Commerce ministry to BB: "Set aside dollar for import of essentials"

The commerce ministry today requested the Bangladesh Bank for keeping a certain quota of US dollar to facilitate import of six essential commodities to ensure smooth supply of the goods during Ramadan.

The ministry's move comes as a dip in imports of a number of essentials created a concern regarding containing their prices before the month of Ramadan, when demand for the items increase.

On Wednesday, businesses in a meeting with the commerce minister alleged that they could not open letters of credit (LCs) for banks' reluctance amid dollar shortage and warned a supply shortage may appear if imports do not increase.

A commerce ministry paper was presented at the meeting between the commerce minister and the essential commodity traders and processors held at the commerce ministry in Dhaka on January 4.

In the paper it was showed that opening of LCs for import of raw sugar slumped 28 per cent year-on-year to 3.75 lakh tonnes in the last quarter of 2022.

In case of chickpea, it dropped 47 per cent to 75,319 tonnes and dates 30 per cent to 21,980 tonnes.

Commodity processors and importers urged the government to allow them to open LCs even if it meant releasing a portion of funds from the central bank's foreign exchange reserve.

They also demanded a reduction in the exchange rate of the dollar for settling the import bills to cut costs as some have to pay as high as Tk 111 for a dollar.

The six commodities mentioned in the commerce ministry's recommendation letter were edible oil, sugar, lentil, onion, chickpeas and dates.

The letter is sent to the central bank through an electronic mail, said Senior Commerce Secretary Tapan Kanti Ghosh.

Ghosh, however, did not say exactly what percentage of dollar by a private bank should reserve for the importers of the essential goods.

The central bank will find out on an average how much of the essential goods were imported in the last few years before the Ramadan and take the decision according to the analysis, he said.

After the analysis, the central bank will determine what percentage of dollar should be reserved for which importers, Ghosh said.

"We have recommended the central bank for reserving the dollar from the receipts of export of merchandise and from the remittance, not from the reserve of the Bangladesh Bank."

Primarily, the move is taken for the Ramadan only, he said.

The possibility of continuing such special measure depends on the situation in future, he said.

The move will be removed if the dollar pressure is eased, the secretary said.

However, all depends on the central bank as it will suggest the private commercial banks for allocating the quota of dollar in this case, he said.

This is a special move from the government as currently the prices of basic commodities went up abnormally in the domestic and international markets following the severe fallouts of the Russia Ukraine war and the delayed recovery from the Covid-19 pandemic.

The scarcity of dollar in the banking sector has badly impacted the import of basic commodities.

As a result, the price of some basic commodities went up in the local markets and also a section of unscrupulous traders has been making a hefty profit taking the opportunity of time.

So, the government wants to ensure adequate supply of commodities in local markets as the demand for those imported goods shoot up before and during the Ramadan.