Forex reserves dipping with new IMF formula

Staff Correspondent: The country’s forex reserves slipped further amid the implementation of the International Monetary Fund’s (IMF) balance of payments and investment position manual.
On July 19, the gross international reserves (GIR) fell to $23.45 billion, central bank data showed.
The central bank began publishing the GIR in line with the manual on July 12 to ensure that the country’s dollar stockpile is reported accurately.
On the day, it stood at $23.58 billion.
The GIR includes gold, cash US dollar, bonds and treasury bills, reserve position at the IMF and special drawing rights holdings, a form of international money created by the lender.
Reserves have been under strain for months due to higher imports against the lower-than-expected export earnings and remittances.
Earnings from merchandise shipment rose 6.67% year-on-year to $55.55 billion in FY23, while remittance inflow grew 2.75% to $21.61 billion.
The change in reporting the reserves comes as part of the conditions agreed with the IMF for the $4.7 billion loan program. As per the conditions for the program, Bangladesh’s gross foreign currency reserves need to be $25.32 billion by September 30 and $26.81 billion by the end of 2023. It failed to meet June’s reserves floor of $24.46 billion.
The central bank forecasts that the GIR will stand at $31.5 billion at the end of the current fiscal year.
It was $46.39 billion in FY21 and $41.83 billion in FY22.
The BB also reported gross foreign assets by adding the Export Development Fund and other foreign assets with the GIR.
It showed the reserves were $29.85 billion on July 19, down nearly 25% from $39.69 billion a year earlier.