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Bangladesh Bank's foreign exchange reserves are continuously decreasing. That's why the International Monetary Fund or IMF is pushing to reveal the actual reserves of Bangladesh. The government is also somewhat worried about the decrease in reserves. The Prime Minister said, "Where did the reserve money go? I tell them that the reserve money went to the pigeon harbor. No one chewed this money. It is being used for people's work. The government blames the global situation and development expenditure for the reduction of the reserve, but economists are more behind the reserve." He has identified some issues. The reasons for the decrease in foreign exchange reserves of Bangladesh will be discussed in this episode of Neoteric IT.
Why has the reserve of Bangladesh decreased and its reasons - What can be done to increase the reserve of Bangladesh - Reserve of Bangladesh - NeotericIT.com
Bangladesh had set a record in the reserve during Karna epidemic. The Russia-Ukraine war started as soon as the pandemic hit. As a result, the whole world is in crisis. His influence fell on the reserve of Bangladesh. Although there is so much discussion about reserve, many of us may not have a clear idea about what reserve actually is.
What is Foreign Exchange Reserve?
First of all it is necessary to know about what is reserve. Foreign exchange reserves are basically the amount of dollars stored with the central bank after paying all the expenses including the country's imports and loan interest with the government's dollar income from various product export remittance loans or other sources. Another issue is closely related to the reserve. And that is the balance of payment. Balance of payments or balance of transactions is very important for the economy of any country. Generally, the balance of payment is called as import-export finance. Balance of payment is mainly divided into two parts
- Current account
- Capital Account
All the import and export accounts of a country, including essential commodities, fuel, cars, gold, are calculated in the current account, on the other hand, the various investment loans and banking information of the country and abroad are calculated in the capital account.
Foreign exchange reserve 2022 position of Bangladesh
Do you want to know the position of foreign exchange reserves 2022 Bangladesh? Then this page post of Neoteric IT is for you.
Since the increase in the price of the dollar, Bangladesh's reserves and balance of payments have faced major problems. Generally, foreign currency is earned by exporting foreign currency from the country, and with that foreign currency, the necessary goods are imported from abroad. But due to the decrease in the value of money against the dollar, a lot of money is being spent from the reserves of Bangladesh to import goods.
Reserve amount of Bangladesh
Do you know the amount of reserves in Bangladesh at present? You will know everything from this article. Bangladesh's reserves were 50 billion dollars not long ago. From there the reserve has now come down to 35 million. Economists think that this rate of decline in reserves is very alarming. Former Governor of Bangladesh Bank economist Dr. Saleh Uddin Ahmed said:
It is definitely a matter of concern that the result has decreased so quickly.
Economist Dr. Saleh Uddin Ahmed also said:
The value of money is decreasing drastically, import costs are increasing, fuel is affecting food products. The overall situation is fueling inflation. People are not really good, the quality of life is decreasing.
What is the current amount of reserves in 2022?
What is the current reserve amount in 2022? Bangladesh Bank has sold 489 million dollars from reserves since the beginning of the current 2022-23 financial year. 762 crores were sold in the last financial year. 90% of the distorted dollars are spent on importing fuel and fertilizers. In August last year, the reserves were four thousand eight billion dollars. At present the reserve is 3585 million dollars. IMF says Bangladesh does not follow international norms in calculating reserves. According to the international rules, Bangladesh's reserves will be much less than 35 million dollars. Bangladesh Bank Reserve has invested its money in dollars as well as various bond currencies and gold abroad. Most money is kept in dollars. Again, the country and several funds have been formed with the money of the reserve.
How many billion dollars is the reserve of Bangladesh?
Do you know how many billion dollars the reserve of Bangladesh? According to Bangladesh Bank data, the total gross reserves in their accounts are 34.3 billion dollars. If eight billion dollars invested in various funds and loans are excluded from there, the amount of net reserves stands at 26.3 billion dollars.
Bangladesh's reserves are 27 billion dollars
Bangladesh reserve 28 billion dollars how? Know from this post - Export development fund has been formed with 700 crore dollars from the reserve. Besides, long-term fund with the money of the reserve, Formation of several other funds namely Green Transformation Fund and Bangladesh Infrastructure Development Fund. Money has been spent from the Bangladesh Infrastructure Development Fund for the construction of Payra port. Along with that, there is a huge deficit of 82 thousand 745 crores in the budget of Bangladesh. Most of which is being met from the reserve. Besides, money has been lent to Bangladesh Biman for the purchase of aircraft and from the reserves of Sonali Bank. In all, 8 billion dollars of reserves have been spent on various funds and projects. Apart from this, 20 million dollars have been given to Sri Lanka. These expenses are added to the reserve. According to the advice of IMF, if all these funds are excluded from the reserves of Bangladesh, then the total amount of reserves will be about 27 billion dollars.
The reason for the decrease in the reserves of Bangladesh
Bangladesh is an import dependent country. We have to import a lot of things to meet the needs of our country. Imported goods include essential goods as well as many non-essential goods. Bangladesh consumes a lot of foreign exchange due to importing luxury goods in particular. Basically, the import of these luxury goods is one of the means of smuggling the country's money abroad. The rest of the money can be easily smuggled abroad by showing the import of a product at a much higher price than its actual value. The government is blaming physical conditions like the Corona pandemic and the Russia-Ukraine war for the overall decrease in reserves.
Bangladesh reserves are responsible for the decrease
Economists say that the global situation is partly responsible, but the lack of good governance in the financial sector is more responsible than the global situation. The war may end sometime but if the country's financial management is not controlled and good governance is not ensured, this problem will continue in the future.
What can be done to increase the reserves of Bangladesh
The remittance sent by expatriates is one of the many things that the reserve of Bangladesh stands on. It is necessary to increase this remittance to bring the reserve to a satisfactory condition. For this, the government should think about increasing the foreign labor market in a planned manner. Economists believe that many unskilled workers from Bangladesh are going abroad. If these workers can be skilled and sent abroad, the remittance income can be doubled. Generally, one skilled worker in other countries earns the same as three workers in Bangladesh. Since the country's economy is largely dependent on remittances, this sector needs to be considered more seriously. Emphasis should be placed on increasing the export income to bring the reserves of Bangladesh back to normal.
Unnecessary imports should be stopped
Although experts talk about multifaceted exports, no other sector is given much importance by the government except the garment sector. In addition to emphasis on exportable sectors, unnecessary imports should be stopped. If the import of all luxury goods except the essential goods is completely stopped, the extra money will not go out of the country. Another concern with Bangladesh's reserves is that some short-term foreign debt will have to be repaid from 2024. That means there will be more pressure on the future reserves, if the loans are not paid on time then the interest on those loans will increase a lot. Salahuddin Ahmed, an economist, said that we have to leave the old strategy and think new. We have to come out of the idea that growth is only understood as development, and growth is not the real measure. It should be understood now that inequality is increasing, the number of poor people is increasing, unemployment is increasing, People are now breaking savings. Those who have no savings are sitting on the streets.
Fear of global food crisis
In the coming days, there is a high possibility of severe famine not only in Bangladesh but also in the whole world. From Asia Africa to the so-called developed countries of Europe and America, inflation and food crisis have increased more than before. Different types of warnings have been given by various international organizations regarding the possible food shortage in 2023.
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