The country’s foreign exchange reserves have exceeded $33.03 billion mark at the end of April amid a drastic fall in imports due to the global coronavirus outbreak, which has caused a halt in trade around the world.
The existing reserve volume can cover the country’s import bills for more than eight months.
Bangladesh Bank Executive Director Kazi Saidur Rahman told the Daily Sun that the forex reserves maintain a satisfactory condition despite many difficulties.
“But there is nothing to be complacent about the current reserves. We need to increase our foreign reserves further. As soon as imports start increasing, there will be pressure on the reserves. Besides, exports and remittance have also nosedived due to coronavirus crisis.”
According to Bangladesh Bank data, the country’s foreign reserves exceeded 33.65 billion on June 22, 2017, the highest in the country’s history.
After paying the import bill, the reserves fell below $33 billion. Two and a half years later, on March 1, reserves again exceed the $33 billion mark. Over the next two and a half years, reserves have fluctuated between 31.5 billion and 32.5 billion.
According to the Export Promotion Bureau (EPB), in the first nine months (July-March) of the current 2019-20 fiscal year, Bangladesh's income from export of goods has decreased by about 6.5 per cent. Garment exports, the country’s main export sector, declined by 8.5 per cent.
In FY 2018-19, exports grew by 10.55 per cent.
In the first nine months of the current financial year, remittances sent by expatriates increased by 16.15 per cent, but in March, remittances decreased by 13.34 per cent.
In April, the situation worsened further. In the first 27 days, the expatriates sent only $730 million in remittances.
According to Bangladesh Bank, import expenditure decreased by 5 per cent during the July-February period.
Bangladesh, Bhutan, India, Iran, Myanmar, Nepal, Pakistan, Sri Lanka and the Maldives - these nine countries are currently members of ACU. The bills of all the products that Bangladesh imports from these countries have to be paid through ACU every two months.
Bangladesh last paid the ACU bill for the January-February period in the first week of March. The ACU bill for the March-April period has to be paid in the first week of May.
Economist Dr Ahsan H. Mansur said Bangladesh’s foreign exchange reserves are in a somewhat 'comfortable' position due to low import expenditure, even though most of the indicators of the economy have taken a worrying turn during the COVID-19 epidemic.
Dr Ahsan H. Mansur, also the chairman of BRAC Bank and executive director of the Policy Research Institute (PRI), said $33 billion reserves was not enough in the current crisis.
“Import is much lower now. Import will increase as soon as the situation returns to normal. Then you have to spend a lot of dollars to meet the import cost, there will be tension in the reserve,” he said.
"Covid-19 is wreaking havoc on the entire world economy. The crisis is growing day by day. In this difficult situation, food, medicine and other necessary products must be preferred for import. In that case, the 33 billion reserves are not enough,” Mansur said.