Bangladesh’s trade deficit has shrunk by 9.24 percent to $11.92 billion during July-March period in current fiscal year over the same period in the previous fiscal. Besides, the current account deficit also decreased to $4.23 billion in the first nine months of this fiscal, 34.67 percent down from the amount in the same period in the previous year.
Various steps taken up by the government several side by side a steady growth in remittance inflow and export earnings against a slowdown of import payments narrowed the trade gap, experts said. They said the reduction of trade deficit is good news for the country. Economists said the imports have slightly declined in recent time but it is still maintaining an upward trend compare with earnings from exports, which has created huge pressure on foreign exchange reserve.
However, export earnings stood $30.43 billion in the first nine months of the current fiscal, up 12.09 percent over the same period in the previous fiscal.
On the other hand, imports increased by 5.13 percent to $42.36 billion, Bangladesh Bank data said. Meanwhile, the country’s foreign exchange reserve has been witnessing a fluctuation between $31 billion and $33 billion for several years. On 8 May 2019, the reserve was almost $31 billion.
Economists said the banking sector is passing critical situation at the time the foreign exchange market has been intervened by the central bank bypassing the structure of the open market economy. They said the central bank should not intervene the market, which will help lessen the ongoing volatility in the foreign exchange market.
However, the local currency Taka depreciated by Tk0.9 or almost 1.07 percent to Tk 84.50 on Wednesday against US dollar from Tk 83.60 on the same day a year earlier, the BB data show. Nazrul Islam, vice-president and head of treasury of Islami Bank Limited, told Bangladesh Post: “Foreign exchange market has faced a huge crisis of US dollar due to meeting higher payment of imports that include capital machinery, power plant equipment and fuel oils.”
He said the central bank is providing a very good support to stabilise the foreign exchange market. He added the government has taken several initiatives to boost export earnings and remittance flow, which will push the reserves up by reducing the trade deficit. Eminent economist and former BB governor Dr Salehuddin Ahmed said, the country’s trade gap is still not satisfactory level.
The government should reduce the trade gap by taking several measures, he said, alarming that it will put more pressure on the foreign exchange market further. He expects, “Stopping unnecessary imports, giving necessary incentives to exporters, and encouraging expatiates to send home more remittance will help boost the foreign exchange reserves.”
