During a recent trip to the Kingdom of Saudi Arabia (KSA), Salman Fazlur Rahman, Prime Minister’s Advisor on Private Industry and Investment, sought extended credit terms to alleviate Bangladesh's pressing dollar crisis. This request was made to facilitate longer payment periods for fuel imports from Saudi Arabia, a critical concern given the current financial constraints. In a press briefing held on Tuesday (February 06, 2024) at the Bangladesh Investment Development Authority (BIDA) building upon his return, Rahman shared insights from his three-day visit. “Currently, we have a 45-day window to settle payments for fuel imports from Saudi Arabia. Given the dollar scarcity, extending this to a year would greatly benefit us. The Saudi officials have agreed to consider this proposal,” Rahman disclosed. Rahman represented Bangladesh at the Islamic Military Counter Terrorism Coalition (IMCTC) meeting, emphasizing Bangladesh’s firm stance against terrorism and the misuse of Islam to justify such acts. “Terror has no religion, and by fostering cooperation among Islamic nations through the IMCTC, we aim to combat the defamation of Islam by terrorism,” he stated. Read: President urges KSA to invest more in Bangladesh The advisor highlighted the unanimous condemnation of the ongoing crises in Gaza by meeting participants, alongside a collective call for resolution. The plight of the Rohingya refugees in Bangladesh was also addressed, with a commitment to seek solutions. On the economic front, Rahman revealed Saudi investors’ interest in establishing a special economic zone in Bangladesh. “We are keen to allocate an economic zone to Saudi Arabia within Bangladesh. Their investment minister has shown enthusiasm for this project,” Rahman noted. Additionally, plans are underway to bolster Bangladesh’s agricultural sector through the joint establishment of a urea fertilizer plant in Saudi Arabia. “This collaboration aims to ensure a steady supply of fertilizers, enhancing our agricultural output. The proposal has been warmly received, with a feasibility study due to conclude by March,” he explained, highlighting the opportunity for private sector involvement alongside government-to-government initiatives. Read more: KSA's Majlish E Shura Council President Abdullah arrives in Dhaka

The power and energy sectors of Bangladesh have been hit by severe cash crunch, especially the US dollars, piling up a huge backlog in payment of their import bills, official sources said this week. According to official sources, the sectors’ cumulative outstanding bills have now jumped to about $5 billion of which the backlog amount in the power sector is about $4 billion (about Tk 43,093 crore), and the remaining 1 billion is in the energy sector. State Minister for Power, Energy and Mineral Resources Nasrul Hamid also admitted the severity of the crisis. “Actually the crisis is not of local currency. Somehow we can manage it. But the main crisis is of dollar. We’re not getting dollar from Bangladesh Bank as per our needs,” he told UNB this week. He noted that the power and energy sectors need at least $1 billion a month to meet payment obligations. "But we’re just getting less than half of that,” he said, adding, “As a result, cumulative outstanding is rising every month”.     Read: JICA to assist govt in preparing power distribution plan for Dhaka Sources said that the two main state-owned organisations' energy sector – Petrobangla and Bangladesh Petroleum Corporations have to spend huge amounts to import primary fuels like crude and refined petroleum and liquefied natural gas (LNG) from abroad. Petrobangla also needs to pay foreign gas companies like Chevron to purchase natural gas to meet the local demands. All are paid in foreign currencies. Similarly, the state-owned Bangladesh Power Development Board (BPDB) has to purchase electricity from independent power producers (IPPs) in dollars. In addition, it has to import 2500 MW of electricity from India of which 1500 MW is coming from Adani power plant. Sources familiar with the situation said that under the existing arrangement, the BPDB pays some large IPPs like SS Power, Payra, Rampal and Adani in foreign currency while the other IPPs are paid in local currency but they are allowed to convert the payment in foreign currency as deals’ obligation. Read: Govt approves import of 40 MW power from Nepal “Each day we need at least 40 million US dollars from Bangladesh Bank to meet our payment obligation. But we’re getting 5-7 million dollars a day”, a top official of the BPDB told UNB, wishing anonymity as he is not authorised to talk to media. Officials at the Energy and Mineral Resources Division said the Petrobangla and BPC also need huge foreign currency, particularly the US dollar to continue its petroleum and gas imports and also to buy gas from foreign gas companies. According to BPC’s Annual Report, the total import of petroleum products was about 6.86 million metric tons and the total expenses of import was US$ 6 billion (equivalent to Tk 62,132.61 crore) in fiscal 2022-23. For the financial year 2023-24, the BPC planned to import more petroleum products than the previous fiscal, officials said.   Petrobangla has also to import over 5 million metric tons from Qatar Gas, Oman Trading, and the Spot market spending US$ 4.5 billion. It has also to pay US giant Chevron to buy gas from its three gas fields where unpaid bills now stand at $300 million due to backlog in payment. Nasrul Hamid said his ministry has regularly been negotiating with the Bangladesh Bank to get more dollar supply. “But the central bank only advises increasing the price of electricity, gas and petroleum which is not frequently possible for a political government”, he said. He also informed that his ministry was planning to receive a loan from Multilateral Investment Guarantee Agency (MIGA) to ease the situation. “But the central bank is not supporting the idea”, he added. END/UNB/SH/F Read more: Still 7.64 percent consumers have to bribe in getting electricity connections: Survey

