BoP to remain underpressure until Q3
Siddique Islam | Monday, 4 April 2011
Siddique Islam
Pressure on the country's overall balance of payments (BoP) has increased in recent months due to widening trade gap, lower growth of inward remittance and deficit balance in the financial account. The BoP entered the negative territory in November last after a long time and the deficit widened further in January this year, officials said Sunday. "Due to deficit of US$ 1.174 billion in financial account the overall balance showed a deficit of $711 million during July-January period of the current fiscal against the surplus of $2.138 billion in the corresponding period of the last fiscal," a senior official of the Bangladesh Bank (BB) told the FE quoting the latest figures. He also said the existing BoP position may continue up to the third quarter of current fiscal. "But the BoP may improve slightly by the end of this fiscal after the expected good harvest of Boro and wheat," the BB official added. The country's overall trade balance, on the merchandise account, recorded a deficit of $4.273 billion during July-January period as compared to that of $2.975 billion of the corresponding period of the previous fiscal. During the period under review, export earnings stood at $12.214 billion against the import payments of $16.487 billion, according to the central bank statistics. The country received $7.495 billion as remittances during the July-February period of current fiscal (2010-11), registering a 2.49 per cent growth over the corresponding period of the previous fiscal. "We hope that the flow of inward remittance will cross $1.0 billion in the month of March," another BB official said, adding that the higher inflow of remittance would help improve the current account position. The current account balance also declined by more than 79 per cent to $428 million during July-January period under review from $2.084 billion of the corresponding period of previous fiscal, the BB data showed. However, the flow of net foreign direct investment (FDI) rose to $458 million during the period against $437 million of the corresponding period of the previous fiscal, the central bank officials said. The portfolio investment witnessed a rise to $40 million in the period from a deficit of $50 million during of the corresponding period of the last fiscal. However, the central bank officials said they are not worried about the negative position of the BoP as the country has 'a satisfactory level of foreign exchange reserve'. The foreign exchange reserve stood at $10.74 billion Sunday after selling of $15 million to the commercial banks Thursday. The BB officials also admitted that pressure on foreign exchange reserve increased gradually due mainly to higher import payments, particularly for fuel oils, food grains and power plant equipment. The country's foreign exchange reserve dropped to $ 10.714 billion on March 29, a decline of $ 444.13 million over the last month. It was $11.158 billion on February 28 last. "We're monitoring the overall import situation closely," the BB official said, adding that the foreign exchange reserve would depend on flow of export, remittance and FDI and foreign loans and grants.
Pressure on the country's overall balance of payments (BoP) has increased in recent months due to widening trade gap, lower growth of inward remittance and deficit balance in the financial account. The BoP entered the negative territory in November last after a long time and the deficit widened further in January this year, officials said Sunday. "Due to deficit of US$ 1.174 billion in financial account the overall balance showed a deficit of $711 million during July-January period of the current fiscal against the surplus of $2.138 billion in the corresponding period of the last fiscal," a senior official of the Bangladesh Bank (BB) told the FE quoting the latest figures. He also said the existing BoP position may continue up to the third quarter of current fiscal. "But the BoP may improve slightly by the end of this fiscal after the expected good harvest of Boro and wheat," the BB official added. The country's overall trade balance, on the merchandise account, recorded a deficit of $4.273 billion during July-January period as compared to that of $2.975 billion of the corresponding period of the previous fiscal. During the period under review, export earnings stood at $12.214 billion against the import payments of $16.487 billion, according to the central bank statistics. The country received $7.495 billion as remittances during the July-February period of current fiscal (2010-11), registering a 2.49 per cent growth over the corresponding period of the previous fiscal. "We hope that the flow of inward remittance will cross $1.0 billion in the month of March," another BB official said, adding that the higher inflow of remittance would help improve the current account position. The current account balance also declined by more than 79 per cent to $428 million during July-January period under review from $2.084 billion of the corresponding period of previous fiscal, the BB data showed. However, the flow of net foreign direct investment (FDI) rose to $458 million during the period against $437 million of the corresponding period of the previous fiscal, the central bank officials said. The portfolio investment witnessed a rise to $40 million in the period from a deficit of $50 million during of the corresponding period of the last fiscal. However, the central bank officials said they are not worried about the negative position of the BoP as the country has 'a satisfactory level of foreign exchange reserve'. The foreign exchange reserve stood at $10.74 billion Sunday after selling of $15 million to the commercial banks Thursday. The BB officials also admitted that pressure on foreign exchange reserve increased gradually due mainly to higher import payments, particularly for fuel oils, food grains and power plant equipment. The country's foreign exchange reserve dropped to $ 10.714 billion on March 29, a decline of $ 444.13 million over the last month. It was $11.158 billion on February 28 last. "We're monitoring the overall import situation closely," the BB official said, adding that the foreign exchange reserve would depend on flow of export, remittance and FDI and foreign loans and grants.