Purchase of fuel-efficient, capital-efficient machinery lowers August import bill

Bangladesh’s import bills fell to $5.38 billion in August from $6.79 billion a month ago on lower purchases of fuel and equipment, according to the central bank.

Fuel oil and capital goods contributed more than 65% to the $1.41 billion drop in imports in August, Bangladesh Bank data shows.

The country paid $1.01 billion in July for crude and refined fuel, which fell more than 57% to $433 million in August. Imports of capital goods in July cost the country $617 million, which fell 55% to $276 million in August.

In addition, letters of credit (LC) opened for the import of fuel and machinery have decreased significantly. The opening of MLs for the import of fuel oil fell 60% in August compared to the previous month, while the MLs of capital goods recorded a drop of 32%.

Former Bangladesh Bank governor Salehuddin Ahmed says austerity is good for the economy, but authorities need to be careful so that industrial production does not suffer fuel shortages.

Mentioning that a decline in imports of capital goods does not always have a negative meaning, he said, “A large part of the capital goods imported into our country is used in the garment sector. If imports of capital goods do not stimulate apparel exports accordingly, then there is no justification for bringing them in. »

In his arguments, he also alluded to money laundering through overcharging.

Across 34 items, central bank data shows import costs for 20 commodities, including wheat, edible oil and coal, fell in August.

Import payment for wheat decreased by 52%, dairy products by 23.3%, refined edible oil by 40%, crude edible oil by 48%, BP leaf by 77% and 39% computer and computer accessories.

Bangladesh Bank officials attributed the fall to several central bank measures, such as widening the LC margin for certain products up to 100% and requiring the central bank to be notified at least 24 hours for opening import LC over 3 million.

Import cost for 14 items up to

The cost of imports of 14 products, including rice, sugar, lentils, onions and medicines, rose in August compared to July. In addition, products such as fertilizers, cement, motor vehicles and scrap ships are also on the list of rising import costs.

Fertilizers led the increase in import costs in August. Paying for fertilizer imports cost the country $276 million in July, which rose 46% to $404 million in August.

Rice import bills jumped 68% in August from the previous month. Bangladesh spent $16.78 million in August to bring in 2.88 lakh tons of staple foods.

Sugar imports cost $11 million or 22% more last month than in July. Onion imports stood at $6 million in July, and jumped to around $14 million next month. Drug import bills were also up 66% from July.

A senior central bank official told The Business Standard that the increased spending on importing basic necessities was due to volatility in the international market.

“Inflation is now biting everyone. As a result, the cost of the same amount of food is now higher than in recent months,” the official said.

In August compared to the previous month, scrap dealers’ import bills increased by 62%, with cement registering a rise of 47%.

Salehuddin Ahmed said scrap metal imports were on the rise as traders sought to cash in on the booming local rod market. Moreover, the increase in imports of other construction materials indicates that the local real estate sector is gaining momentum.

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