Express (August 21, 2011)
The country's overall balance of payments (BoP) entered the negative territory after a decade because of a widening trade gap, lower growth of remittances and a deficit balance in the financial account, officials said.
"The BoP showed a deficit of $635 million in fiscal year (FY) 2010-11 or FY11 against the surplus of $2.87 billion of the previous fiscal mainly due to deficit of $1.58 billion in financial account," a senior official of the Bangladesh Bank (BB) told the FE Saturday.
He also said the deficit in BoP started in November last and continued until June 2011.
In FY01, the country's overall BoP registered a deficit of $281 million.
"The pressure on external sector may continue in the near future following widening trade gap and lower inflow of remittances," Director General of the Bangladesh Institute of Development Studies (BIDS) Mustafa K Mujeri told the FE Saturday.
Mr. Mujeri, former chief economist of the central bank, also said the country's current account balance will improved if the flow of inward remittance and export earnings increase this fiscal.
The current account balance also decreased by over 73 per cent to $995 million in FY11 from $3.724 billion of the previous fiscal, according to the central bank statistics.
The country's overall trade deficit widened more than 42 per cent to $7.328 billion in FY11 as the import bill rose sharply due to price-hike of commodities in the global market.
In FY11, export earnings stood at $23.008 billion against the import payments of $30.336 billion, the BB data has showed. Trade deficit was $5.155 billion in the previous fiscal 2009-10.
The current account balance takes import payments and export receipts into consideration.
The central bank, however, projected that the country's existing negative overall balance of payments situation would continue in FY 12 while current account balance might enter into a negative territory.
The overall balance of payments may come to a negative level of US$439 million by the end of FY12 from a negative level of $38 million in FY11 as was projected earlier by the central bank.
The BB also projected the country's current account balance at a deficit of $884 million in FY 12 from the projected level of $564 million in the last fiscal, according to the BB's latest monetary policy statement, released on July 27 last.
"The BoP position could deteriorate in the coming months if import payment continues to grow at the current pace," the BB senior official said, adding that the overall deficit means higher capital outflow than inflow in the financial and capital accounts in the BoP.
Net foreign direct investment (FDI) in the country came down to $768 million in FY11 from $913 million in the previous fiscal.
The flow of portfolio investment has also recorded a deficit of $28 million from deficit of $117 million.
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