The Bangladesh Bank injected $12.79 billion into banks from its reserves in FY24 to help combat a severe US dollar crisis that hindered import payments. This ongoing support from the central bank has caused forex reserves to drop to risky levels.
Since FY22, the central bank has been injecting dollars into the banking sector: $7.62 billion in FY22, a record $13.58 billion in FY23, and $12.79 billion in FY24. As of June 30, gross forex reserves stood at $21.83 billion, while net international reserves were $16.77 billion, based on IMF’s BPM6 calculation method. The forex reserves were at $33.38 billion at the end of FY22.
Despite a decline in import payments due to various control measures introduced since April 2022, the central bank continues to inject dollars. These measures have led to a 12.59% year-on-year drop in the settlement of letters of credit (LCs) to $49.34 billion from July to March of FY24.
State-run banks, in particular, are receiving dollar support from the central bank to settle import bills for government institutions such as the Bangladesh Petroleum Corporation, Bangladesh Agricultural Development Corporation, and Bangladesh Chemical Industries Corporation.
