Economy
Forex Reserves Dip to $20.46bn After ACU Payment
Following the clearance of $1.42 billion in import bills through the Asian Clearing Union (ACU) for May and June, Bangladesh’s foreign exchange reserves stood at $20.46 billion as of Wednesday (10 July), according to the Balance of Payments and International Investment Position Manual (BPM6) standards.
Reserve Decline
Data from Bangladesh Bank reveals that reserves were at $21.78 billion on 4 July, indicating a decrease of $1.32 billion over the past six days. The ACU, comprising Bangladesh, Bhutan, India, Iran, the Maldives, Myanmar, Nepal, Pakistan, and Sri Lanka, facilitates regional import payments every two months.
Previous Payments and Reserve Status
Earlier on 8 May, Bangladesh Bank cleared $1.6 billion for imports during the March-April period, which reduced reserves to $18.22 billion. By the end of June, Bangladesh received over $2.36 billion from four multilateral lenders and one bilateral partner, including the third tranche of the IMF’s loan, significantly boosting reserves amid a prolonged forex crisis.
The IMF had set a target for Bangladesh to maintain its net international reserves (NIR) at $14.69 billion by 30 June. According to the Bangladesh Bank, net foreign exchange reserves exceeded this target, standing at over $16 billion by the end of June. Total reserves, based on BPM6, were $21.83 billion as of 30 June, up from $19.4 billion on 26 June.
In January-February, Bangladesh cleared $1.29 billion in ACU bills, bringing reserves down to $20 billion at that time. A report from Bangladesh Bank highlighted that May 2024 saw the highest letter of credit (LC) openings in 23 months, amounting to $6.83 billion, amid an ongoing forex crisis.
A treasury head at a state-owned bank commented on the dramatic fall in imports over the past two years due to the central bank’s import LC margin policies. Currently, monthly LC openings are over $5 billion. This policy shift has led to fluctuating private loan growth over the past year and a half.
During the fiscal year 2021-22, importers were bringing in around $8 billion monthly, with private credit growth close to 14%. The recent fluctuations in private credit growth are partly attributed to increased imports during the two Eid festivals.
Bangladesh Bank data shows a decrease in LC openings and settlements by 1.87% and 12.59%, respectively, in the first nine months of the recently concluded fiscal year compared to the same period in the previous fiscal year.
Chief Adviser Prof Muhammad Yunus on Thursday paid tribute to the Armed Forces Division by placing a floral wreath at its headquarters.
Prof Yunus, who visited the division as part of his official duties, laid the wreath to honor the sacrifices and dedication of the members of the Armed Forces.
Following the wreath-laying ceremony, he signed the visitor’s book.
Chief Election Commissioner (CEC) Kazi Habibul Awal, along with four other election commissioners, announced their resignation during a press conference today at the Election Commission (EC) building. The resignation follows growing speculation and pressure.
CEC Awal stated, “In this changed situation, I and other commissioners have decided to step down. We’re handing over our resignation letters to the EC Secretary to send it to the President.” After submitting the letters, the CEC and some commissioners quickly left the premises, with no clear explanation for the absence of two election commissioners.
The resignations come amid increasing unrest tied to the registration of political parties such as Nagarik Oikya and Gono Odhikar Parishad. Sources revealed the CEC felt unsafe due to aggressive behavior from activists, prompting the decision to step down.
Protesters outside the EC building hurled shoes at vehicles carrying Election Commissioners Rashida Sultana, Md Alamgir, and Anisur Rahman as they left. Meanwhile, preparations for their exit had already been underway, with the commissioners reportedly relocating personal belongings from their offices.
The commission, appointed in February 2022 for a five-year term, had previously expressed confusion over demands for their resignation, maintaining they had conducted fair elections. However, internal discussions led to the collective decision to resign earlier than expected.
The government will now purchase LNG from the international spot market through open tender instead of negotiation.
Cabinet Committee on Economic Affairs (CCEA) in a meeting on Wednesday in principle approved a proposal in this regard.
Adviser of the interim government for Finance Dr. Salehuddin Ahmed, who presided over the meeting, said that the government will procure LNG through open tender.
The Energy and Mineral Division of the Ministry of Power, Energy and Mineral Resources placed the proposal where it sought approval to import LNG from 23 listed companies in the international spot market.
The adviser said that though such 23 companies were enlisted by the previous Awami League government and signed Master Sales and Purchase Agreement, they will remain unchanged.
He said that instead of applying the Speedy Increase of Energy and Power Supply (Special) Act 2010, the interim government will follow the Public Procurement Rules 2008 to ensure the competitive bidding process.
“We don’t want to change them as we wanted to import LNG quickly, ensuring proper competition among the suppliers,” he told reporters.
Committee also approved another proposal in principle to sign a contract to import urea fertiliser for the 2024-25 fiscal year from Fertiglobe Distribution Limited, UAE, on a G-to-G basis.
Meanwhile, the Cabinet Committee on Government Procurement (CCGP) in a meeting, presided over by the Adviser for Finance, approved 3 proposals for import of lentil and fertiliser.
As per the proposal, the Trading Corporation of Bangladesh will procure 10,000 metric tons (MT) of lentil from local firm Sahara Enterprise at a cost of Tk 98.20 crore with each kg priced at Tk 98.20.
The Commerce Ministry which moved the proposal on behalf of the TCB in the meeting mentioned in the proposal that the supplier firm was selected through open tender.
The CCGP approved two separate proposals of the Industries Ministry under which Bangladesh Chemical Industries Corporation will import 30,000 MT of bulk granular urea fertiliser from Fertiglobe Distribution Limited, UAE, under state to state contract at a cost of Tk 121.48 crore.
Each metric ton of fertiliser will cost $343.17.
Another 30,000 MT of bagged granular urea fertiliser will be procured from the local Karnaphuli Fertilizer Company Limited (Kafco) at a cost of Tk 116.99 crore with each metric ton costing $330.50.
