Mahfuz Emran: Export earnings and remittance flows, the two main sectors of foreign exchange earnings in the country, declined in April.
Export earnings fell by 16.5 percent and remittances by nearly 17 percent. Reducing the income in these two sectors will increase the pressure on the foreign exchange management. At the same time, there is a fear that the price of the dollar will increase and foreign exchange reserves will decrease further. Altogether, instability in the economy will increase.
According to the source, analyzing the flow of information in recent times, it can be seen that 70 percent of the country’s foreign exchange income is coming from exports. 28 percent coming from remittances. The remaining 2 percent is from other sectors. Exports and remittances, the major sources of foreign exchange earnings, will both fall, leading to a major deficit in the sector.
Analysis of the data shows that the export income in April was $3.96 billion and the income from remittance was $1.68 billion. Both sectors have earned $564 million in foreign exchange. In contrast, imports spent $476 million in February. Along with this, foreign loan installments of about $500 million have to be paid. About $500 million will be spent this month due to Hajj. The total cost of these will be $574 million. Due to this there will be a deficit of $10 million. Apart from this, foreign exchange is also being spent on foreign travel and other services.
Meanwhile, the Asian Clearing Union (ACU) will soon have to pay more than a hundred billion dollars in debt. Besides, the government has decided to increase the import of oil, gas and coal. This will increase the cost of foreign exchange. Altogether, the pressure on reserves will increase. Reserves fell to $3,960 million on Tuesday. It will further decrease when the current debt is paid off.
According to sources, although it is possible to reduce costs by controlling imports, it is not possible to stabilize the foreign exchange market, on the contrary, it is increasing. Now due to repayment of foreign debt, the pressure on the reserves will increase. If export earnings and remittances decrease, this pressure will increase.
The trade deficit has narrowed recently due to lower imports. The current account deficit of foreign currency also decreased. It can be seen from the report of the central bank that in April remittances to the country reached $168.35 million. $202.25 million came in March. Remittances fell by 17 percent in April compared to March. $201 million came in April last year. As such, it has decreased by about 17 percent. In July-April of the current financial year, remittances have reached $1772 million. $1731 million came in the same period of the last financial year.
Meanwhile, to increase the flow of remittances, the price of the dollar has been increased. As a result, expatriates will now get Tk 108 per dollar. Along with this, you will get two and a half percent incentive of Tk 110.70.
Meanwhile, export earnings also decreased in April. In April, export earnings were targeted at $505 million, with earnings at $395.6 million. Compared to the target, the income has decreased by 21.67 percent. In the same period last year, the income was $473.87 million. Accordingly, the income has decreased by 16.52 percent.
The target of export income from July-April of the current financial year is $4731 crore. $4567 millionhave been earned during that time. $4,334 crore was earned during the same period of last financial year. Compared to the target, the income fell by 3.46 percent. It has increased by 5.38 percent compared to the same period of last financial year.
In July-February of the current financial year, the import expenditure was $4880 million. With this, at least another billion dollars will be added to the import expenditure of March and April. Altogether, the import expenditure will be about $6 billion till April. The income is $6339 million. The surplus will be $339 million. Out of this, the foreign exchange account will go into deficit after payment of foreign loans, Hajj expenses and other services. This deficit has to be met with money from reserves. As a result, reserves will also decrease.
As a result of increasing the price of the dollar by 1 taka in export earnings and remittances from Tuesday, the central bank has also increased its price by one and a half taka. As a result, import costs will increase. This will increase the price of industrial products including imported products within the country. As a result, there is a risk that the rate of inflation will increase further.
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