The country's financial account deficit hit $895 million in July, the first month of the current FY24, against a deficit of $66 million in the same month of FY23, causing concern for the Bangladesh Bank.
The financial account recorded a deficit of $2.14 billion in FY23 against a surplus of $15.45 billion in FY22.
Due to the situation, the central bank is now selling a significant amount of dollars from the country’s forex reserve to mitigate the crisis.
Over the past 26 months, the central bank sold approximately $23 billion from its reserves.
This included $2 billion allocated to banks in July and August of the current FY24, $13.5 billion in FY23 and $7.62 billion in FY22.
The flow of foreign loans might have declined due to the current economic crisis, accumulation of significant deferred payments, and downgrading of sovereign and bank ratings by Moody’s, bankers said.
The financial account records capital flows, including foreign direct investment, foreign loans and grants, portfolio investments and changes in reserves.
The deficit in trade services also increased in July of FY24 to $429 million against $283 million in the same month of the previous financial year.
However, the country’s trade deficit narrowed to $636 million in July of FY24 compared with that of $2,098 million in the same month of FY23 due mainly to a decrease in imports.
The government and the central bank have recently taken various measures to restrict imports amid a dollar crisis, which consequently has lowered the trade deficit in the country.
There has also been a notable progress in rectifying the current account deficit.
In July, the country’s current account posted a surplus of $537 million against a deficit balance of $449 million in July 2022 as export earnings increased in the period.