The country’s current account balance registered a deficit amount of $1.26 billion in the first four months of the current financial year 2014-15 against a surplus amount of $793 million during the same period of the FY 2013-14 due to a negative growth in trade balance, services and primary income.
The current account balance registered a surplus amount of $721 million between July and October of the FY13.
Experts and BB officials said the drop in the current account balance would put an adverse impact on the country’s macroeconomic situation in the coming months as imports would increase in the coming months since the government had recently started to construct the Padma Multipurpose Bridge.
The current account balance deals with components such as export receipts and net earnings in services, including remittances, and import payments and profit repatriation by multinationals and local people.
The country ended the FY13 with a large amount of current account balance but it failed to maintain the trend in the FY14.
The current account balance posted $1.54 billion in the FY14 against $2.38 billion in the FY13, according to the BB data.
A country needs to receive loan if its current account balance registers a deficit figure, a BB official told New Age on Monday.
For this reason, the surplus balance of the current account is considered positive for any country, he said.
‘The decline in the current account balance does not put a negative impact right now due to a good amount of the foreign exchange reserve, but it will bring unfavourable situation for the country’s macroeconomic indicators in the coming months,’ a BB official told New Age on Thursday.
The country’s import will increase significantly as the government has recently started the construction process of the Padma Multipurpose Bridge, he said.
In that case, the current account balance and foreign exchange reserve will decline and the trend will ultimately hit the price standard of local currency against the US dollar, he said.
Former interim government adviser Mirza Azizul Islam told New Age on Thursday that the current account balance had declined in the first four months of the FY15 due to rise in import payment and fall in the export earnings.
He said that the government should take immediate measures to increase the export earnings by creating new market in different countries.
The BB data, however, showed that the net foreign direct investment increased by 5.64 per cent to $468 million in the first four months of the FY15 from that of $443 million in the same period of the FY14.
In the first four months of the FY15, medium- and long-term foreign loan also increased by 34.64 per cent to $583 million from $433 million in the corresponding period of the FY14.
The financial account in the country’s balance of payments posted a surplus amount of $2.88 billion in the first four months of the FY15 from a surplus amount of $30 million during the same period of the FY14.
The financial account includes foreign direct investment, portfolio investment, and medium- and long-term loans.
The BB data, however, showed that the country’s overall balance dropped by 24.43 per cent to $1.24 billion in the first four months of the FY15 against $1.64 billion during the same period of the FY14 due to a declining trend in current account balance.
-With New Age input
