Import orders double in first half of fiscal year
Import orders almost doubled in the first half of the fiscal year thanks to bulk purchase for the Rooppur nuclear power plant.
In the first six months of fiscal 2017-18, $40.23 billion worth of letters of credit were opened, up 74.76 percent year-on-year, according to data from the Bangladesh Bank.
The opening of LCs signifies import orders.
Bangladesh Atomic Energy Commission opened LCs worth $11.38 billion through state-owned Sonali Bank in November to import different items to build the nuclear power plant, according to a BB official.
“The LC has been opened under the 'others' category of the central bank's import statistics,” he said.
The import orders for the Rooppur power plant, which would be the highest in the country's history, would not put any pressure on the country's foreign exchange reserves at present.
“The reserves, however, may come under pressure when the government starts to pay instalments for the loans,” he said.
BAEC will settle the LCs using the Russian credit, which will have tenure of 30 years with a 10-year grace period. Bangladesh will have to start repaying the loans from March 2027.
The Rooppur plant is expected to supply 2,400 megawatts of electricity to the national grid by 2024.
After deducting the figure for the Rooppur power plant, $28.25 billion worth of LCs were opened in the first half of the fiscal year.
LC openings also increased during the period due to the higher import orders for food grains, petroleum and capital machinery, the central banker said.
The import orders of food grains soared nearly three times to $2.44 billion between July and December of last year.
Rice import by the country substantially rose during the period amid crop losses, mainly boro paddy, due to flash floods in the country's north-eastern haor areas and depleting public stocks.
The central bank figures also show that actual import of capital machinery or industrial equipment used for production stood at $3.29 billion in the first half of the fiscal 2017-18, up from $2.44 billion a year earlier.
At the end of first half of the fiscal year, the import orders for industrial raw materials stood at $9.27 billion in the first six months of fiscal 2017-18, up from $8.05 billion a year earlier.
“It is a positive indicator for the economy that the import of capital machinery and industrial raw materials has been maintaining an upward trend. This means the country's production output may increase in the months to come,” the BB official said.
The opening of LCs of petroleum products increased to $1.61 billion during the first half of the fiscal year in contrast to $1.26 billion a year ago.
The actual import in terms of settlement of LCs also increased to $24.66 billion between July and December of the fiscal year, up from $23.02 billion a year earlier, showed the BB data.c