The government and the central bank are looking at foreign loans and grants to increase the foreign exchange reserve as exports and remittances fell in April 2023, according to official sources.
The International Monetary Fund (IMF) had set a minimum net reserve target of $22.95 billion last March, which Bangladesh could not fulfill.
The target has been set at $24.46 billion as a net reserve for next June, $25.32 billion in September and $26.41 billion in December.
Economists say that it will not be possible for the government and the central bank to fulfill this condition for the time being because of negative export earnings and low remittance flow.
There doesn’t seem to be any good news in the coming months either, they added.
According to the data of central bank, in April remittances to the country reached $1.68 billion, which was $202 billion in March. Remittances fell by 17 percent in April compared to that in March.
On the other hand, export earnings in April were $3.96 billion, which was $4.64 billion in March.
The export earnings in April fell by 16.5 percent compared to that in March.
Apart from this, the foreign exchange income of the two sectors was $5.64 billion in last April.
In contrast, the import expenditure in February was $4.76 billion. Along with this, foreign loan installments of about $500 million have to be paid, and some $500 million will be spent this month on Hajj activities.
Besides, foreign exchange is also being spent on travel and other services.
Meanwhile, Mezbaul Haque, executive director and spokesperson of the Bangladesh Bank, expressed hope that many grants and loan funds will be available by next June.
Apart from this, Prime Minister Sheikh Hasina went on a foreign tour and signed agreement with various organisations – all these are expected to leave a positive improvement in the reserves by June.
Dr Mustafizur Rahman, distinguished fellow of Centre for Policy Dialogue (CPD), told The News Times that the second installment of the IMF is expected to arrive around October.
The government could not fulfill the conditions of the IMF regarding reserve, he said, adding that the conditions might not be met next June either.
‘However, there will be no problem in getting the second tranche from the IMF loan even if the reserve conditions are not met. The central bank will give an explaination to the IMF,’ Mustafizur pointed out.
The CPD official argued the World Bank’s budget support will increase the reserve, however, the government has to reduce import expenditure to maintain reserve.
Hundi should be stopped and legal action should be taken against it to facilitate remittance inflow through legal channel, he added.
