The gross international reserve of Bangladesh, according to the guideline of the International Monetary Fund, stood at $24.17 billion on Monday while the Bangladesh Bank’s conventional value of the foreign exchange reserve was $31.17 billion on the day.

However, the GIR is expected to further go down with an import payment of $1.09 billion to the Asian Clearing Union due tomorrow.

The central bank compiled the GIR in line with the IMF’s Balance of Payments and International Investment Position Manual, 6th edition — also known as BPM6.

The GIR refers to a country’s total holding of foreign exchange assets that are readily available for use in international transactions.

The GIR primarily includes foreign currencies or other convertible currencies as well as gold, special drawing rights and reserve positions.

Conventionally, the Bangladesh Bank has so far calculated the foreign reserve by adding the Export Development Fund and other foreign assets to the GIR, with the reserve standing at $31.17 billion on Monday.

But, as per the BPM6 guideline, the EDF and other non-available foreign assets for the immediate use in international transactions must be excluded from the reserve calculation.

Besides, the net foreign reserve, excluding one-year liabilities to non-resident Bangladeshis, could be significantly lower than the GIR amount.

Bangladesh is under obligation to meet the IMF condition of maintaining the net reserve above $24 billion for availing a $4.7 billion loan package over a three-year period.

However, the BB governor on June 18 mentioned that the net foreign reserve would not be disclosed.

Selim Raihan, executive director at the South Asian Network on Economic Modeling, on Monday told New Age that while the current reserve level was not a matter of significant concern, it was also not at a comfortable level.

He raised a question as to why the regulators allowed the foreign reserve to deplete alarmingly — from $48 billion to the present level — without taking preventive measures.

Raihan appreciated the decision to introduce a unified dollar rate, although he viewed that the decision should have come earlier.

He suggested minimising incentives for mobilising remittances and export earnings.

Raihan emphasised that the government should be vigilant as further decline in the reserve could severely hamper the country’s economic activities.

He also viewed that the next six months would be crucial, given various payments that would be due in the period and the foreign exchange market remaining volatile.

According to Ahsan H Mansur, executive director at the Policy Research Institute of Bangladesh, the gross international reserve indicates the country’s struggle to meet the IMF’s reserve condition.

While the current reserve level is not alarming for the country’s economy, a downward trend will raise uncertainty, he said.

Mansur pointed out that a further depletion would hinder private sector growth and make import payments difficult, affecting economic growth.

He highlighted the importance of stabilising the foreign exchange market to alleviate the dollar crisis.

Mansur applauded the central bank’s decision to sell dollars at market rate and allow market forces to determine the dollar rate.

The Bangladeshi taka continues to weaken against the US dollar, reaching Tk 108.7 for each dollar on Monday, driven by a dollar shortage and a pressure on banks to settle import payments.

The Bangladesh Bank has been releasing dollars from its foreign reserve to stabilise the foreign exchange market, but the rate remains volatile.

The central bank sold about $13.56 billion in FY23 and $7.62 billion in FY22 to banks.

As per the new monetary policy statement, the Bangladesh Bank will soon adopt a unified and market-driven single exchange rate regime, allowing the exchange rate between taka and the dollar or any other foreign currency to be determined by market forces.

Starting from July, the Bangladesh Bank will no more sell any foreign currency at a discounted rate and will follow the prevailing interbank market rates when selling or buying dollars from the market, it said.

On Monday, the BB sold $54 million to banks at Tk 108.85 per dollar, which was the interbank dollar rate on the day.

Banks have been facing challenges in settling import payments and opening letters of credit due to the severe dollar crisis, with low remittances and export earnings making it difficult to meet the demand for dollars.

The country’s export earnings inched up to $55.55 billion in FY23 from $52.08 billion in FY22.

Additionally, the remittance flow to the country also rose slightly to $21.61 billion in FY23 from $21.03 billion in FY22.

Since April 2022, the government and the Bangladesh Bank have implemented a series of initiatives to curb imports.

The Bangladesh Bank has imposed restrictions on the import of luxury items and unnecessary products.

In the first 11 months of FY23, the country’s import payments declined by 14.11 per cent to $64.76 billion against $75.4 billion in the same period of the previous year, according to BB data.