BB suspends gold imports to save forex reserves

The Bangladesh Bank (BB) has suspended gold imports to save foreign currency amid declining reserves.

The measure came two years after it allowed 18 companies to import gold and precious metals.

The central bank decided not to allow gold imports right now as the foreign currency reserves are depleting fast, according to BB officials.

Bangladesh Bank spokesperson Md Serajul Islam told The Business Post, “The central bank banned the gold import as it is a luxurious item.”

To avoid an economic crisis like the one Sri Lanka is facing now, the government, in July, took a series of steps including stopping official overseas tours of its employees and raising taxes to discourage the import of luxurious products.

The BB wrote to the commercial banks to follow the order on gold import suspension.

Dhaka Bank Managing Director EmranulHuq told the Business Post, “We’ve received the central bank’s order related to the suspending gold import.”

The gold imports mainly take care of the demand by the jewelry industry. Diamond World, one of the country’s biggest precious and jewelry item importers, imports gold through Dhaka Bank.

In 2018, the government framed a Gold Policy to allow precious metal imports to prevent smuggling and ensure transparency in trading.

In December 2019, BB awarded licences to 18 companies including a bank to import gold.

Diamond World was the first company that obtained BB’s permission to import gold. The company got approval to import 131 kilograms of gold last year.

Following Diamond World, LaxmiJewellers ltd, BDEXgold and Diamond, Jewellery House, Rotno Gold Corner, and other seven companies got the BB’s approval to import a total of 306.761 kilograms of gold, according to the BB.

Along with the latest measure, the BB took several initiatives to put a lid on fast depleting foreign exchange reserves.

Despite the efforts, the foreign exchange reserves declined by $8.67 billion in the last year to $39.05 billion as of August 31 hit by the rising import payment and falling remittances in the wake of several reasons including the Russia-Ukraine war.