Bangladesh’s financial account deficit widened to $1.15 billion in July-February of the financial year of 2022-23 against a surplus of $11.9 billion in the same period of FY 2021-22, according to Bangladesh Bank data.
The country’s trade deficit, however, narrowed to $13.82 billion in July-February period of FY23 compared with that of $22.43 billion in the same period in FY22 due mainly to a fall in imports.
In July-February of FY23, the country’s current account deficit declined to $4.38 billion from deficit balance of $12.96 billion in the same period of the previous year as export earnings increased in the period.
Experts said that financial account had recently been adversely affected by sluggish foreign direct investments and net foreign loans and grants.
Foreign lenders and investors may lack confidence in the country’s economy amid the ongoing economic woes, they said.
The financial account deficit occurs when residents of a country invest in foreign countries more than what the foreigners invest in that country, or when the country borrows from foreign lenders more than what it lends to the foreign borrowers, according to the experts.
The financial account records the flow of financial assets, including foreign direct investment, portfolio investment and others, between countries.
A trade deficit occurred when a country imports goods and services more than what it exports. It is a narrower measure of a country’s trade balance and does not take into account income and transfers, they said.
A current account deficit is the broadest measure of a country’s international trade and financial flows, including not only trade in goods and services but also income and transfers between countries, they said.
A negative financial account can be a consequence of a trade deficit or a current account deficit, as the country may need to borrow money or sell assets to finance its international transactions, bankers said.
In the first eight months of FY23, the country’s import payments declined slightly by 10.27 per cent to $48.79 billion compared with that of $54.37 billion in the same period of the previous year.
Imports have declined in recent times as banks were declining opening letters of credit for importing raw materials and other products due to a severe dollar crisis on the market.
The BB and the government have taken a number of initiatives, including restricting imports of luxury and unnecessary products, to contain imports.
The trade deficit was 0.44 billion in February while it was $1.08 billion in January 2023 and $1.18 billion in December 2022.
In July-February of FY23, the country’s export earnings grew by 9.45 per cent to $34.96 billion compared with that of $31.94 billion in the same period of FY22 due to increased shipments of readymade garment products.
The country’s trade deficit reached a record high of $33.25 billion in FY22 from $23.78 billion in the previous financial year.
The country’s net FDI increased by 4.99 per cent to $1.53 billion in the first eight months of FY23 compared with that of $1.46 billion in the same period of the previous financial year.
The deficit in trade services also increased in July-February of FY23 to $2.55 billion against $2.42 billion in the same period of the previous financial year.-New Age
