Bangladesh's current account showed surplus for the first two months of this fiscal economists believe largely for import squeeze amid dollar death, but BoP takes pressures for lower forex inflows.
During July, the very first month of the fiscal year 2023-24, the current-account surplus was recorded at US$507 million. And in July-August period it stood at $1.1 billion, according to Bangladesh Bank's latest data released Wednesday.
However, the financial woes stemming from a recurrent shortfall in the country's financial account-another key component of the balance of payments (BoP)-continue with the deficit further widening during the July-August period, according to the data.
The FAD ballooned over $2.0 billion during the period under review-a situation where external payment for imports is getting difficult while prices staying high for supply strains apart from market misconduct.
Import payments dropped over 22 per cent while shipments modestly increased 9.0 per cent over the corresponding period a year earlier. Remittance inflow, on the other side of the account,
decreased over 13 per cent during the period on a year-on-year basis.
The situation of the overall balance of payments, however, improved somewhat as its deficit narrowed to $1.7 billion during the July-August period against $2.2 billion a year before.
Capital account, which is a very paltry amount, was in surplus at $11 million during the period.
Economists contacted by the FE writer said the overall balance-of-payments deficit declined largely due to a $2.5-billion turnaround in the current account from a deficit in July-August last year to a surplus in July-August this year.
They also said the turnaround in the current account is in turn largely due to a 22.3-percent decline in imports complemented by a 9.0-percent growth in exports.
"This unfortunately is not the kind of deficit correction that will bring macroeconomic stability. The wheel of the economy cannot keep running if import compression continues like this," says noted economist Dr Zahid Hussain.
He notes that the deficit in the financial account has increased due to increased outflows on account of trade credit, reduced net disbursements of medium-and long-term loans, and an increase in unaccounted-for outflows.
"These all are matters of serious concern."
He feels that macroeconomic policy adjustments are needed to correct external deficit without choking the economy.
"This means a deficit reduction driven by increased exports and remittances complemented by a surplus in the financial account and containment of unaccounted outflows."
Dr Ahsan H. Mansur, executive director of Policy Research Institute of Bangladesh, says the good sign of the day is the current account is in surplus. But he thinks there is a concern about the widening financial-account gap.
"Financial-account deficit is a major concern."
The economist feels the need for a good management on how to manage the financial account. He also suggests discussion with the creditors on how to defer such liabilities.
Dr Mansur says import should be eased to heal domestic unease on the consumer front as the election is around the corner.
"We have to raise imports otherwise there is a risk for further inflationary pressures on the economy as the prices of essential commodities may go up following less-than-expected imports."
In the meantime, the trade imbalance also narrowed to $1.0 billion in the July-August period from $4.60-billion deficit during the same period a year earlier, on the back of parted-down imports.
jasimharoon@yahoo.com
© 2026 - All Rights with The Financial Express
