Bangladesh Bank has projected that the country’s foreign exchange reserves would slip down to less then $ 10 billion by June, for the first time in one-and-a-half years, due to slow growth of remittance and high import bills.
Officials of the central bank told a recent meeting on the country’s macro-economic situation that the country’s reserves of foreign currencies might come down to $9.5 billion at the end of the current fiscal year.
The foreign exchange reserves exceeded $ 10 billion mark for the first time in November 2009. The reserves stood at $10.6 billion on March 22, down from $11.15 billion exactly one year ago.
Experts said dwindling foreign exchange reserves posed a challenge to the country’s macro-economy as pressure on the balance of payment (BoP) would be mounted.
They said the country may have to rely on the lenders like the International Monetary Fund to meet BoP obligation, a situation the country did not face in the last five years.
Sources told daily sun that the central bank had attributed the declining reserves to slow growth of the inflow of remittance and fattening import bills.
Inflow of remittance stood at $7.49 billion between July 2010 and February 2011, having a paltry growth of 2.3 percent over $7.31 billion remitted during the same period in fiscal 2009-10.
The country’s monthly import payments surged significantly in the last several months pushing up the amount in the first seven months of the current fiscal to $18.28 billion, over $5 billion higher than the last year’s $13.01 billion.
The central bank projected that further pressure on reserves and on the balance of payment could make situation critical.
Compared to robust $2.84 billion, the current account was down to $428 million in the first seven months of the current fiscal, they said.
MK Mujeri, executive director of Bangladesh Institute of Development Studies, said the country did not face any major problem to meet the BoP obligation because of its “comfortable” reverses. Foreign exchange reserves equivalent to three months import costs is regarded comfortable for a country like Bangladesh. The import payment in last January stood $3.47 billion and would continue to go up in the coming months to erode the comfortable reserves position, he said. Besides, a finance ministry official said the declining reserves would put negative impacts on the latest credit rating by Moody’s Investors Service, a US-based credit rating agency. Moody’s rated Bangladesh’s credit rating Ba3, the same as the Philippines and Vietnam, after withstanding external shocks and political unrest to achieve economic stability. http://www.daily-sun.com/?view=details&type=daily_sun_news&pub_no=175&cat_id=1&menu_id=1&news_type_id=1&index=0
Officials of the central bank told a recent meeting on the country’s macro-economic situation that the country’s reserves of foreign currencies might come down to $9.5 billion at the end of the current fiscal year.
The foreign exchange reserves exceeded $ 10 billion mark for the first time in November 2009. The reserves stood at $10.6 billion on March 22, down from $11.15 billion exactly one year ago.
Experts said dwindling foreign exchange reserves posed a challenge to the country’s macro-economy as pressure on the balance of payment (BoP) would be mounted.
They said the country may have to rely on the lenders like the International Monetary Fund to meet BoP obligation, a situation the country did not face in the last five years.
Sources told daily sun that the central bank had attributed the declining reserves to slow growth of the inflow of remittance and fattening import bills.
Inflow of remittance stood at $7.49 billion between July 2010 and February 2011, having a paltry growth of 2.3 percent over $7.31 billion remitted during the same period in fiscal 2009-10.
The country’s monthly import payments surged significantly in the last several months pushing up the amount in the first seven months of the current fiscal to $18.28 billion, over $5 billion higher than the last year’s $13.01 billion.
The central bank projected that further pressure on reserves and on the balance of payment could make situation critical.
Compared to robust $2.84 billion, the current account was down to $428 million in the first seven months of the current fiscal, they said.
MK Mujeri, executive director of Bangladesh Institute of Development Studies, said the country did not face any major problem to meet the BoP obligation because of its “comfortable” reverses. Foreign exchange reserves equivalent to three months import costs is regarded comfortable for a country like Bangladesh. The import payment in last January stood $3.47 billion and would continue to go up in the coming months to erode the comfortable reserves position, he said. Besides, a finance ministry official said the declining reserves would put negative impacts on the latest credit rating by Moody’s Investors Service, a US-based credit rating agency. Moody’s rated Bangladesh’s credit rating Ba3, the same as the Philippines and Vietnam, after withstanding external shocks and political unrest to achieve economic stability. http://www.daily-sun.com/?view=details&type=daily_sun_news&pub_no=175&cat_id=1&menu_id=1&news_type_id=1&index=0
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