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No foreign tours, ban on luxury items: Bangladesh takes measures to save forex

The government on Thursday announced a temporary ban on foreign tours of its employees and deferred the implementations of large projects relying on heavy imports as part of measures to save dollars, reported The Daily Star

May 12, 2022
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Bangladesh’s Finance Minister AHM Mustafa Kamal

Amid growing import bills and dwindling foreign exchange reserves, authorities in Bangladesh have restricted the imports of some luxury items, and banned foreign tours for government employees among other measures to save the country’s precious reserves. By April end, the country’s forex was at around 44 billion with a six-month import cover. 

Since January this year, the country’s import bills are rising fast amid high commodities prices in the global market, fueled by the conflict in Ukraine, forcing the government and the central bank to intervene.

From 202o to late 2021, the reserves remained healthy, firstly due to the pandemic which cut the import, and later due to rising exports and robust growth in inward remittances. However, the situation began to change early this year, as import bills surged and growth in remittance flow dipped.

On Wednesday, the central bank tightened its rules for luxury and non-essential imports like sports utility vehicles, washing machines, air conditioners, and refrigerators, asking banks to impose at least a 75 percent margin for opening letters of credit for imports of luxury for these items.

The government on Thursday announced a temporary ban on foreign tours of its employees and deferred the implementations of large projects relying on heavy imports as part of measures to save dollars, reported The Daily Star.

"When times are tough, we have to take decisions that are tough too…We cannot say when the Ukraine war will end. Considering the global situation, we have taken this step,” Bangladesh’s Finance Minister AHM Mustafa Kamal was quoted as saying by The Daily Star.

The implementation of large projects, which will not detail the economic growth, will be delayed, he said after a cabinet meeting. Importantly, the reserves are likely to drop by over $2.2 billion this month upon clearance of pending due to the Asian Clearing Union.

(SAM)

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