Higher import payment pushed up credit growth, particularly in the private sector in February, bankers said.
The country's overall imports jumped by nearly 30 per cent or US$ 926.37 million in February last, driven mostly by increased purchase of rice, capital machinery, and oil.
The settlement of letters of credit (LCs), generally known as actual import, in terms of value, rose to $ 4.02 billion in February 2018 from $ 3.09 billion in the year-earlier period, according to the central bank's latest statistics.
However, actual import in February was less than that of the previous month.
The actual import was $ 4.98 billion in January 2018.
On the other hand, the opening of fresh LCs, generally known as import orders, climbed by over 25 per cent or $ 851.30 million to $ 4.24 billion in February as against $3.39 billion in the year-earlier period. Fresh LCs were worth $ 5.33 billion in January 2018.
"The overall imports increased significantly in February due to higher import of fuel oil, rice and capital machinery to meet the growing demands for the essentials on the local market," a senior official of the Bangladesh Bank (BB) told the FE.
He also said that the upward trend in imports may continue ahead of the holy Ramadan.
Meanwhile, the import of capital machinery or industrial equipment used for production rose to $ 295.95 million in February 2018, compared with $ 204.67 million in the same month of 2017.
The import of capital machinery may increase in the coming months following implementation of various infrastructure projects including the Padma Bridge, the central banker said.
Rice import rose sharply to $ 171.40 million in February 2018 from only $ 8.63 million a year before, while wheat purchase stood at $ 57.95 million, the central bank data showed.
Besides, higher import of petroleum products has also pushed up the country's overall import payment expenditure, according to the central bank official.
The import of petroleum products increased to $ 284.45 million in February 2018 from $ 180.24 million in the same month of 2017.
"The upward trend in the oil import may continue in the near future also to meet the additional demand for irrigation purposes across the country," another central bank official noted.
Back-to-back import for ready-made garment accessories also rose to $ 635.74 million in February 2018 from $ 506.06 million in January 2017.
On the other hand, the credit growth to the private sector advanced by 18.49 per cent in February 2018 year-on-year from 18.36 per cent a month ago, the data showed.
Such credit growth is higher than the target, set by the central bank in its latest monetary policy. On January 29 last, the central bank had projected in its second half-yearly monetary policy statement for the fiscal year 2017-18 that the private sector credit would grow at 16.80 per cent in June 2018. It was projected at 16.3 per cent earlier.
"A good number of non-funded commitments given by the banks earlier to their clients have already converted into loans and advance on maturity," a senior executive of a leading private commercial bank told the FE while explaining the main reasons for the upward trend in private sector credit growth despite liquidity shortage.
He, however, said fresh commitments for both funded and non-funded have been decreased recently due mainly to non availability of funds both foreign currency and the Bangladesh Taka (BDT).
However, the senior banker expected that the upward trend in the private sector credit growth may continue in the coming months as the central bank has slashed cash reserve requirement (CRR) by 1.0 percentage point to 5.50 per cent.
Officials and bankers said all banks would able to use Tk 101 billion in additional funds after the implementation of the revised CRR rule from April 15.
"Higher credit growth along with populist expenditures ahead of the election may trigger inflationary pressures on the economy," Mustafa K Mujeri, former Director General of the Bangladesh Institute of Development Studies (BIDS), told the FE.
Mr. Mujeri, a former chief economist of the central bank, said that the fiscal policy for the next fiscal year 2018-19 may be "expansionary" because of the general elections.
siddique.islam@gmail.com