Dhaka, Bangladesh (BBN) – The country’s overall trade deficit widened by over 42 per cent to $7.328 billion in the last fiscal as the import bill rose mainly due to price-hike of essential items in the global market, officials said.
The overall trade deficit rose to $7.328 billion in July-June period of the fiscal year (FY) 2010-11 from $5.155 billion of the previous fiscal year, according to the central bank statistics.
“Higher prices of most essential commodities in the global market and import of a large quantity of food grains are responsible for widening of the trade deficit in the last fiscal,” a senior official of the Bangladesh Bank (BB) told BBN in Dhaka on Wednesday.
Food grain imports stood higher at 5.309 million tonnes in FY11 compared to 3.452 million tonnes of the previous fiscal.
However, the stock of food grains with the government stood higher at 889,000 tonnes at the end of June 2011 compared to 531,000 tonnes at the end of June 2010, according to the official figures.
In term of value, the import of food grains stood at $1.993 billion in the last fiscal year as against $854.51 million in FY10, while other consumer goods rose to $1.770 billion from $1.737 billion.
The central bank official also said import of other essential items including petroleum products, industrial raw materials and capital machinery also increased significantly in the last fiscal to meet the domestic demand.
In FY11, export earnings stood at $23.008 billion against the import payments of $30.336 billion, the BB data showed.
“The widening trade gap and deceleration of the growth of inward remittance have pushed the country’s current account balance that has been declining in the recent months,” another BB official said.
The country’s current account balance decreased by 73.28 per cent to $995 million in FY11 from $3.724 billion of the same period of the previous fiscal, the BB data showed.
Remittances sent by Bangladeshis working abroad reached $11.650 billion in the last fiscal, marking a 6.03 per cent growth over the previous fiscal. It was 13.40 per cent in FY10.
The widening trade gap, lower growth of inward remittance and deficit balance in the financial account has forced to enter the country’s overall balance of payments (BoP) in the negative territory in FY 11 after a long time.
“The BoP showed a deficit of $635 million in FY 11 against the surplus of $2.865 billion of the previous fiscal due mainly to deficit of $1.584 billion in financial account,” another BB official said.
He also said the BoP position will deteriorate further in the coming months if the import payment pressures continue.
However, the flow of net foreign direct investment (FDI) came down to $768 million in FY11 from $913 million of the previous fiscal while the flow of portfolio investment has also recorded a deficit of $28 million from deficit of $117 million.
BBN/SSR/AD-17Aug11-6:15 pm (BST)
