The country’s current account balance dipped by 36.81 per cent to US$ 1.38 billion in July-April of the outgoing financial year against US$ 2.18 billion during the same period of the FY13 due to a lower growth in remittance and higher payments for import in the recent months. Experts and BB officials told New Age on Tuesday that the decreasing trend in the current account balance would put an adverse impact on the country’s macro-economic situation in the coming months as imports might increase ahead of construction of 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 reflect the trend this financial year.
The current account balance posted US$ 2.52 billion in the FY13 against a deficit figure of US$ 447 million in the FY12, according to BB data.
A BB official told New Age on Tuesday that any country needs to receive loan if its current account balance registers a deficit figure.
For this reasons, the surplus balance of the current account is considered positive for any country, he explained.
Bangladesh Institute of Development Studies research director Zaid Bakht told New Age that the current account balance had recently declined due to rise in import and decreasing trend in the remittances.
The BB data showed that the inflow of remittance in the first 10 months of the FY14 decreased by 4.77 per cent to US$ 11.72 billion from US$ 12.31 billion in the corresponding period of FY13.
The declining trend in the current account balance does not put a negative impact right now due to a robust amount of the foreign exchange reserve, but it will bring an unrest situation on the country’s macro-economic indicators in the coming months, Zaid cautioned.
The government will start the construction process of the Padma Multipurpose Bridge in the quickest possible time when the country’s import will increase significantly, he said.
Against the backdrop, the current account balance and foreign exchange reserve will decline and the trend will ultimately hit on the price standard of local currency against the US dollar.
The government should take immediate measures to push up the remittance earnings otherwise the worse position in the current account balance will not be able to enter into a positive zone.
The BB data showed that the country’s trade deficit decreased by US$ 27 million to US$ 5.89 billion in the first 10 months of the FY14 against US$ 5.92 billion during the same period of the FY13 due mainly to rise in exports.
The trade deficit in the service sector increased by 21.46 per cent to US$ 3.17 billion in July-April of the FY14 from US$ 2.61 billion in the corresponding period of the FY13, showed the BB data.
The net foreign direct investment dropped by 11.72 per cent to US$ 1.25 billion in the first 10 months of the FY14 from that of US$ 1.41 billion in the same period of the FY13.
The FDI decreased in the period as the foreign investors showed little interest in expanding their investment in the country due to political unrest and uncertainties.
The BB data showed that the financial account of the country’s balance of payments declined to US$ 1.87 million in the first 10 months of the FY14 from US$ 3.07 billion during the same period of the FY13.
The financial account includes foreign direct investment, portfolio investment, and medium- and long-term loans.
Due to the decreasing trend in current account and financial account, the country’s overall balance decreased by 2.86 per cent to US$ 4.30 billion in the first 10 months of the FY14 against US$ 4.42 billion during the same period of the FY13.
-With New Age input
