Dhaka, Bangladesh (BBN)– Bangladesh’s overall trade deficit widened by over 14 percent in the first month of the current fiscal due mainly to higher imports of essential items including food grains.

“The overall trade deficit may widen further in the coming months due to a rising trend in import of essential items including fuel oils and capital machinery to meet the growing demand for the products in the local market,” a senior official of the Bangladesh Bank (BB), the country’s central bank said on Wednesday.

The overall trade deficit rose to US$129 million in July 2010 from $113 million in the corresponding period of the previous fiscal, according to the central bank statistics.

The BB official also said higher prices of most of the essential items including food grains in the global market have made the trade deficit wider in July, the first month of the fiscal year 2010-11 (FY11).

The country’s overall imports grew by nearly 39 per cent in the first two months of the current fiscal, thanks to a jump by over 392 per cent increase in import of food grains.

Letters of credit (L/Cs) against imports worth $ 4.504 billion were settled during July-August period of FY11 compared with $ 3.248 billion of the corresponding period of the last fiscal.

“However, due to larger current transfers of $ 902 million, current account balance recorded a surplus of $ 500 million in July, 2010 against the surplus of $ 532 million in July, 2009,” the central bank said in its Major Economic Indicators: Monthly Update for September, 2010.

The overall balance showed a surplus of $ 78 million in July, 2010 against the surplus of $ 486 million in the same period of the previous fiscal, the Update added.

BBN/SSR/SI-07Oct10-1:04 am (BST)