Public dependency on the open market for US dollars has increased, where per dollar is being sold at Tk 120-121. The dollar crisis in the kerb market became more acute after Bangladesh Bank and law enforcers raided money changers with allegations of higher exchange rates. In this situation, a number of individuals are selling dollars, through their networks, at Tk 120-121 per dollar. They are becoming the lone source of dollars for those who are traveling abroad for treatment, education, and other emergencies, sources said. Read: Bangladesh Bank introduces dollar booking policy for max 1 year  Jamal (not his real name), owner of a money exchange house in Dhaka’s Motijheel area, told UNB today that they cannot buy a dollar even at Tk 115. “How can we possibly sell per dollar at Tk 113.30?” — he asked. Many other money changers and individual floating traders of the US dollar remain idle due to the supply crisis of the currency. In the span of a month, the exchange rate of the US dollar in the kerb (open) market reached Tk 120-121 per dollar from Tk 112. The central bank and law enforcers recently raided money changers and asked to sell per dollar at the previous rate of Tk 113.30. Read: Selling dollars at higher prices: What is Bangladesh Bank’s action against treasury heads of 10 banks? Market insiders said there is a severe shortage of US dollars in Bangladesh. The price of foreign currency is increasing uncontrollably and the value of taka is falling. As a result, the price of the dollar in the kerb market has crossed Tk 120. Talking to various exchange houses and those involved in dollar trading, UNB learnt that most money changers do not have dollars. Secretary General of the Money Changers Association of Bangladesh, Sheikh Helal Sikder, said that Bangladesh Bank has set the dollar price for money changers. In this case, the buying rate is Tk 111.80 and the selling rate is Tk 113.30. Read: Dollar goes off kerb market after central bank-led raids of money exchanges “No one is getting dollars at this price, so the money changers are now sitting empty-handed,” he said. Replying to a query about the dollar shortage in the kerb market, Bangladesh Bank’s Executive Director and spokesperson, Mesbaul Hoque, told UNB that dollars are being traded, but not everyone is selling them.

