Bangladesh's import bills fell to $5.38 billion in August from $6.79 billion a month ago thanks to lower fuel and capital equipment procurement, according to the central bank.
Fuel oil and capital machinery contributed more than 65% to the $1.41 billion import fall in August, as shown in Bangladesh Bank data.
The country paid $1.01 billion in July for crude and refined fuel, which plummeted by more than 57% to $433 million in August. Capital equipment import in July cost the country $617 million, which dropped by 55% to $276 million in August.
Besides, Letters of Credit (LC) opening for fuel and machinery import fell substantially. LC opening for fuel oil import dropped by 60% in August compared to the previous month, while capital equipment LCs posted a 32% fall.
Former Bangladesh Bank governor Salehuddin Ahmed feels austerity is positive for the economy, but the authorities need to be cautious so that industrial production does not suffer any fuel shortage.
Mentioning that a fall in capital machinery import does not always carry negative meaning, he said, "A large part of the capital machinery imported in our country is used in the garment sector. If capital equipment imports do not boost garment exports accordingly, then there is no justification for bringing those in."
In his arguments, he also hinted at money laundering by over-invoicing.
Of 34 items, central bank data show that import costs of 20 commodities, including wheat, edible oil and coal, decreased in August.
Import payment for wheat decreased by 52%, dairy food by 23.3%, refined edible oil by 40%, crude edible oil by 48%, BP sheet by 77% and computer and IT accessories by 39%.
Bangladesh Bank officials attributed the fall to several measures by the central bank such as widening the LC margin for some products up to 100% and mandating notifying the central bank at least 24 hours ago for opening import LCs over $3 million.
Import cost for 14 items up
Import cost for 14 products, including rice, sugar, lentils, onions and medicines, increased in August compared to July. Besides, products like fertiliser, cement, motor vehicles and scrap vessels are also on the list of import cost hike.
Fertilisers topped import cost hikes in August. Payment for fertiliser import cost the country $276 million in July, which rose by 46% to $404 million in August.
Import bills for rice surged by 68% in August compared to the previous month. Bangladesh spent $16.78 million in August to bring in 2.88 lakh tonnes of the food staple.
Sugar imports cost $11 million or 22% more last month than in July. Onion imports were $6 million in July, which surged to around $14 million next month. Medicine import bills also increased by 66% compared to July.
A senior central bank official told The Business Standard that more spending in importing daily essentials was due to the volatility of the international market.
"Inflation is now biting everyone. As a result, the cost of the same amount of food is now higher than in recent months," said the official.
In August compared to the previous month, import bills for scrap vessels rose 62%, as cement posted a 47% upswing.
Salehuddin Ahmed said imports of scrap vessels are on the rise as traders look to profit from the soaring local rod market. Besides, the increase in other construction material imports indicates that the local real estate sector is gaining momentum.