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 $8 billion monthly, with private credit growth close to 14%. The recent fluctuations in private credit growth are partly attributed to increased imports during the two Eid festivals.
Bangladesh Bank data shows a decrease in LC openings and settlements by 1.87% and 12.59%, respectively, in the first nine months of the recently concluded fiscal year compared to the same period in the previous fiscal year.
Expatriate Bangladeshis sent approximately US$ 2.11 billion in remittances during the first 28 days of September in the fiscal year 2024-25, according to data released by Bangladesh Bank on 29 September.
Of this total, state-owned and specialised banks handled $679.10 million, while private banks received $1.43 billion in remittances.
Chief Adviser to Bangladesh’s interim government, Professor Muhammad Yunus, has vowed to expedite reforms and hold elections swiftly. Yunus, who recently assumed the role after the collapse of Prime Minister Sheikh Hasina’s 15-year administration, expressed his commitment during an interview with Tokyo-based news outlet NHK WORLD in New York on Sunday. He was attending the United Nations General Assembly at the time.
Following mass student-led protests that ended Hasina’s long-standing rule in August, Yunus stepped in as the leader of the caretaker government. Known for founding Grameen Bank, an institution providing microloans to the underprivileged, Yunus, along with the bank, earned the Nobel Peace Prize in 2006 for his efforts in poverty alleviation.
During the interview, Yunus emphasized that the interim government’s primary mission is to implement reforms promptly and ensure elections are held as soon as the groundwork is complete. He underscored the importance of success, stating, “Failure is not something that we can accept.”
Addressing the pivotal role of students in the ousting of the Hasina administration, Yunus acknowledged the sacrifices made by young people, referring to their involvement as part of a “revolution.” He highlighted his intention to engage the younger generation in shaping policy.
Furthermore, Yunus called for continued support from Japan, Bangladesh’s largest donor, during this crucial transition period. He stressed that Japan’s assistance is vital to stabilizing Bangladesh’s economy and fostering a democratic foundation in the nation.
Syeda Rizwana Hasan, the Adviser for Environment, Forests, and Climate Change, announced today that steps will be taken to restrict the use of polythene shopping bags to safeguard future generations.
Starting from October 1, polythene bags will be banned in shopping malls, followed by a ban in kitchen markets from November 1.
“Everyone must take responsibility and stop using polythene voluntarily. Action against polythene producers will begin from November 1,” Rizwana Hasan stated during a seminar.
The Department of Environment (DoE) organized the seminar to raise public awareness about alternatives to banned polythene bags.
Rizwana Hasan highlighted that the restriction on polythene will be executed in phases according to legal provisions, and discussions with shopping centers and store owners are ongoing to ensure a smooth transition.
She also announced plans to make the government secretariat a plastic-free zone by December.
Other speakers at the seminar included Environment Secretary Dr. Farhina Ahmed, DoE Director General Dr. Abdul Hamid, Director Rajinara Begum, President of the Shop Owners Association Muhammad Helal Uddin, and Md. Arifur Rahman Bhuiyan, Assistant Professor of Environmental Science at BUP. They discussed the harmful effects of polythene and the need for alternative products.
Earlier, Rizwana Hasan inaugurated a fair showcasing eco-friendly alternatives to polythene bags and visited 24 stalls. The fair featured products from government and private entrepreneurs, including reusable bags, jute bags, paper bags, and items made from bamboo and cane.
