Bangladesh in comfort zone

Bangladesh has maintained a healthy $2.57 billion current account surplus in the first 11 (July-May) months of the 2012-13 fiscal.

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This is seen as a comfortable zone for Bangladesh as it will not have to borrow for regular transactions.

In case of deficit, a government has to borrow (from banks, private sectors or abroad) and repay.

Economists say this comfortable situation is the result of a buoyant flow of remittance and reduced trade deficit.

During the same period in the 2011-12 fiscal, there was a debt burden of $530 million. The account includes regular export-import and other earnings and expenditures.

Bangladesh Bank’s balance sheet shows the trade deficit has dropped by 27 percent during the time. In the first 11 months of the last fiscal, there was around $6.33 billion deficit in trading of goods. During the same period in the 2011-12 fiscal, the deficit was over $8.64 billion.

Bangladesh Institute of Development Studies (BIDS) Research Director Zaid Bakht said this became possible due to increasing export income and decreased import expenditures.

According to the balance sheet (FOB-based), export revenue gained 10.12 percent in the first 11 months of the last fiscal compared to the figures in the previous fiscal. During this period, Bangladesh saw a nearly 12 percent increase in its main export sector: readymade garments.

The import cost come down by 0.39 percent.

However, the deficit in the service sector increased to around $2.9 billion in the first 11 months of the previous fiscal. It was up from over $2.71 billion in the same period the fiscal before.

Together, there has been a surplus of over $2.4 billion compared to over $1.2 billion in the 2011-12 fiscal.

Analyses show that an increase in foreign aid and investment made a positive impact on the economic health.

During the 11 months of the previous fiscal, Bangladesh received $1.15 billion in foreign direct investment (FDI). During the same period in the 2011-12 fiscal, the amount was over $1.11 billion.

Investment in the capital market (portfolio investment) increased to $244 million – which was $234 million in the 2011-12 fiscal.

Bangladesh received nearly $1.72 billion in medium and long-term loans, which is 37.5 percent higher than the amount of the same period the fiscal before.

Overall, the surplus amounted to $4.66 billion in the first 11 months of the previous fiscal.

During the same period in the 2011-12 fiscal, there was a deficit of over $10 million.

Source: bdnews24