Home ›› 05 Oct 2022 ›› Front
There are no benefits in keeping the foreign exchange reserves at a certain level, utilising the reserves to tackle the country’s crises was the right decision, and this is what the Bangladesh Bank has been doing, said central bank’s outgoing spokesperson Serajul Islam.
Serajul made the remarks at a press conference held at the central bank office in Motijheel on Tuesday – his last working day. He is going on post-retirement leave from Wednesday.
The outgoing spokesperson added, “It is normal that the reserves would decrease and then increase after a certain period. It is not a good decision to keep it level. If the support from the reserves was not given during the USD price hike, the situation could have gotten worse.”
According to the Bangladesh Bank data, in the last financial year and the first quarter of current FY, the regulator provided more than $10 billion in support from reserves to stabilise the forex market.
For this reason, the amount of reserves has decreased from $48 billion to $36.44 billion between August last year and September this year. However, the amount of usable reserves is only $28 billion.
The Export Development Fund (EDF) was created with $7 billion from reserves and another $1 billion was used for other purposes. There are allegations that the exporters are not repaying the loans taken from the EDF fund on time.
In response to a question from journalists about whether lending from the fund will be stopped in such a context, the spokesperson said, “It would not be right to stop lending. Rather, the debt recovery activities should be increased.
Remittances and exports were better in the first two months (July and August) of this fiscal year, but the situation changed for the worse last month.
Export earnings dropped 6.25 per cent to $3.9 billion and remittance inflow declined 10.48 per cent to $1.53 billion in September, compared to the same month of previous year.
Regarding the decrease in remittance, Serajul said, “Many people may have increased sending remittances illegally for short-term gain. This can have an impact on remittance income. But this should not be done for the sake of the country.”
About the decline in exports, the spokesperson said, “Eighty per cent of our export income comes from one product. Diversification of exports has become necessary. The leather industry can be a good option in this context.
The USD crisis was triggered by the increase in import payments after the ease in pandemic restrictions, and by the skyrocketing commodity prices in the global market caused by the Russia-Ukraine war.
The Bangladesh Bank and NBR have taken various steps, including increasing LC margin and hiking regulatory duty on luxury goods, to reduce imports.
Commenting on the matter, Serajul said, “Initiatives have been taken to overcome this crisis. The exports and remittances are declining now, so reducing imports cannot be the only solution for Bangladesh.
