Forex reserves hit $35 billion for the first time

The country’s foreign exchange reserves have set a new record, hitting $35 billion for the first time in its history.

Bangladesh Bank Executive Director and spokesperson Md Serajul Islam confirmed the matter to Dhaka Tribune on Wednesday.

The foreign exchange reserves of Bangladesh crossed $34 billion on June 3, last year, and crossed $33 billion on June 22, 2017. 

“The aid from developing partners and remittances have added up to raise the foreign exchange reserve to $35.09 billion,” said Serajul.

“The money provided by International Monetary Fund (IMF) and loans for various projects from the World Bank (WB), Asian Development Bank (ADB), and Japan International Cooperation Agency (Jica) is also the key factors behind the rise of the reserves to a new record,” he added.

From May to June 24, IMF approved $732 million and ADB approved an additional $500 million as loans for Bangladesh to help the country address the challenges posed by the ongoing Covid-19 pandemic.

On the other hand, recently the government signed a loan agreement of $250 million (budget support) with the International Development Association (IDA) of the World Bank Group to finance the “Second Jobs Development Policy Credit (DPC-2)” program, according to concerned officials.

According to central bank data, from June 1 to June 18 of the 2019-20 fiscal year, Bangladeshi expatriates had sent $1.20 billion as remittance, whereas the country received $1.36 billion in June of the 2018-19 fiscal year. 

Speaking with Dhaka Tribune, Policy Research Institute executive director Ahsan H Mansur, said: “The amount of money that the Bangladeshi expatriates have sent during this pandemic, is not of their recent income. 

“The reason that they have sent such huge sums of remittance is that they might have to return home in the near the future as many of those who work in the Middle Eastern countries have lost their jobs due to a significant decline in oil prices.” 

“A good number of migrant workers will lose their jobs and return to Bangladesh from different countries owing to the worldwide crisis created by the Covid-19 pandemic in the coming days,” he added.

The inflow of remittance declined by 14.01% year on year to $1.50 billion in May as the coronavirus pandemic took a toll, as per central bank data.

Talking to Dhaka Tribune, former lead economist of World Bank, Bangladesh Zahid Hussain said that the aids from our development partners have helped in the rise in the country’s foreign exchange reserves.

“This is a very good news for us during the coronavirus crisis,” he added.

Zahid said: “The decreasing trend of import growth is also the factor behind the new record in our reserves but it is so difficult to sustain it.”

“If the current situation doesn’t improve soon then it would become impossible for us to maintain this reserve amount,” Zahid warned.

“The expenditure for healthcare will continue to rise if the situation does not return to normal soon, which will affect our foreign exchange reserves,” added the economist.