Bangladesh sees its current account turn deficit again during July-January primarily as a spike in payments on account of transportation in services tips the balance.
The current-account deficit amounted to more than half a billion dollars -- $552 million -- during the past seven months in a downturn from a surplus purse in the July-December period of the last fiscal year worth US$56 million
The services net outflow was recorded $2.641 billion during the period under review. It was just over $2.0 billion during the same period a year before and $2.169 billion during July-December of this fiscal year.
The financial-account surplus has shrunk relative to the first half of the year, reflecting increased net short-term-credit outflows.
During the July-December or H1 of the fiscal year, financial-account surplus was $1.187 billion. During the July-January period, the surplus dropped to $850 million.
The deficit in overall balance has spiked relative to the first half, although still significantly lower than in July-January FY24.
During July-December of this fiscal year, the overall balance of payments (BoP) was recorded $412-million deficit. It spiked to $1.17 billion deficit during the past seven months ending January.
However, during the July-December period of last fiscal year (2023-24) it was substantially deficit at $4.687 billion.
Economists say the country's current account is back into deficit primarily because of a spike in payments on account of transportation in the services account.
They feel the BoP accounting has improved, as reflected in a decrease in errors and omissions relative to the first half.
"The data overall show the fragility of our external balances," says Dr Zahid Hussain, an independent economist.
He says: "One can't help but wonder what would be the state of external balance if import payments were not as subdued as they currently are. It is a clear warning against complacency in policy making."
Another economist, Dr M. Masrur Reaz, Chairman and CEO of Policy Exchange Bangladesh, told the FE that the "errors and omissions" in the balance of payments are a matter of transparency and still account for a significant volume of $1.7 billion.
He emphasises proper monitoring and the tracking of data to minimize such discrepancies.
Meanwhile, the trade deficit widened to $11.747 billion during the period, up from $9.766 billion in the July-December period of this fiscal year.
This fast increase is attributed to a 3.3-percent rise in imports to $38.114 billion during the July-January period.
Exports (f.o.b.), however, increased 10 per cent to $26.367 billion during the same period.
The capital account grew by 43 per cent to $232 million in the July-January period of this fiscal year.
jasimharoon@yahoo.com
© 2025 - All Rights with The Financial Express
