Economy
“Import control cannot solve dollar crisis”
Limiting imports is not a permanent solution to the dollar crisis as the global economic downturn has caused the dollar exchange rate to skyrocket internationally, said Bangladesh Bank, Executive Director and Spokesperson Serajul Islam.
“Not only in Bangladesh, but dollar prices have also increased much more in the neighboring countries which result, we are under quite a lot of pressure. But reducing imports is not a permanent solution to deal with this,” he told the media.
It was his last working day at the Bangladesh Bank.
Serajul Islam said to handle the global pressure, Bangladesh should emphasize increasing exports.
He wished businessmen to establish Bangladesh as a brand in the world market.
“Our remittance inflow is going down a bit. Along with this, the amount of export earnings is also decreasing. This has created some pressure on the reserves.”
The Bangladesh Bank official, however, claimed that the economic pressure will not last as both remittances and export earnings will increase.
Export earnings fell by 6.25% year-on-year in September after a strong comeback in August with a 14% growth due to the deepening Ukraine-Russia crisis, while the US Fed hiked the interest rate to tame inflation.
Henceforth, remittance earnings, another lifeline of foreign reserves, was $1.5 billion, the lowest in seven months, as the decision of fixing the dollar rate for remittance by banks backfired, prompting wage earners to send money home through illegal channels to get higher prices.
On the other hand, the country’s trade deficit, which had slowed down in July-August amid falling import expenditure, may now widen further in the coming months due to the fall in remittance and export.
The trade deficit grew by 6.30% to $4.28 billion in the first two months of the current fiscal year whereas it had grown by 35% in the first month of the year, according to the Bangladesh Bank data.
During the eleventh month of the current fiscal year, the country’s foreign currency reserves have fallen below $19 billion for the first time. After paying off some import bills, the reserves have now stood at $18.26 billion on Sunday.
According to the International Monetary Fund (IMF), as of May 8, the total foreign currency reserves of the country were $19.82 billion.
Mohammad Mezbauul Haque, the spokesperson of Bangladesh Bank, informed that through the Asian Clearing Union (ACU), the central bank has paid off import bills totaling $1.63 billion over the past two months.
However, Bangladesh Bank maintains that after paying off the import bills, the foreign currency reserves now stand at $23.71 billion.
According to the Central Bank’s accounts, the reserves were $25.27 billion on May 8.
The Dhaka Stock Exchange (DSE) and the DSE Brokers Association (DBA) have expressed gratitude towards Prime Minister Sheikh Hasina for her directive to list government companies in the capital market, a move hailed as timely and positive.
The directive was issued during the recent meeting of the Executive Committee of the National Economic Council (Ecnec) last Thursday.
Dr. Hafiz Muhammad Hasan Babu, Chairman of DSE, described the directive as a significant step towards enhancing the dynamics of the capital market. He emphasized that besides invigorating the capital market, this move would also attract foreign investment and promote sustainable development.
Despite previous efforts, government institutions had not been listed in the stock exchange, according to a notification issued by the DSE. The Prime Minister’s directive is seen as a pivotal step towards revitalizing and expanding the economy.
Dr. Babu further remarked, “The listing of reputable companies in the capital market, as directed by the Prime Minister, will greatly benefit the country’s economy. It will also enhance investor confidence.”
Similarly, the DBA released a notification applauding the Prime Minister’s directive, terming it as positive and timely for the capital market.
Saiful Islam, President of DBA, expressed optimism about the directive’s potential to accelerate the country’s capital market and overall economy. He pledged support to relevant government departments and regulatory bodies in implementing the directive, ensuring its positive impact on the economy, including the capital market.
India has expressed interest in financing Bangladesh’s Teesta project, announced Foreign Minister Hasan Mahmud. Speaking to reporters after a meeting with Indian Foreign Secretary Vinay Mohan Kwatra, Mahmud stressed the importance of aligning the project with Bangladesh’s needs. He confirmed discussions on the Teesta issue during the meeting. Mahmud also affirmed Prime Minister Sheikh Hasina’s upcoming visit to New Delhi, indicating that the finalization of the date would depend on the formation of the new Indian government following ongoing elections.
Meanwhile, the IMF has approved a $1.15 billion staff-level loan for Bangladesh in its third tranche. Mahmud noted the ongoing elections in India and the subsequent formation of the new government as factors influencing the scheduling of PM Hasina’s visit.
When asked about the sequence of visits to India and China, Mahmud suggested Delhi’s geographical proximity to Bangladesh. Diplomatic sources suggest PM Hasina’s visit to India is planned for early July, following India’s elections.
Pre-election surveys indicate strong prospects for Indian Prime Minister Narendra Modi’s re-election. Modi previously congratulated PM Hasina on her electoral victory in January, expressing optimism about strengthening ties between the two nations.
The last bilateral engagement between the prime ministers occurred during the G-20 Leaders Summit in September 2023. Modi is expected to invite South Asian and BIMSTEC leaders to his swearing-in ceremony, fostering regional cooperation.
Addressing border killings, Mahmud emphasized the government’s commitment to ending such incidents and promoting the use of non-lethal weapons by border forces. Discussions also covered enhancing physical and people-to-people connectivity, including cooperation with India to import hydropower from Nepal and Bhutan through India. Mahmud highlighted the need to further ease visa restrictions to strengthen people-to-people relations.
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