Commodity imports plummet amid dollar crisis 

Vessels nowadays no longer have to wait inordinately to dock at the jetty of Chittagong Port, the main gateway of the country's overseas trade. Cargo vessels can be loaded here in just a day.

This gives an idea of the present trend in the country’s foreign trade.

According to the National Board of Revenue (NBR)'s records, imports fell to a significant extent in November, the fifth month of the current fiscal year. However, it was in a rising trend in the previous four months. 

In an overall estimation, the total imports in the first five months of the fiscal year 2022-23 is a bit higher than the corresponding period of the previous year. 

The dollar crisis, which appeared on the scene in April, turned acute in the last few months, which prompted the central bank to take multifaceted measures to curb imports. The authorities had initially raised duties on non-essential and luxury products.

As it apparently failed to bring the situation under control, the Bangladesh Bank is now overseeing the opening of LCs (letter of credit) worth more than USD 3 million. 

Due to various initiatives, the number of LCs has finally come down significantly and it eventually had a bearing on the imports.   

A growth in commodity imports is considered as a positive sign for the economy. An increase in the import of industrial raw materials predicts a possible rise in the industrial production and a subsequent growth in export earnings. 

But a reduction in imports of unnecessary and non-essential commodities is now being considered as a positive issue. The Bangladesh Bank is increasingly selling dollars from its forex reserve to meet import expenses at the government level and combat the prevailing dollar crisis. The country’s forex reserve has now come down to USD 33.86 billion from USD 48 billion.  

Amirul Haque, managing director of Premier Cement, told Prothom Alo that a decrease in imports of non-essential goods is positive in situations like a dollar crisis. It needs to consider whether the import of raw materials of export-oriented and import-substituting industries decreased remarkably or not. A sharp fall in imports of industrial raw materials would lead to low production and slow down the growth eventually.

According to the revenue board, the import volume was around 11.7 million tonnes in November at a cost of USD 7.1 billion. It was 12.7 million tonnes at a cost of USD 7.64 billion in the previous year’s corresponding month. 

It means that the imports declined 8 per cent in the context of quantity and 7 per cent in the context of cost. 

The scenario is quite different when it comes to the overall estimation of imports. The country registered no decline in the overall imports in the first five months of the fiscal year 2022-23. A total of 56.5 million tonnes of commodities have been imported in the period stretching from July to November, when the quantity was 53.1 million tonnes in the previous year. 

It means the imports rose 6.4 per cent during the period. 

On the flip side, Bangladesh spent USD 35.49 billion to meet import liabilities in the current fiscal’s first five months, when the figure was USD 32.94 billion in the previous fiscal. The year-on-year import costs dropped 8 per cent during the five months.   

The commodity prices witnessed a sharp rise in the global market following the commencement of the Ukraine war and the rising trend prevailed for several months at a stretch. 

The high commodity price impacted the previous fiscal’s import expense too. A total of USD 78.95 billion was spent to meet import liabilities in the fiscal year 2021-22, which is up by 45 per cent from the previous year.

However, the import volume plunged 3.86 per cent in the year, despite the rise in import expenses, according to the revenue board. 

The commodity prices started to drop in the global market at the beginning of the current fiscal. It, in some cases, returned to the pre-war level. Also, various countries posted a remarkable fall in their demands as the global economy is seemingly heading towards a recession. The shipping costs dropped too. 

There are indications that the import costs also would subside in the coming days. 

Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue (CPD), said the country’s capacity to meet import liabilities is lower than in a normal time. So, essential food, fuel, fertilizer and export-oriented raw materials should get priority in case of imports. 

It will be good for the economy if the import of luxuries and non-essential goods is reduced, he said, noting that the drop in imports, however, is still not up to the expected level.