Current account deficit hits fresh record at $6.32b

Trade deficit soars by 92pc in 8 months

Staff Correspondent | Published: 00:06, Apr 16,2018 | Updated: 00:20, Apr 16,2018

 
 

A file photo shows a container is being loaded in a ship at Chittagong Port. Deficit in the country’s current account increased to $6.32 billion in the first eight months of the current fiscal year 2017-2018 setting a fresh record due to sharp increase in import payments against moderate growths in export earnings and remittance inflow. — New Age photo

Deficit in the country’s current account increased to $6.32 billion in the first eight months of the current fiscal year 2017-2018 setting a fresh record due to sharp increase in import payments against moderate growths in export earnings and remittance inflow.
On the other hand, the country’s trade deficit also hit all time high of $ 11.732 billion in July-February of FY 18, rising by 92.67 per cent from $ 6.089 billion in the same period in the fiscal year 2016-17.
The current account deficit in July-February of the last fiscal year 2016-2017was $963 million while the previous highest deficit was recorded in FY2010-2011 with $1.68 billion.
The annual current account balance — the gap between export receipts and net earnings, including remittances, and import payments and profit repatriation by multinational companies and local people — turned negative in FY16-17 with $1.48 billion after registering its all-time high surplus at $4.26 billion in the previous fiscal year of 2015-16.
Current account deficit was $ 5.347 billion in July-January of the year 2017-2018.
Bangladesh Bank in the monetary policy for the second half of the fiscal 2017-18 planned to limit current account deficit within $ 4.7 billion.
Centre for Policy Dialogue distinguished fellow Mustafizur Rahman on Sunday told New Age that the current account deficit jumped sharply as the growth of import payments was much higher considering the growth of export earnings and remittance inflow.
Although the situation is yet not alarming, National Board of Revenue and other government agencies should be cautious to check any possible over invoicing or any other mismatch in import payments, Mustafizur said.
Besides, government should take adequate measures to accelerate export and remittance growth, he said.
Although the remittance has started to increased, the amount remained below the figure of 2016, he said.
He suggested for close observation over the current account deficit as it might impact over the foreign currency reserve as well.
‘Government should take prudent external sector management so that challenges could be overcome,’ said Mustafiz.
The country’s import payments grew 26.22 per cent or $7.44 billion in the first eight months of the fiscal year 2017-2018 against that of the same period in the previous fiscal year.
Total import (freight on board) during the July-February of fiscal year 2018 increased to $35.82 billion while the figure was $28.379 billion in July-February in the previous fiscal year.
Total export earning, on the other hand, rose by only 8.06 per cent to $24.08 billion in July-February of FY18 from $22.29 billion during the same period of FY17.
Because of the huge gap in import and export payment after trade deficit hit all time high $ 11.732 billion in the July-February period whereas the previous record was $9.93 billion in FY2010-2011.
Because of high deficit in current account and trade balance, the local currency taka has become weak against the US dollar in recent times.

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