Rising fuel import widens trade gap

Despite a fall in import, trade imbalance crossed $5 billion in the first seven months of the current fiscal year due to a rise in import of petroleum and fertiliser.
In July-January of fiscal 2011-2012, trade imbalance was $5.03 billion, up from $4.27 billion in the same period last year.
A Bangladesh Bank official said a fall in import could not help much in narrowing the trade gap amid a sharp decline in export growth.
In the first seven months this year, import grew by 15.51 percent against 41.79 percent in the same period last year.
However, during the period this year, exports rose by 14.71, while the growth was around 42 percent last year.
In the seven-month period this year, the export growth is one percentage point less than import growth.
Import of food, raw materials and capital machinery went down, but that of petroleum and fertiliser marked a sharp rise.
According to letter of credit settlement statistics, petroleum import shot up by 49 percent in the first seven months of the current fiscal year. Such growth was 35 percent during the same period last year.
LC opening for petroleum import soared by 93 percent in the first seven months this year, while LC opening for petroleum products fell by 7 percent during the same period last year.
The rising import payments were primarily caused by higher demand for imported petroleum to meet the requirement of fuel-based rental power plants.
The Centre for Policy Dialogue (CPD) in its half-yearly report on the current economy said, “Almost one third of the incremental import payments during the first seven months of the fiscal year was attributed to imports of petroleum products.”
Deficit in the balance of payment also widened this time due to a spread in the trade imbalance.
In the seven months, deficit in the overall balance was $813 million, which was $711 million during the same period last year.
The BB official said they have taken various steps in the recent times to ease import pressure. Such measures include encouraging banks not to open LCs for luxury goods.
A positive impact of these measures has also been felt in the foreign currency market.
The taka had been losing against the US dollar almost every day until mid-February this year, and hit around Tk 84.
But from the beginning of March, the dollar has been sold in the range of Tk 81 to Tk 82.