Reserves remain below $20bn for one and a half months

After the fall of the Awami League government, the foreign currency reserves have remained below $20 billion for one and a half months.

Although there was an increase of $45 million in the last 22 days, the reserves stood at $19.80 billion on Wednesday.

On Thursday, the Bangladesh Bank released the reserve information, calculated according to the International Monetary Fund approved Balance of Payments and International Investment Position, or BPM-6, method.

The gross reserves are at $25.30 billion.

IMF uses the BPM-6 method for calculating net reserves, which are determined by subtracting short-term liabilities from gross reserves.

Four days before the fall of the Awami League government, the Bangladesh Bank published the reserve account, which showed $20.48 billion on Jul 30 and the same amount on Aug 21.

After paying import bills of the Asian Clearing Union, or ACU, the reserves fell to $19.44 billion on Sept 12. On Oct 2, they slightly increased to $19.76 billion.

Since the IMF loan approval, the central bank has been publishing this data from July 2023.

However, Shahriar Siddique, the assistant spokesperson and director of the Bangladesh Bank, claims that the reserves are increasing.

He told bdnews24.com: “The reserves are increasing due to the rise in remittance flow. However, dollars are being sold from the reserves due to the opening of government LCs. Currently, more dollars are being purchased than sold.”

In 2020, during the coronavirus pandemic, the country’s reserves reached $48 billion, approaching the $50 billion milestone.

However, after the pandemic, rising energy and food prices in the global market, compounded by the outbreak of the Ukraine war, led to increased import costs, resulting in a steady decline in reserves since 2022.

In the last two financial years, the Bangladesh Bank has been selling dollars from the reserves to commercial banks for opening government letters of credit, or LCs, further decreasing the foreign currency reserves.

After the fall of the Awami League government, the new governor of the Bangladesh Bank Ahsan H Mansur said in a press conference that he has stopped selling dollars from the reserves, assuring that the reserves would increase and there would be no fear of decline.

However, this has not happened.