Tuesday, June 25, 2024


Dhaka Tribune

Countdown to elections: Economy in focus as challenges mount

  • Inflation rate decreased to 9.49% in November
  • In the initial four months, Tk103,976 crore revenue amassed 
  • Reserves declined to $19.40 billion on Nov 29
  • Flow of remittances saw a significant decline in November
Update : 08 Dec 2023, 11:49 PM

With only 30 days remaining until the 12th parliamentary elections, the primary concern for the winning party will be the country's troubled economy, currently facing significant challenges.

Uncertainty prevails among the populace as Bangladesh Bank's foreign exchange reserves are dwindling despite various efforts to handle the situation, including import control. 

Inflationary pressures are mounting due to rising oil prices and currency devaluation, increasing the country's financial sector risk. 

Distressed assets, defaulted loans, and loan defaults in banks are on the rise, contributing to the depletion of reserves. Additionally, the slowdown in export and expatriate income is heightening concerns.

The new labour policy in the US and the strike and blockade by anti-government parties have added to the economic challenges. 

However, despite these issues, one positive indicator is the increased government revenue collection. Bangladesh has achieved a significant milestone in manpower export, and inflation, another key economic indicator, has decreased slightly.

Economists are expressing optimism, noting that there is currently no need to worry about the economy. But what lies ahead is a matter of discussion.


The inflation rate decreased to 9.49% in November, marking the lowest in the last seven months. Inflation rates for September and October were 9.63% and 9.93%, respectively.

Food price inflation stood at 12.56% in October but decreased to 10.76% in November. Non-food inflation also declined, easing to 8.16% in November compared to 8.30% in October.

Planning Minister MA Mannan attributed this decline in inflation to several factors. He mentioned that the commencement of rice harvesting and the availability of winter vegetables in the market contributed to the drop in food prices. 

Manpower export

Bangladesh has achieved a remarkable milestone in the export of manpower, surpassing all previous records. The number of workers exported from Bangladesh reached 1.24 million by the end of November this year, exceeding last year's figure of 1.13 million.

Recruiting agencies anticipate that the numbers will continue to rise in 2022 and 2023. Many workers, unable to go abroad for two years due to the pandemic, are expected to seize opportunities as businesses in the Middle East open up, creating more job opportunities.

The increased quota for Bangladeshi immigrants in various Saudi institutions is a significant factor in this record growth. The quota has been raised from 25% to 40%, facilitating more excellent employment opportunities for Bangladeshi workers in Saudi Arabia.


In the initial four months (July-October) of the current fiscal year 2023-24, the National Board of Revenue (NBR) has amassed a total revenue of Tk103,976 crore from income tax, local-level value-added tax (MUSC), and import-export duty. 

This amount represents a notable increase of 14.36% compared to the corresponding period in the last fiscal year, when revenue collected in the first seven months amounted to Tk90,918 crores.

Dollar price

In January 2022, the highest dollar exchange rate in the banking sector was 85 taka. However, currently, banks are collecting Tk124 to Tk125 per dollar from importers. 

It indicates an approximately 47% increase in the dollar exchange rate during that period. In the curb market, the dollar price has surged to Tk128.

To alleviate the dollar crisis, the government has imposed stricter conditions for opening LCs (Letter of Credit) for imports since the beginning of the 2022-23 financial year. Consequently, banks have also reduced their LC opening. 

Due to these measures, the volume of imports decreased by about 16% at the end of the fiscal year 2022-23. Furthermore, in the July-September quarter of the current financial year, imports witnessed a notable decline of 23.90%.

Forex reserves

Foreign exchange reserves in the Bangladesh Bank experienced a further decrease, with a drop of 120 million dollars last week. 

According to International Monetary Fund (IMF) calculations, the reserves declined to $19.40 billion on November 29, compared to $19.52 billion the previous week. 

However, it's noteworthy that usable reserves are now less than $16 billion.

Despite the decline, it is expected that more than $1 billion of foreign loans and budget assistance will be received this month. The amount of dollars sold from the reserves this month is expected to come from abroad. 

Consequently, Bangladesh Bank anticipates that reserves will remain stable this month. The central bank views this incoming foreign debt as a positive development in the management of the dollar crisis.


According to central bank data, the currency has depreciated by about 6% in the past year. However, bankers argue that the currency's value has fallen more than the central bank has announced.

For instance, they highlight the fact that the central bank sells dollars from the reserve at Tk110.25. In contrast, importers purchase the dollar at a maximum rate of Tk128. This signifies a difference of more than Tk17.


The flow of remittances saw a significant decline in November. This has led many expatriate Bangladeshis to opt for unauthorized channels for remittances.

According to Bangladesh Bank data, expatriate Bangladeshis remitted $1.55 billion in November, reflecting a 5.48% decrease compared to the previous month and a substantial 26% decline compared to last year. 

Over the first five months of the current financial year, remittances decreased by 21% to $8.60 billion compared to the previous year.

Defaulted loan

Despite provisions of special facilities, the banking sector's defaulted loans are not decreasing. At the end of September, the defaulted loans in the country's banking sector amounted to Tk155,397 crores. 

This indicates an increase of Tk21,000 crore or 15.63% compared to September 2022.

Foreign debt

According to Bangladesh Bank data, the foreign debt reached $100 billion until September this year. The government and government institutions hold $79 billion, while the private sector has taken the remaining $21 billion in foreign loans. 

The pressure on foreign debt repayments has increased due to the dollar crisis. 


In the four months from July to October, import Letters of Credit (LC) openings fell by about 12% due to the dollar crisis. During the same period, LC settlements dropped by 24%. 

In November, the export of goods from Bangladesh to the world market was worth $4.7 billion, decreasing from $5 billion in November 2022. It reflects a negative growth rate of 6.05% in November. 

In the first five months of the current financial year, exports of ready-made garments decreased by 4.5%.

What the experts say

The executive director of the research institute Policy Research Institute (PRI), Ahsan H Mansoor, mentioned that the country is currently going through a balance of payment crisis, characterizing it as a moderate crisis. 

He attributed the economic slowdown to political unrest. 

The former governor of Bangladesh Bank, Atiur Rahman, acknowledged the resilience of the agriculture sector, which has played a crucial role in sustaining the economy. 

Additionally, he highlighted the support from remittances sent by expatriates and the strength of the rural economy. 

Rahman also noted the positive impact of infrastructure development and mentioned that inflation came under control in November, with expectations of a further decrease.

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