Bangladesh's trade deficit will rise to record $33b in the last fiscal year due to a huge increase in the country’s import payments, according to the Bangladesh Bank projection.
The trade deficit is expected to increase further to $36.70 billion in the current fiscal year 2022-23, beginning from Friday.
Amidst the worries, the fiscal year 2022-23 has started from Friday (July 1). Coronavirus has recently created panic again while the wounds of the Russia-Ukraine war are still there.
The floods have caused severe damage in different districts of the country including Sylhet-Sunamganj.
However, the new fiscal year started with various challenges including to curb inflation and higher import which has created pressure on the economy.
In the first 10 months of the last fiscal year 2021-22, the deficit increased by 53 percent to $27.56 billion.
The BB also projected an increase in the current account imbalance to $17.73 billion in the last fiscal year from $4.5 billion a year ago.
Bangladesh Bank Governor Fazle Kabir said the current account deficit has increased as the growth of export earnings fell below the growth of imports while remittances dipped 16 per cent year-on-year in the July-May period.
The central bank, however, expects that the current account deficit would reduce marginally to $16.54 billion in FY23.
In the new monetary policy, in the fiscal year 2021-22, the export earnings will increase by 32 percent while import cost will increase by 35 percent in the last year.
Besides, remittances will reduce by 14 percent.
According to the central bank, Bangladesh imported a variety of goods worth $68.69 billion during July-April of the 2021-22 fiscal. This figure is 41.42 percent more than the same period last year. In the same period of the fiscal year 2020-21, the import of goods was $48.55 billion.
On the other hand, the country earned $41.10 billion by exporting various products in the first 10 months of the last year, which is 34.56 percent more than the same period of the last fiscal year.
As a result, the overall trade deficit for 10 months stood at $27.60 billion.
This has resulted in a large deficit in the balance of payments to exceed all past records.
This important index of the economy has risen to $15.32 billion.
At the same time last fiscal, there was a deficit of only $1.65 billion.
Ahsan H Mansur, executive director of the Policy Research Institute (PRI), said Bangladesh had crossed the milestone due to an unusual increase in imports of goods.
He said, "Imports have been on the rise since the Corona epidemic situation returned to normal. And the gap between imports and exports or the trade deficit is increasing. The government and Bangladesh Bank have taken several steps to curb import expenditure. Even then, imports are not declining. Despite the decline in export earnings due to the Russia-Ukraine war, there are no signs of a decline in imports. Remittances sent by expatriates are also declining. All in all, the crisis in the economy is growing.”