Bangladesh witnessed a decrease of $133 million in its foreign currency reserves, marking a drop to $19.83 billion on May 8 within a week, as per data from the central bank.
As of April 30, the reserves were recorded at $19.96 billion. The forex value is calculated based on the guidelines of the International Monetary Fund (IMF) outlined in the balance of payments and investment position manual (BPM6).
The latest data, revealed on Wednesday, indicates that the reserves have lingered below the $20 billion mark for nearly a month due to insufficient inflows to offset outflows.
With the reserves showing no signs of improvement, the IMF has significantly lowered the Net International Reserves (NIR) requirement for Bangladesh in the fourth tranche of its $4.7 billion loan.
Initially, the IMF had set a target of $20.11 billion for June. However, following a 15-day review mission in Dhaka concluding on Wednesday, the NIR threshold for the central bank was revised down to $14.76 billion.
This adjustment comes amid sluggish growth in exports and remittances. In April, the country exported goods worth $3.91 billion, a marginal decrease of 0.99 percent compared to the previous year. On the other hand, remittance inflows surged by 21.31 percent to $2.04 billion, boosted by Eid-ul-Fitr, during which migrant workers typically increase their remittances ahead of the festival.
The continuous decline in forex reserves of Bangladesh, a nation heavily reliant on imports, can be attributed to escalating commodity prices fueled by disruptions in the supply chain caused by the COVID-19 pandemic, the Russia-Ukraine conflict, and the ongoing crisis in the Middle East.
According to IMF guidelines, gross foreign reserves encompass various assets such as gold, US dollar cash, bonds, treasury bills, reserve position in the IMF, and special drawing rights holdings.
Net International Reserves (NIR) is calculated as the difference between reserve assets and reserve liabilities to both residents and non-residents, including commitments to sell foreign exchange arising from derivatives and all credit outstanding with the IMF.
Therefore, the NIR typically reflects a lower value compared to gross reserves.
