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Food, fuel imports tip the balance

Overall Dec import cost increases by $391.24m

Siddique Islam | January 27, 2018 00:00:00

Overall import cost increased nearly 12 per cent or US$391.24 million in December with food and fuel buys from abroad weighing heavily, officials said.

The settlement of letters of credit (LC), generally known as actual import, in terms of value, rose to $3.65 billion in December 2017 from $3.26 billion in the same period of the previous calendar year, according to the central bank's latest statistics.

The actual imports by the country were worth $4.11 billion in November 2017.

On the other hand, the opening of fresh LCs, generally known as import orders, rose by 2.05 per cent or $78.15 million to $3.89 billion last month (December) from $3.81 billion a year ago.

Overall import orders from Bangladesh recorded an all-time high of $16.10 billion in November 2017 while LC worth a large amount was opened for setting up Rooppur Nuclear Power Plant (NPP).

Bangladesh Atomic Energy Commission (BAEC) opened the extra-large LC worth $ 11.38 billion through the state-owned Sonali Bank Limited to import different items, including capital machinery, needed for building the nuclear plant, they added.

"The overall imports increased during the period under review mainly due to higher import of food grains, particularly rice and wheat, to meet the growing demand for the essentials in the local markets," a senior official of the Bangladesh Bank (BB) told the FE on Friday over phone.

The rice import rose to $190.28 million in December 2017 from only $1.09 million a year before while wheat import cost $103.52 million as against $87.71 million, the BB data showed.

However, the import of food-grains, particularly rice, may fall slightly in the coming months due to seasonal effect, the central banker explained.

He also said higher import of petroleum products pushed up overall import payments.

The import of petroleum products, however, rose to $263.98 million in the month of December last calendar year from $169.36 million in the same month of 2016.

"The upward trend in import of fuel oils may continue in the near future," another BB official hinted.

He also said demand for the petroleum products may rise in the months ahead to meet extra pressure on the fuels for irrigation purposes across the country during the dry-season farming spree.

However, back-to-back import of readymade garment (RMG) accessories came down to $565.26 million in December last from $630.70 million a year ago despite higher export earnings from the apparel products.

Earnings from RMG, covering both knitwear and woven, rose by 7.75 per cent to $14.77 billion during the July-December period of the ongoing fiscal year (FY) 2017-18 from $13.71 billion in the same period of the FY 17.

Knitwear exports went up by 11.47 per cent to $7.59 billion in the first half of FY 18 from $6.81 billion in the same period of the FY 17 while shipment of woven garments rose by 4.08 per cent to $7.18 billion from $6.90 billion.

On the other hand, import of capital machinery -- industrial equipment used for production - came down to $263.48 million in December 2017 as against $292.40 million in the same month of 2016.

The imports of capital machinery may increase in the coming months following implementation of different infrastructure projects, including Padma Bridge, according to the BB officials.

Talking to the FE, a senior official of a leading private commercial bank said the existing upward trend in overall import may continue in the near future.

"The import-payment pressure particularly on capital machinery for power plants and infrastructure-development projects may rise in the coming months," the private banker hinted.

He also said the uptrend in fuel prices on the global market may enlarge overall import-payment obligations in the near future.

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