The country’s import bill payment declined again in May, compared with the same month of the last financial year, as tightened money supply continued to take its toll on imports of industrial raw materials and capital machinery.
According to the Bangladesh Bank’s data released last week, the settlement of letters of credit for imports declined by 3.93 per cent in May compared with May 2011 when import bill payment rose by 38.47 per cent.
The total import bill payment in May stood at $2.83 billion against $2.95 billion in May 2011 and $2.13 billion in May 2010.
An official of the Bangladesh Bank told New Age that import bill payment had declined in the last few months with the decrease in credit growth to the private sector because of the BB’s contractionary monetary policy.
Credit growth in July of the current fiscal year was 24.36 per cent, in August 23.19 per cent, in September 21.97 per cent, in October 21.46 per cent, in November 19.33, in December 19.39 per cent, in January 18.94 per cent, in February 19.55 per cent, in March 19.45 per cent and in April 18.22 per cent, showed the BB’s data.
Because of sluggish credit growth, the import of capital machinery, industrial raw materials and non-essential products declined in the last few months, said a BB official.
He said the BB had discouraged commercial banks from opening LCs on luxury products after the country’s foreign exchange reserve fell below the $9 billion mark in January this year from $11.32 billion in March 2011 because of higher import of fuel oils by the government for running the costly rental power plants.
The foreign exchange reserve again crossed the $10 billion mark at the closing week of April, but the reserve tumbled to $9.58 billion on May 9 when the government paid $732 million as import bills to the Asian Clearing Union, he said.
According to the BB’s data, the country’s forex reserve on Thursday stood at around $ 9.81 billion.
The BB’s data, however, showed that the opening of LCs in May this year increased by 11.40 per cent compared to May 2011 when the opening of LCs declined by 2.56 per cent.
The worth of the LCs opened in May this year stood at $3.16 billion against $2.83 billion in May 2011 and $2.94 billion in May 2010.
Another BB official said that the opening of LCs in May had increased as the value of the taka was now stable against the US dollar amidst lower import growth in the last few months.
Moreover, remittance inflow in the first 11 months of the current financial year stood at $11.77 billion, increasing by 10.88 per cent from the same period of the previous financial year.
The inflow in May stood at $1.15 billion against $998.42 million in May last year.
For these reasons, the buying rate of the US dollar stood at Tk 81.94 and the selling rate at Tk 81.76 on Thursday, coming down from Tk 84.40 and Tk 84.48 respectively on February 1 this year.
So the commercial banks opened a significant number of LCs in May, he said.