National, Front Page

Spectacular growth of forex reserves

From $18 to $48b in 50 years

Published : 23 Dec 2021 10:50 PM

Bangladesh's foreign exchange reserves have now touched a new record of $48 billion from only a meagre $18 immediately after the independence of the country.

The forex reserves have helped the country become a big economy in the World in 50 years.

The country's forex reserves have recently reached a new record thanks to the upward trend of remittance, export earnings and foreign assistance, experts said.

The increase in reserves helped develop different mega infrastructure projects like Padma Bridge as a financial support and it helped increase rating of the country across the world, they added.

However, the country's economy, with its 25 years of exploitation by Pakistan and nine months of bloody war, lost its infrastructures.

During the war of independence, there were no currency transactions and transactions were done with the imprint "Bangladesh" on Pakistani notes.

Printing of Bangladesh currency started in India in 1972 to meet currency demand in the country. 

Bangladeshi Taka was recognized in the international arena as Bangladesh became a member of the International Monetary Fund in the early 1973 and in 1980 the country started minting money from Gazipur mint.

Dr Atiur Rahman, former Bangladesh Bank governor, told Bangladesh Post, “Record growth of remittance inflows, export earnings and foreign assistance mainly helped increase the reserves.”

“In the last 50 years, Bangladesh's banking sector has expanded in spite of various hurdles. Today, the economy of Bangladesh has grown significantly,” he added.

“Remittance inflow witnessed a rapid growth even during the pandemic.  The continuation of remittance helped push foreign currency reserves up, which is helping the rating of the country across the World,” he mentioned.

Former Bangladesh Bank governor Mohammed Farashuddin Ahmed said, “In 1972, most of the Notes (Taka) were printed from India and we started printing some money from abroad.”

“Bangladesh started its journey with a foreign exchange reserve of only $18. In a span of 50 years, it has stood at $48 billion. A total amount of $500 was lent from India and deposited in the Central Bank of India,” he added.

Banking activities of Bangladesh started with the conversion of 12 banks left by Pakistan into eight banks, he said adding that the first private bank in the country was approved in 1982. This number now stands at 61, he mentioned.

However, the foreign exchange reserves have hit a record high to stand at $48.04 billion on August 24.

In the last month, it stood at $44.88 billion, according to Bangladesh Bank data.

The reserves are adequate to cover about seven months’ import payment for the country of 160 million people.

However, Bangladesh’s export earnings witnessed a rapid growth in July-November of the current fiscal of 2021-22, up 24.29 percent to $19.79 billion compared to that of $15.92 billion in the same period of FY 2020-21, according to the Export Promotion Bureau data.

The country’s export earnings in the financial year 2020-21 rose by 15.10 percent to $38.76 billion from $33.67 billion in FY20 despite the pandemic.

On the other hand, remittance inflow stood at $8.61 billion during the July-November period of the current fiscal year against $10.89 billion in the same period of the previous fiscal, according to Bangladesh Bank data.

Remittance inflow in the country hit a record growth to stand at 24.77 billion for the first time in the fiscal year 2020-21.

According to the Economic Relations Division (ERD), Bangladesh received $7.10 billion, equivalent to Tk 60,350 crore, in assistance from development partners in the outgoing 2020-21 fiscal year.

Meanwhile, the overall imports stood at $60.68 billion in July-June period of FY 21 against $50.69 billion in the same period a year earlier.