Import payments have increased by more than 50% over the first four months of the current fiscal year indicating rising imports of industrial raw materials, machinery and intermediate goods to meet pent-up consumer demands at home and in the major export destinations including the US and Europe.
In July-October, export payment stood at $23.39 billion, which is 51.33% higher compared to the same period last year, according to the latest data of the Bangladesh Bank.
Last year, when the economy and business entities were facing challenges amid the Covid-19 epidemic, the opening of Letters of Credit (LC) was worth $15.45 billion.
Economists and traders think consumers in the US and Europe have started buying products again following the improved Covid-19 situation so the demands for all types of goods have increased significantly across the globe.
Bankers and experts see the rise in imports as one of the reasons for Bangladesh's booming economy. They say rising prices of commodities, including oil, and shipping costs in the global market have cost the sector extra money.
"Covid-19's influence is becoming normal and the country's economy is reviving. However, it cannot be said for sure that the amount of LC has increased because the prices of various products, including oil, have gone up in the world market, and we are paying more and getting less," said Policy Research Institute (PRI) Executive Director Ahsan H Mansoor.
Bangladesh Garment Manufacturers and Exporters Association Vice President Md Shahidullah Azim said exports to Europe and America were almost closed at this time of the last year but at present, it is very normal so the amount of import of different products is higher.
Mercantile Bank Managing Director Md Kamrul Islam Chowdhury said the demand for loans in the banking sector has increased in the last few months as investments have been sluggish due to Covid-19 for a long time. At present, it is very normal so the import of various products including capital equipment has increased.
According to the central bank data, payments for intermediate goods import rose 66.87% to $2.02 billion, while payment for capital machinery import rose 21.21% to $1.29 billion between July and October.
The payment for consumer goods import rose 48.26%, petroleum import rose 82.45%, and payment for industrial raw materials rose 49.15% during the same period, the Bangladesh Bank data shows.
The government's expenditure in October in LC settlement for fuel was also 87.43% higher compared to $192.03 million in September this year, according to the central bank's LC opening and settlement data.
"The import expenditure increased mainly because of the abrupt fuel price hike in the global market," said Syed Mehdi Hasan, director (operations and planning) at Bangladesh Petroleum Corporation (BPC).
Sources at BPC said during the Covid-19 outbreak last year, the consumption of different types of fuel was only 8,000 to 9,000 tonnes per day. Now, the daily consumption of fuel has reached around 17,000 tonnes.
The inflow of remittance dropped for the five consecutive months in November this year, as the illegal cross border transaction "hundi" system saw a rise following strict restrictions.
Remittance inflow has continued to drop for six consecutive months in November, registering an 18-month low despite an upward trend in the country's trade and commerce outlook following an improved pandemic situation.
Bangladeshi expatriates remitted $1.55 billion in November, nearly 25.25% year-on-year decline. The remittance inflow was $2.07 billion in November last year.
Besides, the total remitted amount in the first five months (July-November) of the current fiscal year was $8.60 billion, which is a 21% drop year-on-year, according to the central bank's data, released Wednesday.
The downtrend in remittance inflow has caused an increase in price and demand of dollars in the local market. Although the central bank is selling dollars as per the demand of banks, the price of dollars is not decreasing.
According to the Bangladesh Bank, it sold nearly $2 billion to banks from July to November this year.
"To keep the market stable, we are selling dollars based on the demands of other banks. In October, we sold $518 million and in November it was $568 million."