Bangladesh's financial account deficit reached $3,929 million in July-September, the first three months of the current FY24, against a surplus of $839 million in the same period of FY23.
The financial account recorded a deficit of $2.14 billion in FY23 against a surplus of $15.45 billion in FY22.
Sluggish foreign direct investments, reduced net foreign loans and grants, and a decline in foreign portfolio investments contributed to the deficit in the financial account, bankers said.
In response to this crisis, the Bangladesh Bank has tapped into the country’s foreign exchange (forex) reserves, selling approximately $25 billion over the past 27 months.
Of this, $3.8 billion was allocated to banks in July-September of FY 2023-24, $13.5 billion in FY23 and $7.62 billion in FY22.
The financial account includes capital flows like foreign direct investment, foreign loans and grants, portfolio investments and changes in reserves.
Similarly, the deficit in trade services expanded in July-September of FY24, totalling $1,223 million compared with that of $1,110 million in the corresponding period of the previous financial year.
However, there was a positive shift in the trade balance, with the trade deficit narrowing to $1.81 billion in July-September of FY24 from $7.57 billion in the same period of the previous year, due primarily to reduced imports.
Recent measures by the government and the central bank to restrict imports amid a dollar crisis have contributed to the reduction in the trade deficit.
Therefore, the country has made significant progress in addressing the current account deficit.
July and August of FY24 saw a current account surplus of $892 million, a significant improvement from the $3.67 billion deficit recorded in the same period of 2022, driven by increased export earnings.
In the first three months of FY24, the country’s import payments declined by 23.77% to $14.74 billion compared with those of $19.34 billion in the same period in the previous year.
Bangladesh’s export earnings in July-September of FY24 rose by 9.85% to $12.93 billion compared with those of $11.77 billion in the same period of FY23.
The country’s trade deficit reached a record high of $33.25 billion in FY22 from $23.78 billion in the previous financial year.