Usable forex reserves stands at $15.82 billion

Bangladesh's net (useable) foreign exchange reserves now stand at $15.82 billion, following a depleting trend since the Ukraine-Russia war broke out. 

According to a report of the central bank, the country's reserve amount on 23 November stood at $19.52 billion based on the Balance of Payments and International Investment Position Manual (BPM6), 

However, the net reserves will be $3.7 billion less than the total reserve amount, central bank sources confirmed the data to The Business Standard.

According to the central bank's calculation, gross reserves stand at $25.16b. 

But the IMF prescribed BPM6 calculation method yields a different amount. 

Of this, according to the BPM6, $3.5b of the Export Development Fund given to exporters in foreign currency, $160 million from the Green Transformation Fund, $270m being used for long-term financing facility (LTFF), the $860m for the Sonali Bank financing facility, the $450m deposit with ITFC, the $390m in the Roopur escrow account, all need to be deducted.

This comes to the BPM6 gross of $19.53b.  

From this, $2b needs to be deducted to remain a member of the IMF maintaining SDR allocation, $937m for FC Clearing account and $50m that has to be paid to the Asian Clearing Union (ACU) for imports from these member countries. 

Additionally, $326m has to be repaid to the IMF within a year. 

Calculating these deductions, the net reserve comes to $15.82m.

In July, Bangladesh started calculating its foreign reserve according to a formula suggested by the International Monetary Fund – BPM6.

Following the new calculation, the country's gross foreign exchange reserves dropped by $6.44bn to $23.56bn. 

The IMF introduced the BPM6 manual in 2012, but the central bank did not comply with it fully, which helped its forex reserves look higher than actual, prompting the government to use it for different infrastructural projects.

According to BPM6 calculation, the Bangladesh Bank has to exclude foreign currency loans to local banks, known as the Export Development Fund (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 come to the actual reserves figure.

Bankers had said the Russia-Ukraine war, which began in March 2022, would lead to higher costs for the energy, consumer goods and transport sectors.

As a result, Bangladesh would also experience higher import costs similar to other countries. 

While import costs surged, the country's remittance flow did not spike upward, putting pressure on the reserves.