pressure on foreign exchange reserve," he added.
According to the latest information given by the central bank, the import cost was $3.2918 billion in May, highest in a month in the country's history.
The import stayed above $3 in the last five months.
In the first 11 months of the last fiscal, goods worth $30.7471 billion were imported, with the amount being 43 percent higher than in the corresponding in 2009-10 fiscal.
The cost of import from July to May in 2009-10 was only 2.82 percent higher than that in the same period previous fiscal.
On the other hand, last financial year's export earning was $22.9244 billion, 41.47 percent higher than in the previous year.
Of the earning, 35 percent went to back-to-back Letter of Credit (L/C) or to import goods to produce the export items.
Even though the amount of remittance increased, the rate of remittance growth in the last fiscal was lower than those of the past years.
The rate of remittance growth increased by 22.42 percent in 2008-09 fiscal, 13.25 percent in the subsequent one and only six percent in the last fiscal.
ACU had received only half of its due payment when the foreign currency reserve decreased to $1 billion during the Awami League government's tenure in 2001.
bdnews24.com/arh/ost/nir/2230h
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Dhaka: Amid press reports that the country's forex reserve is dwindling fast due to increased import spending, the central bank governor says there is nothing to be worried about it.
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