At the end of the first nine months of the FY 2015-16, Bangladesh has recorded a massive Balance of Payments (BoP) surplus.
According to Bangladesh Bank data released on Thursday, the BOP surplus grew to $2.93 billion during this period (July-March) of FY 2015-16.
At this time last year, it was over $2.43 billion. But the 2014-15 fiscal year had ended with a BOP deficit of $1.65 billion.
Compared to last year, export earnings in the first 10 months (July-April) of the current fiscal year rose by 9.22%.
A trade surplus is an economic measure of a positive balance of trade, where a country’s exports exceeds its imports. A trade surplus represents a net inflow of domestic currency from foreign markets, and is the opposite of a trade deficit, which would represent a net outflow.
When a nation has a trade surplus, it has control over the majority of its own currency. This causes a reduction of risk for another nation selling this currency, which causes a drop in its value. When the currency loses value, it makes it more expensive to purchase imports, causing an even a greater imbalance.
Finance Minister AMA Muhith said the $2.93 billion surplus was a result of a drop in international oil prices and cuts in food imports.
According to the report on the current fiscal’s budget implementation and progress, presented in Parliament on April 27, despite a trade deficit the primary income shortfall, a significant surplus in secondary income was helping to maintain a current account surplus.
Also, a surplus in the capital and financial accounts was keeping the overall BOP favorable and increasing the foreign currency reserve, the report said.
Source: Ittefaq