Preparations for Bangladesh's national budget for the 2023-24 fiscal must balance expectations in an election year with the conditions of the International Monetary Fund (IMF), and tackle inflation, foreign exchange crisis and revenue shortfall. Balancing public satisfaction and protecting the economy is a major issue. Economists say it has been seen in the past that election year budgets often prioritise public satisfaction over the improvement of the economy. As such, the opportunity to deliver a budget that is satisfactory is very limited, said macroeconomist and public policy analyst Dr Debapriya Bhattacharya, who is also a Distinguished Fellow at the Centre for Policy Dialogue (CPD). Read more: Safeguards are needed to protect vulnerable people under IMF-backed reforms: Debapriya He told UNB, "Before the election, all governments want to give a budget that satisfies the people. But due to the financial situation, fiscal deficit, and trade deficit, the opportunity is very limited for the government. If such a big effort is made, it will have a negative impact on the overall economy." "It is important to remember that this budget will be implemented by two governments. In this budget, flexibility must also be preserved. Because, if the government makes any big promises, there is doubt as to how much they can implement," he pointed out. Dr Debapriya said that the budget is coming at a time of political uncertainty in the country. Plus exit from LDC, and the Covid-19 response revival are issues hanging over the budget. Also read: 11pc of Bangladesh budget allocated for disaster risk reduction: State Minister “Compared to any other year, this year's budget has to be prepared in a very complicated situation. Because earlier, there would be a deficit in terms of income and expenditure in the country, but there would be comparative relief in terms of foreign transactions. But this time it is not,” he opined. Dr Debapriya said, "There has been a major disruption in the growth rate. It is going down further because there is no money, no dollar. There is a huge deficit in both areas to be dealt with together.” So the government has to control imports and limit its investment program. As a result, next year's growth target should also be moderated. Read more: Despite many challenges, Bangladesh remains one of the fastest growing economies in Asia-Pacific: Visiting IMF team "The financial structure has actually weakened," he said. Executive Director of the South Asian Network on Economic Modeling (SANEM) Salim Raihan, also a professor of economics at Dhaka University (DU), said that in the previous election years, the economy was not in such a crisis as this time. "As a result, no new major pressure was created in the economy despite budgeting for public satisfaction at that time. But this time, if the budget is made considering only public satisfaction in view of the election, it will create new pressure on the economy," Professor Raihan said. Read more: Bangladesh’s GDP growth rate will overtake China’s in current fiscal year, IMF predicts

The 1320 MW Rampal power plant has resumed its partial production, but officials still worry about its uninterrupted operation due to dollar crisis that may again disrupt the import of coal, the plant’s main fuel. The Unit-1 of the coal-fired plant resumed production from Wednesday after a month-long shutdown caused by shortage of coal. The plant is still under a test run that started in August before being discontinued last month. A kind of concern was expressed by the officials of the Bangladesh-India Friendship Power Company Limited (BIFPCL) that has been engaged in implementing the power plant project. During a briefing session on Thursday, Subhash Chandra Pandey, the project director of the BIFPCL for the Rampal plant said there is no substitute to coal import if the plant is to be kept operational. “The coal used in the plant is of high standard and not available in the subcontinent”, he told a group of energy reporters who visited the plant. According to official sources, Unit-1, having 660 MW capacity was forced to shut down on January 14 due to shortage of coal supply. The authorities of the power plant were unable to open any letter of credit (LC) to import coal due to the dollar crisis. After a lot of persuasion at the government’s policy level, LC opening was allowed for importing coal and the supplier sent a consignment of 30,000 metric tons. BIFPCL officials said the supply of foreign exchange required for import of coal for the plant is not under their control. Read more: Rampal’s unit-1 to resume power generation Wednesday under 'test run' The BIFPCL, a joint venture of Indian state-owned NTPC and Bangladesh Power Development Board (BPDB), is the owner and operator of the Rampal power plant. The official said another consignment of 50,000 MT of coal is also coming to the country soon. With the current stock of coal, the plant can run until April this year, said the project director adding that the unit-1 needs about 4500 MT of coal per day to keep operational with full capacity. “The unit -2 is expected to come into operation in June this year and at that time it will require about 9,000 MT of coal per day”, the official of the project said. He said though the unit-1 is now under test run as the BPDB which has a power purchase agreement (PPA) with the BIFPCL has not given the go-ahead yet for start of the commercial operation of the plant.

