Bangladesh’s import payments, including those of the Export Processing Zones (EPZs), declined 21 per cent to $27.76 billion in the July-November period of FY24, compared to $35.15 billion recorded year-on-year.
The slip – which is now persistent – was triggered by the government’s efforts to stem the steady depletion of foreign exchange reserves through import restrictions, industry insiders and experts say.
According to Bangladesh Bank data published on Tuesday, the country’s food grains and consumer goods import payments declined by 39 per cent and 20.3 per cent respectively in the July-November period of FY24, compared to year on year.
Intermediate and capital goods are the heart of an economy. In such areas, import payments declined by 21.7 per cent and 24.4 per cent respectively for the July-November period, compared to the same period of previous FY.
Economists and businesses say even though the country needs to restrict import payments to save USD, the economic growth must be prioritised. Basic components of import-oriented industries are essential for a smooth economy, but luxury product imports must be halted.
Centre for Policy Dialogue (CPD) Executive Director Fahmida Khatun said, “The fall in imports is likely to have a knock-on adverse impact on investment, employment, production and GDP growth over the near to medium-term future”
Bangladesh Bank data shows that food grains import payment declined by 39 per cent to $640 million in July-November period of FY24, of which rice import payments declined by 97 per cent to $8.6 million, compared year-on-year.
Import payments of consumer goods such as edible oil and pulses declined around 40 per cent and 46 per cent respectively in the July-November period of FY24, compared to the same period last year.
In terms of intermediate goods, crude petroleum import payments rose by 20 per cent to $493 million and petroleum oil payments declined by 9.7 per cent to $2.33 billion in the July-November period of FY24.
RMG industry
Import payments of goods related to the RMG sector, the key source of foreign currency earnings for Bangladesh, declined by 19.6 per cent to $6.63 billion. Raw cotton import payments dropped year-on-year by 41.3 per cent to $1.36 billion in the July-November period.
Commenting on the issue, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Executive President Mohammd Hatem said, “The overall import situation is connected closely to the USD shortage.
“But for the RMG sector, we cannot import more as the volume of orders has dropped.”
He continued, “For the last one and half years, the RMG sector suffered a lack of sufficient orders due to a decline in global demand. The export data which we have been shown is not the real picture of foreign currency earnings.”
Capital machinery
Capital machinery is a key indicator of investment in a country. Import payments of such components declined by 21.1 per cent to $1.7 billion in the July-November period of FY24, compared to the same period of FY23.
It should be noted that Bangladesh is facing low domestic and foreign direct investments (FDIs) for the last few years.
CPD recommends that the government should work on attracting investments (both local and FDI) to the SEZs by taking advantage of the triangulation of investment, multi-modal transport, and trade connectivity.
Due to a significant fall in import payments, the country’s balance of payment slightly improved in the first five months (July-November) of FY24. Current account balance in that period was positive $579 million, compared to negative $5.66 billion posted in the same period last FY.
However, the financial account of BOP is the key concern of Bangladesh. Such an account deficit ballooned to $5.39 billion for the same period of FY24, compared to $1.26 billion in surplus posted during the same period of FY23.
