Written by The Banking Post
Bangladesh is preparing to remit approximately US$2.02 billion to the Asian Clearing Union (ACU) by July 8—an obligatory trade-payment settlement that is expected to drag gross foreign-exchange reserves below the US$30 billion threshold. While temporary in nature, this liquidity drain comes just weeks after reserves touched a near two-year high, buoyed by steady remittance inflows and disbursements from multilateral lenders.
ACU: A Crucial but Costly Settlement Mechanism
The ACU, headquartered in Tehran, facilitates bi-monthly payment settlements among nine participating South and Southeast Asian countries: Bangladesh, Bhutan, India, Iran, Maldives, Myanmar, Nepal, Pakistan and—until recently—Sri Lanka. The mechanism minimizes the use of hard currency and supports regional trade flows. Sri Lanka’s membership remains suspended due to its failure to meet import payment obligations during its prolonged economic crisis.
According to Bangladesh Bank data, gross reserves stood at US$31.68 billion as of June 30, with the IMF’s Balance of Payments Manual (BPM6) methodology estimating usable reserves at US$26.66 billion. The upcoming ACU payout is expected to lower the former figure to around US$29 billion. However, central bank officials underscore that the net international reserves (NIR)—currently near US$20 billion—will remain unaffected, as these already exclude future obligations like ACU settlements over a rolling 12-month horizon.
Net Reserves and Reserve Accounting Practices
Bangladesh Bank calculates net reserves by deducting short-term liabilities and upcoming payments such as ACU obligations, dollar bonds and foreign debt servicing. These adjusted reserves reflect the actual foreign currency buffer available for external shock absorption and emergency intervention.
“A net reserve position doesn’t change due to ACU payments alone,” said a senior official at Bangladesh Bank. “It changes only when dollars are sold directly from the reserve or when the government invests or disburses foreign currency for development financing or emergency support.”
Recent History and Outlook
The upcoming US$2.02 billion settlement follows a similar payment made in early May, when Bangladesh paid US$1.88 billion for imports processed during March and April. That transaction temporarily pushed BPM6-compliant reserves down to around US$20 billion. However, since then, the receipt of loan tranches from the IMF, World Bank and other development partners has boosted the forex buffer by roughly US$4 billion.
With further multilateral disbursements expected over the second half of 2025—including the sixth tranche of the IMF’s Extended Credit Facility—Bangladesh’s reserves are projected to hold steady, hovering near US$25 billion under BPM6 norms, even after the ACU deduction.
This resilience is likely to ease investor concerns around external debt repayment and bolster confidence in the central bank’s liquidity management capabilities.
What It Means for Bangladesh
Despite the headline dip in gross reserves, analysts remain cautiously optimistic. The ACU payment underscores Bangladesh’s compliance with international trade obligations, and the central bank’s ability to absorb large outflows without destabilizing the financial system. As the export sector slowly recovers and remittance inflows stabilize, maintaining a reserve position above US$25 billion will be key to sustaining macroeconomic stability in the months ahead.