The inward remittance flow in January came as good news while Bangladesh Bank (BB) is struggling with LCs liabilities to import essential commodities and industrial raw materials amid volatile foreign exchange supply. In January, Bangladesh received $1.96 billion in the legal channel, the BB updated data revealed on Wednesday. In December, the remittance was $1.69 billion. Bangladesh received $12.45 billion inward remittances in seven months (July-January) in the current fiscal year 2022-23. Read More: Banks to stop charging any fees for handling remittances. Bank officials said many import payments are being deferred due to the dollar crisis. For this, expatriate income of dollars are being bought at a higher price than the fixed price. As a result, expatriate income increased. If the price limit of the dollar is removed, the crisis will go away, they said. The BB spokesperson Mesbaul Haque told UNB that in order to increase remittance inflow, the central bank has increased the exchange rate of US dollars for remittance. Read more: Bangladesh Bank simplifies receiving remittance In addition to a 2.5 percent hassle-free incentive for remittance, several banks also provide additional incentives to attract foreign exchange, he said. Banks will not cut any charge or fee for sending remittances in the legal channel, he said. Research by Bangladesh Bank found that more than 40 percent of remittance of expatriate income is sent to the country through hundi. Read More: Bangladesh 9th in remittances with US$ 15.9b: World Bank.

The government has taken preparations so that the intending Bangladeshi hajj pilgrims do not face dollar crisis, said State Minister for Religious Affairs Md Faridul Haque Khan on Thursday. He was talking to reporters after attending the Deputy Commissioners Conference 2023 at the Osmani Memorial Auditorium in the capital. Read more: 1918 pilgrims perform hajj at government's cost since 2014: State Minister Asked whether there is enough dollars in reserve for 27,000 pilgrims this season, the state minister said no such situation has been created in Bangladesh yet. “Bangladesh’s condition is still stable.” Regarding the propaganda over religion in textbooks, he said if there is anything controversial about religion in the textbooks, it must be removed. Read more: No increase in Hajj package this year, says minister The Ministry of Education has already formed two committees to investigate the matter. After the work of this committees, there remains an opportunity to do what are need to be done, he added. “It's a way to destroy communal harmony by spreading huge propaganda about a trivial matter. These are spread before the elections. There is no time to allow such things,” said the state minister.

Khulna division has been experiencing acute load shedding even in the winter due to suspension of power production at Rampal Power Plant amid shortage of coal caused by the dollar crisis. The production came to a halt on January 14, only after 27 days the coal-fired plant in Bagerhat started electricity generation by adding 660MW of electricity to the national grid produced from its first unit. Khulna West Zone Power Distribution Company (WZPDC), which distributes power in Khulna and Barishal region, authorities have been struggling to meet the electricity demand although the demand for electricity comes to half in the winter. Read more: Hasina, Modi jointly unveil Rampal Power Plant’s unit 1 On Thursday, the Khulna region experienced 24 MW load shedding in off-peak hours while during peak hours it was four MW. On Friday, the load shedding was 5 MW while the residents of different areas in the city experienced power outages, officials said. Anwarul Azim, deputy manager of Bangladesh-India Partnership Power Company Ltd (BCPCL), said import of coal was suspended due to the crisis of US dollar that cut production by half on January 14. BCPCL is a joint venture of the Chinese firm China National Machinery Import & Export Corporation (CMC) and Bangladeshi state-owned North-West Power Generation Company Bangladesh Limited (NWPGCL). Rampal Power plant’s Unit-1 has a capacity of producing  660MW of electricity . Before suspension of production, its Unit-1 used to produce 560-570 MW. Read more: Rampal Plant starts electricity production, 660MW from unit-1 added to nat’l grid Of this, 400MW was added to the national grid via Aminbazar-Gopalganj transmission line and 260MW was added to Khulna-Bagerhat. Around 5,000 tonnes of coal are needed for the operation of the power plant and all are imported from Indonesia but due to the dollar crisis the import of coal was suspended. Anwarul Azim said banks did not allow opening of Letter of Credit (LC) for importing coal due to the dollar crisis. “Already, a coal-carrying vessel from Indonesia is ready to leave for Bangladesh but we are trying our best to import coal. We hope the problem will be resolved soon,” he added.

