Dhaka, Bangladesh (BBN) – The country’s overall import payments grew by 22.91 percent in the first five months of the current fiscal year (FY), mainly due to an increase in import bills for fuel oil.

“The overall import payments increased significantly because of higher imports of petroleum products during the period under review,” a senior official of the Bangladesh Bank (BB) said, adding that the petroleum products import may increase further in the coming months to meet the increasing demand for it for irrigation and oil-based power plants.

Letters of credit (LCs) against imports worth US$ 14.95 billion were settled during July-November of FY ’12 compared to those valued at $12.16 billion in the corresponding period last fiscal, according to the central bank statistics.

The import of fuel oils increased by 92.44 per cent to $2.20 billion in the first five months of FY ’12 from $1.15 billion in the same period of the FY ’11, the central bank said.

Imports of intermediate goods like coal, scrap vessels, hard coke and clinker have increased by 68.99 per cent to $1.29 billion during the period from $765.55 million in the corresponding period in the previous fiscal.

The BB official also said higher import of scrap vessels has also contributed to raising the import of intermediate goods sharply.

The import of scrap vessels rose to $511.09 million during the period from $118.19 million in the corresponding period of the previous fiscal.

“The imports of other essential items including industrial raw materials and capital machinery also increased significantly during the period to meet the domestic demand,” the central banker added.

He also said fresh opening of import LCs for capital machinery decreased to a marked extent during the period under review as placement of import orders for different types of capital machinery, including rental power plants, declined recently.

The import orders for capital machinery declined by nearly 38 per cent to $870.44 million during the period from $1.40 billion in the corresponding period of the pervious fiscal.

However, actual import of capital machinery — industrial equipment used for production — rose by 32.79 per cent to $ 1.03 billion during the period against $778.20 million in the corresponding period of FY ’11. This reflected the arrival of imported capital machinery against orders placed earlier.

Food grain imports fell during the period under review. The country has built enough stocks for the main staple rice after a bumper Boro crop yield in May this year, another central banker said, adding that such a declining trend about import of food grain may continue in the coming months.

Import of food grain such as rice witnessed a negative growth of 28.05 per cent to $476.87 million in the first five months in the FY ’12 over the same period last fiscal.

Industrial raw material imports increased by 19.56 per cent to $ 5.58 billion during the period under review from $4.672 billion of the corresponding period in the pervious fiscal.

During the period, the import of machinery for miscellaneous industries witnessed an 18.85 per cent growth to $1.25 billion compared to that of $1.05 billion in the same period the previous fiscal.

The BB official expects the pressure on import payments to ease in the coming months as import orders have already recorded a negative growth.

“The declining trend in import orders has continued in the month of January largely because of lower imports of food grains,” the central bank official said.

A senior official of a leading private commercial bank (PCB) said short supply of the greenback has also contributed to lower import orders during the period under review.

“We’re now opening LCs against imports on a selective basis because of lower inflow of the US dollar to the market,” the private banker said, adding that the declining trend of import orders may continue in the near future.

BBN/SSR/AD-06Jan12-8:19 am (BST)