The country’s current account balance dipped by 35.21 per cent to $1.54 billion in the recently concluded financial year against $2.38 billion in the FY 2012-13 due to a lower growth in remittance and higher payments for import in the period.
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 might increase ahead of the 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 maintain the trend in the FY14.
The current account balance posted $2.38 billion in the FY13 against a deficit figure of $447 million in the FY12, 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.
Bangladesh Institute of Development Studies research director Zaid Bakht earlier told New Age that the current account balance had recently declined due to rise in import and fall in the remittance inflow.
The country’s remittance inflow registered a negative growth in the FY14 for the first time in the last 14 years against the backdrop of downward trend in manpower exports during the period.
The expatriate Bangladeshis sent $14.22 billion in the FY14 against $14.46 billion in the FY13.
‘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,’ Zaid said.
The country’s import will increase significantly when the government will start 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.
The government should take immediate measures to push up the remittance earnings, Zaid said.
The BB data showed that the country’s trade deficit decreased to $6.80 billion in the FY14 from $7 billion in the FY13.
The trade deficit in the service sector, however, increased by 32.47 per cent to $4.18 billion in the FY14 from $3.16 billion in the FY13, showed the BB data.
The net foreign direct investment dropped by 10.20 per cent to $1.55 billion in the FY14 from that of $1.72 billion in the FY13.
The FDI decreased in the last financial year 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 $ 2.78 billion in the FY14 from $2.86 billion in the FY13.
The financial account includes foreign direct investment, portfolio investment, and medium- and long-term loans.
The country’s overall balance, however, increased by 6.92 per cent to $5.48 billion in the FY14 from $5.12 billion in the FY13 as the country received a good amount of medium- and long-term loans from foreign sources.
-With New Age input