With the price of the US dollar skyrocketing, Bangladeshi travellers are directly affected by fluctuating exchange rates. Should you then drop your travel plans until the price of the US dollar becomes stable? Is there any way to deal with this dollar crisis and still travel? Let’s look at some alternative ways to travel abroad without purchasing US dollars. WHY YOU SHOULD CONSIDER ALTERNATIVES TO BUYING US DOLLARS Traveling abroad can be an exciting and enriching experience, but it can also be expensive. One of the biggest expenses of international travel is the cost of converting Bangladeshi taka into the currency of the country you are planning to visit. Travellers usually carry US dollars when visiting any foreign country. The recent price hike of US dollars has made the exchange rate high regardless of the base currency. Therefore, it would be wise and cost-effective for travellers to consider the alternative ways. Read More: Bangladeshi passport’s ranking improves in 2023, still behind Iran and Sri Lanka as per Henley Index WAYS TO TRAVEL ABROAD WITHOUT BUYING US DOLLARS ·        USE CREDIT CARD Bangladesh Bank advises taking dollars through an international card (dollar-endorsed VISA/Mastercard) in case of traveling abroad. It has given this advice due to rising exchange rates and supply shortages in banks and open markets. The difference between the cash dollar price in the open market and the bank is currently over Tk 10. It is cheaper to endorse dollars on your credit card. In the current situation, it may save you around Tk 5 to 10 per US dollar. However, currently, the exchange rate for cash and card endorsement is the same, which is Tk 106 (as of January 12). According to a news in August 2022, when it cost up to Tk 109.50 to buy one US dollar in the open market, the price of buying dollars through a bank or card went up to Tk 95. Read More: Beach Bucket List: 9 Magnificent Sea Shores in South Asia “This is why we are recommending travellers to request their banks to ask for travelcards instead of asking for cash, so that they pay less,” Bangladesh Bank spokesperson Sirajul Islam told media at that time. ·        BUY THE LOCAL CURRENCY OF YOUR TRAVEL DESTINATION Buying the local currency of the country where you are traveling can reduce your exchange cost. The exchange rates of different currencies against the US dollar have also gone up. So, you can check if buying your destination country’s currency reduces the cost or not. For example, if you are travelling to India, buying rupees from Bangladesh may give you more currency than converting to the US dollar. You ·        USE DIGITAL WALLET Many countries now accept digital wallets such as Apple Pay and Google Wallet. If you plan to travel to a country that accepts these types of payments, you can avoid the need to convert your currency altogether. You can load currency using a third-party service. Read More: 10 Best Professions for Travelers ·        TAKE ADVANTAGE OF FOREIGN ATMS When you are in a foreign country, it can be more cost-effective to withdraw cash from an ATM than to convert currency at a bank or currency exchange shops. If you have a dollar-endorsed card from Bangladesh, you can withdraw money in the country you are traveling to using the local ATMs. However, check with your bank to ensure that your card will work in the country you are planning to visit and see if there are fees for using foreign ATMs.

Prime Minister's Private Industries and Investment Adviser Salman F Rahman on Saturday said the existing dollar crisis in banks will be gone by next month. read more: Bangladesh broadens its sources for energy supply; no shortage of dollars: FM “Necessary goods can be imported ahead of Ramadan and there will be no crisis during the month of Ramadan,” Rahman said while replying to journalists after placing a wreath and paying tribute at Mujibnagar mausoleum in Meherpur. He said prices of essentials in the global market have gone up and it has created a pressure on Bangladesh’s economy. read more: Remittance: Bangladesh Bank tells banks to provide Tk 107 per dollar “Yet we are selling essential commodities to 1 crore families through TCB. As at least 4 to 5 crore people are getting benefited from it, no major problem will remain,” he said.