External balance sees record surplus
The country's external balance sheet saw a record surplus of $3.5 billion at the end of the first eight months of the current fiscal year mainly due to a continuous fall in imports.
The balance was a $516 million deficit at the end of the same period (July-February) last year.
A Bangladesh Bank official said a robust remittance growth and moderate exports also helped improve the balance.
The record surplus in external balance also raised the foreign currency reserves to $14.24 billion on April 9, the amount being enough to pay the country's import bills for more than four months.
International standards suggest such reserves are sufficient when the amount equals a country's three months' import payments.
During the eight-month period this year, imports fell by 6.97 percent, on average, in contrast to a 14.53 percent rise in the same period a year ago.
Import of petroleum, a major item in the basket, fell by about 6 percent during the period.
Import letters of credit for petroleum decreased by about 19 percent, according to BB statistics.
Petroleum stock is much higher now due to a carryover stock from last year's import, which is the main reason behind the fall in its import, the BB official said.
Oil prices also marked a decline on the global market, which pulled down the country's import bills for petroleum, the official said.
As a result, the government's allocation for petroleum subsidy in the current fiscal year may come down by a half, he added.
A downturn in the European and US economies and political unrest at home are also causing the decrease in imports, the central bank official said.
A major part of Bangladesh's imports is capital machinery and industrial raw materials for export oriented industries.
As export growth is not so high, imports of these two categories have declined.
The World Bank's latest update on Bangladesh also said the contraction of import was due to lower oil prices and moderate growth in exports.
Capital machinery import fell by 18.46 percent and that of industrial raw materials by 6.84 percent in the first eight months of the current fiscal year, according to the BB.
Food import also went down by 42 percent during the period due to a bumper production.
However, exports rose by about 10 percent in July-February, improving trade deficit substantially; the amount came down to $4.7 billion during the period, from $6.38 billion in the same period a year ago.
Remittances also grew by 17 percent, which took the current account balance to a record $1.36 billion surplus though the amount was a $660 million deficit at the end of the same period last year.
The BB official said they are finding it very difficult to maintain a stable exchange rate due to the huge surplus in the external balance sheet.
The local currency is getting stronger every day against the dollar, which may hurt exporters and expatriates.
They have been buying dollars from the market to protect the interest of the exporters and expatriates, the BB official said.
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