Bangladesh's net foreign exchange reserves have now reached $15.82 billion, reflecting a declining trend since the onset of the Ukraine-Russia conflict.
According to a recent Bangladesh Bank report, the country's reserves amounted to $19.52 billion based on the Balance of Payments and International Investment Position Manual (BPM6) as of November 23.
In July, Bangladesh adopted a new formula for calculating foreign reserves, aligning with the International Monetary Fund's BPM6.
Under the updated calculation, the country's gross foreign exchange reserves decreased by $6.44 billion to $23.56 billion.
The introduction of the BPM6 manual in 2012 by the IMF aimed to provide a more accurate representation of reserves. Previously, the central bank's non-compliance with the manual had inflated the forex reserves, which were then utilized for various infrastructure projects.
As per the BPM6 calculation, Bangladesh Bank is required to exclude certain elements such as foreign currency loans to local banks (Export Development Fund or EDF), deposits with state-owned local banks, deposits with the IDB Group, fixed-income securities below investment grade, a loan to Sri Lanka, and other foreign currency assets in non-convertible currencies from its previous gross reserves figure to determine the actual reserves.
Bankers had forewarned that the Russia-Ukraine conflict, beginning in March 2022, would lead to increased costs in the energy, consumer goods, and transport sectors.
Consequently, Bangladesh, like other nations, faced elevated import costs. However, the country did not witness a corresponding surge in remittance inflows, putting additional strain on the reserves.