Current account surplus posts $1.7 billion
Friday, 22 January 2010
Sheikh Shahariar Zaman
The country posted US$1.7 billion current account surplus in July-November period of the ongoing fiscal showing an ominous piling up of unutilised money.
The current account surplus is the difference between total domestic income and remittance and total expenditure, investment and import payment.
This is the fourth year in a row that the country has been experiencing earning over spending leaving a current account surplus, which is not a good sign, Zaidi Sattar, chairman of Policy Research Institute, told the FE.
"There is a lot of scope where a third world country like Bangladesh can spend including infrastructure and social sector but it is not happening," he explained.
Bangladesh is mired in poor infrastructure and over 40 per cent of the people live below the poverty line.
Bangladesh is a growing economy and it should spend more on infrastructure and social sector development, he said.
Investment in the country is stagnant at 24 per cent of the GDP for the last four to five years and it should be increased, Mr Zaidi said.
"Saving is 32 per cent of the GDP, which means that another 8 per cent can be spent on infrastructure, education, health and social safety nets," he said.
Private sector investment remains stagnant at 19 per cent of the GDP, whereas the public spending is about 5 per cent, he added.
The main reasons of the current account surplus are robust remittance growth and slump in import, Mr Zaidi said.
"In the last fiscal the current account surplus was 2.8 per cent of the GDP and in this fiscal it is expected to be over 3 per cent," the economist predicted.
Recurring current account surplus will put pressure on taka and in future the local currency may appreciate, he feared.
If the local currency is appreciated, Bangladeshi exporters will lose edge over their competitors.
The country has a surplus balance of payment (BoP) of $2.2 billion in the first five months of the current fiscal which was $1.2 billion in July-October period.
Bangladesh received $750 million budgetary support from Asian Development Bank in November which helped inflate the BoP figure.
In the period the country earned $6.1 billion from export and spent $8.1 billion on import.
Foreign direct investment plunged to only $259 million in July-November period, which was $502 million in the same period of the last fiscal.
The country posted US$1.7 billion current account surplus in July-November period of the ongoing fiscal showing an ominous piling up of unutilised money.
The current account surplus is the difference between total domestic income and remittance and total expenditure, investment and import payment.
This is the fourth year in a row that the country has been experiencing earning over spending leaving a current account surplus, which is not a good sign, Zaidi Sattar, chairman of Policy Research Institute, told the FE.
"There is a lot of scope where a third world country like Bangladesh can spend including infrastructure and social sector but it is not happening," he explained.
Bangladesh is mired in poor infrastructure and over 40 per cent of the people live below the poverty line.
Bangladesh is a growing economy and it should spend more on infrastructure and social sector development, he said.
Investment in the country is stagnant at 24 per cent of the GDP for the last four to five years and it should be increased, Mr Zaidi said.
"Saving is 32 per cent of the GDP, which means that another 8 per cent can be spent on infrastructure, education, health and social safety nets," he said.
Private sector investment remains stagnant at 19 per cent of the GDP, whereas the public spending is about 5 per cent, he added.
The main reasons of the current account surplus are robust remittance growth and slump in import, Mr Zaidi said.
"In the last fiscal the current account surplus was 2.8 per cent of the GDP and in this fiscal it is expected to be over 3 per cent," the economist predicted.
Recurring current account surplus will put pressure on taka and in future the local currency may appreciate, he feared.
If the local currency is appreciated, Bangladeshi exporters will lose edge over their competitors.
The country has a surplus balance of payment (BoP) of $2.2 billion in the first five months of the current fiscal which was $1.2 billion in July-October period.
Bangladesh received $750 million budgetary support from Asian Development Bank in November which helped inflate the BoP figure.
In the period the country earned $6.1 billion from export and spent $8.1 billion on import.
Foreign direct investment plunged to only $259 million in July-November period, which was $502 million in the same period of the last fiscal.