About $1.5 billion in export earnings remained stuck abroad as of May against the backdrop of a dollar crisis in the country, according to Bangladesh Bank data.
The central bank data showed that out of the $1.5 billion that was unrealised, about $255 million remained outstanding due to short-shipment issues, $68 million was unpaid owing to bankruptcy, $251 million was stuck in litigation, $125 million was withheld due to fraudulent activities or fake exports and $700 million was unpaid for unspecified reasons.
According to the central bank rules, exporters are required to repatriate funds within 120 days from the date of goods shipment.
However, when the funds remained overdue, the government found itself grappling with an ongoing dollar crisis and currency depreciation, bankers said.
They said that they were still facing difficulties in settling import payments and opening letters of credit due to the prevailing dollar crisis on the market.
The central bank has consistently urged financial institutions to expedite the retrieval of overdue export proceeds to stabilise foreign exchange market.
The overdue export proceeds were $1.28 billion at the end of June 2022 and $1.42 billion at the end of December 2022.
Bangladesh Bank executive director and spokesperson Md Mezbaul Haque said the accumulated overdue amount stood at $1.5 billion.
About $281 million was recovered in the past one year, and efforts are underway to recover the remaining sum, he said.
Mezbaul observed that the outstanding amount accounted for only 1 per cent of the total exports, which, in the context of business, was not an uncommon occurrence.
The interbank exchange rate in Bangladesh has surged to Tk 109.5 a dollar amid the ongoing dollar crisis, causing a significant depreciation of the taka — by about 30 per cent — over the past two years.
The current exchange rate climbed from Tk 94.7 in July 2022 and Tk 84.8 in July 2021.
BB officials expressed concerns that certain business entities were bringing export proceeds to the country at their convenience to exploit the situation.
The exporters are bringing the proceeds to the country when they have to meet their own import liabilities since banks are reluctant to open new LCs amid the dollar crisis, they said.
The depletion of foreign exchange reserves, poor inflow of remittances and export earnings are contributing to the imbalance in the foreign exchange market.
The dominance of the illegal ‘hundi’ market, where unofficial currency trading occurs, also plays a role in exacerbating the crisis.
To stabilise the foreign exchange market, the Bangladesh Bank sold about $22 billion in the past 25 months, including $13.5 billion to banks in financial year 2022-23 and $7.62 billion in FY22.
The foreign currency reserve in Bangladesh dropped to $29.31 billion on August 23 from $41.82 billion in June 2022.
The gross international reserve of Bangladesh, according to the International Monetary Fund guidelines, dropped to $23.16 billion on August 23.
