BB says import control cannot solve dollar crisis

Restricting imports is not a permanent solution to the dollar crisis as the global economic downturn has caused the dollar exchange rate to skyrocket internationally, said Bangladesh Bank Executive Director and Spokesperson Serajul Islam.

"Not only in Bangladesh, but dollar prices have also increased much more in the neighbouring countries. As a result, we are under quite a lot of pressure. But reducing imports is not a permanent solution to deal with this," he told the media on Tuesday.

It was his last working day at the Bangladesh Bank.

Serajul Islam said to handle the global pressure, Bangladesh should emphasise increasing exports.

He urged businessmen to establish Bangladesh as a brand in the world market.

"Our remittance inflow is going down a bit. Along with this, the amount of export earnings is also decreasing. This has created some pressure on the reserves."

The Bangladesh Bank official, however, claimed that the economic pressure will not last as both remittances and export earnings will increase.

Export earnings fell by 6.25% year-on-year in September after a strong comeback in August with a 14% growth due to the deepening Ukraine-Russia crisis, while the US Fed hiked the interest rate to tame inflation.

Meanwhile, remittance earnings, another lifeline of foreign reserves, was $1.5 billion, the lowest in seven months, as the decision of fixing dollar rate for remittance by banks backfired, prompting wage earners to send money home through illegal channels to get higher prices.

On the other hand, the country's trade deficit, which had slowed down in July-August amid falling import expenditure, may now widen further in the coming months due to the fall in remittance and export.

The trade deficit grew by 6.30% to $4.28 billion in the first two months of the current fiscal year whereas it had grown by 35% in the first month of the year, according to the Bangladesh Bank data.