The country's import is increasing every day. After five years of import disruption, the window of trade has now opened. The dollar crisis that has been going on for two and a half years is gradually ending and the outstanding foreign debt has also started to decrease.
As a result, the pressure on debt repayment is also decreasing. This is improving the country's foreign exchange reserve situation.
Bank officials say that clamour for the dollar has subsided to a great extent. Many of the overdue foreign bills have been settled. Even so, $3 billion in debt remains pending, which will have to be paid in the future.
Syed Mahbubur Rahman, former chairman of Association of Bankers Bangladesh (ABB), an organization of bank executives, and managing director of Mutual Trust Bank, said that the unstable situation regarding the dollar has passed. There is not as much fuss about the price as before. Some outstanding bills of government banks still remain. Due to this, the price of the dollar has risen above Tk 120. Once these liabilities are paid off and incentives are lifted, the price of the dollar may fall below Tk 120.
Economists, businessmen, and bankers say that there are both good and bad sides to increasing imports. When the economy grows, imports increase. This is natural. Imports will increase, investment in the country will increase. The economy will move forward. But the problem is that imports had increased abnormally. It was reduced through various measures. Now there is a tendency to increase again. In this situation, there will be pressure on import reserves.
The price of goods has also decreased quite a bit in the international market. It may decrease further next year and reach the lowest in the last five years. Fuel oil prices have also decreased.
The World Bank has predicted that it may decrease further to US$73 per barrel in the future. Together, these will increase import trade in the future.
Source said that when the global lockdown began in early 2020 due to the corona infection, imports were also disrupted. This continued until the end of 2021. From the end of 2021, the price of goods in the international market started to increase. When Russia invaded Ukraine in late February 2022, the price of goods worldwide increased sharply. This hampered imports into the country.
The dollar crisis began in the country in April of that year. It took a sharp turn in July. It continued until August 5. At that time, to save dollars and reduce pressure on the reserves, the central bank imposed controls on imports. First, it imposed a 25 per cent LC margin on all products except essential goods. Then it increased it to 75 per cent margin. Later, it increased it further to 100 per cent margin. At the same time, it imposed restrictive duties on luxury goods.
Through this, imports were widely controlled. This reduced the production of import-dependent raw material industries. Import-dependent trade and commerce came to a standstill. Employment was negatively affected. Due to the supply crisis of imported goods, prices increased. Due to which the inflation rate of imported goods will also increase. Imported goods have played a maximum role of 52 per cent in increasing inflation at different times since the 2022-23 fiscal.
The country has been in the grip of an economic recession since 2018. It has become more pronounced in the subsequent period. Due to Corona and recession, imports decreased by 8.57 per cent in the 2019-20 fiscal year compared to the previous year. Imports in that year amounted to $56.9 billion. Import expenditure increased slightly in the 2020-21 fiscal year to $66.8 billion. This sector grew by 19.71 per cent compared to the previous year.
Basically, as the situation normalized somewhat after Corona, demand for products in the international market increased. Due to which prices also increased and import expenditure increased that year. Import expenditure increased to a record high in the 2021-22 financial year. Import expenditure increased by 36 per cent in that year to $82.49 billion. Import expenditure, including foreign debt, increased by 48 per cent. In April of that year, LCs for the import of goods worth a maximum of $9 billion was opened. When Russia invaded Ukraine in February 2022, the prices of all goods in the international market increased by leaps and bounds. As a result, import expenditure also increased.
From April of that year, controls were imposed on the import of goods except for essential ones. This not only reduced the import of goods, but also reduced expenditure in this sector. In the 2022-23 fiscal, the expenditure decreased by 15.74 per cent to $77.5 billion.
Import expenditure has been decreasing since that year. In the 2023-24 fiscal, import expenditure decreased by another 10.61 per cent to $63.24 billion.
In the two months of July-August of the current fiscal year, imports were $9.91 billion. Imports decreased by 1.16 per cent compared to the same period of the previous year.
Sources said that after the new interim government took office, the previously imposed LC margin was withdrawn from September 5. However, 100 per cent margin is imposed on the import of only 14 luxury goods. In addition, as money laundering has decreased significantly and remittances and export earnings are increasing, the flow of dollars into the market is increasing.
Earlier, the reserves used to decrease every month. Now, instead of decreasing, the reserves are increasing. Regular debts, including import expenditure, are being repaid without touching the reserves. In addition, foreign debt of about $3 billion has been repaid. As a result, the pressure on the reserves has eased somewhat.
For these reasons, the central bank has allowed imports to increase. As a result, the tendency to open LCs in banks has increased. However, due to low prices of goods in the international market, more goods are being imported at lower prices than before. Those concerned believe that this will help the import-dependent industry overcome the recession and turn around.
Dr Zahid Hossain, former chief economist at the World Bank's Dhaka office, said that overall imports decreased in the first eight months of the current fiscal (July-February). However, it is difficult to say why they increased in February as a single month. However, imports of Ramadan goods may have an impact.
