Reserve may stand at $ 24b in June
Mahfuz Emran: The central bank wants to keep the country’s foreign exchange net reserve at $24 billion. For this purpose, they have revised the foreign exchange income and expenditure plan.
Among these, stricter import controls are being imposed to save foreign exchange, foreign exchange exemptions are being taken in less important sectors like foreign travel, medical, education, meetings and seminars.
At the same time, to increase the foreign exchange earnings, the related organizations are taking steps to search for new markets for exports, increase exports to new markets, bring non-repatriated export earnings back to the country, and increase the flow of remittances.
Besides, it is planned to reduce high interest short-term foreign loans and take more low-interest long-term loans.
According to sources, after analyzing the data of various international organizations including the International Monetary Fund (IMF), the World Bank, the Central Bank has seen that the dollar crisis will continue in the next financial year.
But the crisis will not be so pronounced as in the current financial year. That is why Bangladesh Bank is still following the policy of saving dollars. Which decided to continue in the future.
The IMF has predicted that the country’s gross reserves may fall to $29.96 billion by June. Which is equal to 3 and a half months of total import expenditure. At the same time, the net reserve may come down to $24.46 billion. With which the import expenses of 2.9 months can be met. That is less than 3 months import cost. Reserves have to rise to $3,423 million in June. Net reserves may drop to $2,873 million. With which it will be possible to meet the import expenses of 3.2 months.
Meanwhile, the country’s foreign exchange reserves are continuously decreasing. Reserves fell to $2,970 million on May 8 after the Asian Clearing Union (ACU) debt settlement.
On May 9, when the World Bank released $507 million for budget support, the reserve increased again to $3,960 million.
On May 11, reserves fell again to $3,350 million.
On May 17, the reserve further decreased to $3,180 million. In the first week of July, ACU will again have to pay more than $118 million in debt. Then the reserves may come down to $2 thousand 9 billion.
Besides, between May and June, another billion dollars will have to be sold to the commercial banks to repay the foreign debt and LC debt. As a result, the reserves will decrease further.
However, it is not possible to pay the import expenses and foreign debt with the dollar income from export income and remittances. As a result, dollars have to be sold from the reserve.
In this situation, it will not be possible to maintain the net reserve at 2 thousand 446 million dollars by June according to the conditions of the IMF. That is why the central bank wants to keep net reserves at least 2 thousand 4 billion dollars.
With which it will be possible to meet the import expenses of about 5 months. According to international safe standards, it is considered safe only if there is a reserve equal to at least 3 months of import cost.
Currently, the country’s monthly import expenditure has come down to $5 billion as a result of strict controls. $850 million were also spent in the previous month. According to that, the import decreased by $350 million. More controls are being imposed on imports. As a result, the central bank believes that it will be possible to save reserves.
According to IMF conditions, money invested in various funds should be deducted from current reserves. Earlier investment in various funds was 8 billion dollars. Now reduced to $550 million.
Initiatives have been taken to reduce this further. As a result, $4 billion will have to be deducted from the reserve. In this, the net reserve can stand at $2 thousand 4 billion.
According to sources, the dollar price gap has been reduced in the banking channel, remittance bank and curb market. Short term loans were about $2 trillion dollars. Of this, about $8 billion has already been disbursed.
Another $8 billion will be disbursed this year. A policy of taking less short-term loans has now been adopted. As a result of reducing imports, this debt is also decreasing.
Because most short-term loans are taken against imports. This will reduce the pressure on reserves. On the other hand, long term loans will be taken more. Which will be helpful for reserves.
Meanwhile, the IMF forecasts that the current account balance in June will be within 3.2 percent of GDP. It will increase to 4.2 percent in the next financial year.
In the financial year 2024-25, it will decrease to 3.5 percent. It will come within 3 percent in the next 2 fiscal years. In other words, GDP growth will increase as a result of increasing economic activities next year. It will increase the import.
On the contrary, foreign exchange earnings will be less. As a result, the deficit will increase. Remittances may increase by 2 percent in the current financial year. It may increase by 7 percent in the next financial year. Export income may decrease by 7.2 percent in the current financial year. It may increase to 8.6 percent in the next financial year. Imports may decline by 22.6 percent in the current fiscal year. It may increase to 14.2 percent in the next financial year.
In the current financial year, medium and long-term debt will be limited to $7 thousand 952 million. Next year it will increase to $8 thousand 9 billion. Bangladesh’s credit risk is low.
Meanwhile, the central bank considers increasing the export income as a big challenge. Because the economic recession is evident in the big markets of Bangladesh. This has reduced export orders by an average of 25 to 30 percent.
As a result, the import of raw materials has also decreased. This may further reduce export earnings in the future. But the products which were exported earlier, the income did not come to the country due to recession. The central bank has instructed the banks to bring them to the country.
At the same time searching for new markets and increasing exports to new markets
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