Forex reserve spent mainly for importing industrial raw materials, equipment24 June 2022
Staff Reporter :
The country's foreign exchange reserve is mainly spent on the import of raw materials and equipment in the industrial sector. At least 56 percent of the dollars are being spent to bring industrial raw materials and equipments.
Most of the dollars are spent on fuel oil as a single product, which is 9.5 percent of the total import, according to multiple sources of Bangladesh Bank (BB).
Though the country's maximum foreign reserves are earned from the industrial sector and followed by remittances sent by the Bangladeshi expatriates.
Three percent dollars only are added to the country's foreign reserve as foreign investments and loans.
Bangladesh has recently experienced foreign exchange crisis due to increase of excessive import expenditure and decreasing of remittances.
In such a situation, the department concerned now calculating foreign exchange income and expenditure. At the same time, it is being analyzed in which sectors foreign exchange earnings can be increased and in which sectors it can be reduced.
Both the government and the central bank have taken multifaceted steps to increase foreign exchange earnings and reduce expenditure to address the problems.
Sources in the Bangladesh Bank (BB) said, some more steps will be taken soon in this regard.
According to sources, there are four main sources of foreign exchange earnings in this country. These are export earnings, remittances sent by expatriates, foreign investment and foreign loans.
The two main sectors of foreign exchange expenditures are import and repayment of foreign loans.
Besides, there is a very limited amount of travel, study abroad and some foreign exchange spent in the medical sector.
Bangladesh earns about 7,200 crore dollars in foreign exchange every year on an average. In contrast, the cost is more than 6,000 crore dollars. A large part of dollars are spent for travel, medical and education purposes from the remaining 700 crore dollars, BB sources said.
A small amount of dollars is added to the foreign
exchange reserves. After reducing the corona pandemic situation, the sudden rise of demand and price hike of goods in the international market due to the Russia-Ukraine war pushed up the cost of imports.
The export earnings have not been increased in the same way as import expenditure has increased, BB sources said.
The remittances earning have decreased, which increased the pressure on the country's reserves.
The total 60 percent import expenditures are met by the export earnings and the remaining 40 percent is paid from remittances, BB sources said.
According to BB sources, a total of 6,058 crore dollars have been spent for import purposes from July to March under the current financial year, while a total of 4,717 crore dollars are earned from export sector from July to May.
Of the import expenditure, about 3,500 crore dollars have been spent on importing industrial raw materials and equipment, which is 57 percent of the total import expenditure.
Bangladesh received a total of 1,919 crore dollars as remittance in the same period.
Besides, the average foreign investment received the country of 260 crore dollars and 220 crore dollars as loans, while Bangladesh has to pay the loan at 250 crore dollars a year, the BB sources said.
However, the most imported single product is fuel oil, which costs more than the other imported products. The import costs have gone up more than doubled in recent times due to the price hike of fuel oil in the international market.
Bangladesh has spent a total of 557 crore dollars during July-March under the current financial year, which is 9.20 percent of the total imports, BB sources said. Of the imported oils, crude oil imports amounted to 100 crore dollars and refined oil 446 crore dollars.