Bangladesh's financial account deficit widens further in Jul-Mar FY23

15 May '23

2 min read

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Bangladesh's financial account saw a deficit of $2.21 billion between July and March of this fiscal, indicating continuation of the ongoing instability in the foreign exchange market.
It saw a a surplus of $11.92 billion a year ago.
Due to a 12.33 per cent fall in imports, the trade deficit fell by 41.6 per cent year on year to $14.61 billion in the period.

Bangladesh's financial account deficit widened further in the first nine months of this fiscal (FY23), which ends on June 30. This indicates that the ongoing instability in the foreign exchange market will continue in the next few months.

The financial account saw a deficit of $2.21 billion between July and March of FY23 in contrast to a surplus of $11.92 billion a year ago, data from the Bangladesh Bank showed. The deficit was $1.97 billion in the July-February period.

The country’s financial account has witnessed a surplus almost every year historically.

Due to a 12.33 per cent fall in imports, the trade deficit declined by 41.6 per cent year on year to $14.61 billion in the July-March period, media reports in the country said.

The current account deficit stood at $4.64 billion between July and March, down by 75 per cent year on year.

Though the deficits in both trade and the current account narrowed substantially between last July and March this year, the foreign exchange reserves will continue to face stress in the coming days due to the large deficit in the financial account, a Bangladesh newspaper report cited economists as saying.

The central bank’s move curbing imports to some extent has not been sufficient to stop the erosion of the reserve level.

Remittances, the cheapest source of US dollars for Bangladesh, heavily fell in April—by 16.27 per cent year on year to $1.68 billion—compounding further pressure on the foreign exchange regime.

ALCHEMPro News Desk (DS)

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