Severe import crisis on one hand, idle dollars on the other

Special Report

The country’s imports of goods have declined significantly in August, the second month of the current 2025-26 fiscal year. According to the latest data from Bangladesh Bank, businessmen and entrepreneurs imported goods worth 522.27 crore (5.27 billion) dollars in August. This is 1047.8 crore (1.05 billion) dollars less than in July, which is a decrease of 16.71 percent. It has decreased by only 1 percent compared to August last year.

In August of the 2024-25 fiscal year, the country imported various types of goods and industrial raw materials worth $5.27 billion. However, the first two months (July-August) of the current fiscal year show that overall imports increased by 9.26 percent. A total of $1.49 billion worth of goods were imported in these two months, which is more than $10.52 billion in the same period last year.

Economists say the overall growth is due to an increase in imports of certain sectors, such as food and fuel. However, imports of capital machinery and raw materials required for industrial establishment have declined. New investment and production expansion are slowing due to a slowdown in new industrial initiatives and business expansion.

During July-August, businessmen and entrepreneurs opened a total of $11.48 billion in LCs (letters of credit), which is 8.28 percent more than the same period last year. LCs were settled at $11.12 billion, an increase of 4.23 percent. However, LCs opened for capital equipment for industrial establishment increased by only 0.72 percent, while settlements decreased by about 12 percent. LCOs for intermediate goods also decreased; open decreased by 11.62 percent, while settlements decreased by 9.72 percent.

On the other hand, the opening and settlement of LCs for food products and fuel oil has increased, which is contributing to the country’s food security and fuel supply, albeit to a small extent. However, the import crisis in the industrial sector has brought the establishment of new factories and industrial expansion to a standstill. This situation has created panic among businessmen and entrepreneurs.

According to Bangladesh Bank data, the monthly import figures for the current fiscal year were as follows: January 6.38 billion dollars (8.56 percent increase), February 5.94 billion dollars (13.22 percent increase), March 5.89 billion dollars (15.30 percent increase), April 5.82 billion dollars (2.92 percent decrease), May 5.78 billion dollars (4.76 percent increase), June 4.39 billion dollars. In particular, imports of $4.39 billion dollars were recorded in June, the last month of last year, which was the lowest for the entire year.

Zahid Hossain, former chief economist of the World Bank, said, “Imports are not increasing, which is a negative signal. Imports fell completely in June, increased slightly in July, and then decreased again in August. The main reason is the decline in investment. If the election is held in February, investors can increase investment, then imports will increase.”

Anwar-ul Alam Chowdhury Parvez, former president of BGMEA and current president of the chamber, said, “The garment industry has been in turmoil for more than a year. To restore peace in the country’s economy, imports must be increased and investment flows must be accelerated.”

On the other hand, there is a glimmer of hope in the foreign exchange reserves. According to the latest data from Bangladesh Bank, the country’s gross reserves have increased to $32.11 billion as of October 21. According to the International Monetary Fund (IMF), the current reserves are $27.35 billion. In the current fiscal year, $2.126 billion has been purchased through auction.

Expatriate income has also increased compared to the previous fiscal year. From July to October 18, $9.15 billion came into the country, which is 13.6 percent more than the same period in the previous fiscal year. The monthly inflows were $247.78 billion in July, $242.19 billion in August, and $268.58 billion in September.

Yet, despite the increase in reserves, the dollar is virtually idle due to the import crisis. Businessmen and entrepreneurs are worried as new investment and industrial expansion have stalled. Experts believe that unless investment and imports pick up again, economic progress will remain stagnant and pressure on the industrial sector will increase.