BoP surplus widens

The overall surplus in the balance of payments increased by 67.45 percent year-on-year to $1.97 billion in the first quarter of the current fiscal year because of low credit demand and a slight boost in the flow of foreign investment. 

Although exports slowed down, the surplus of the BoP widened as imports went down significantly.

In the first quarter, exports grew by only 0.75 percent, whereas imports declined by 8.53 percent, according to statistics from Bangladesh Bank.

A finance ministry official said public and private sector investment have not picked up yet, which prompted the fall in imports.

The sluggish spending of the fund set aside for the development projects is also to blame.

In the first three months of the current fiscal year, the implementation of the annual development programme was 11 percent of the total allocation, the lowest in three years.

In July-September, the private sector credit grew only 2.63 percent, which was 2.93 percent in the same period a year ago.

A Bangladesh Bank official said imports also decreased because of the fall in petroleum price in the international market.

Petroleum imports fell by 52 percent and raw materials imports plunged by 3.21 percent in the first quarter, according to the central bank's data on letter of credit settlement.

As a result of the decline in imports, trade deficit fell by 38 percent to $1.51 billion in the period.

The rise in the flow of foreign direct investment also contributed to the overall BoP surplus.

In the quarter, FDI flow went up by about 36 percent to $449 million.

There was a turnaround in case of errors and omissions too: it was $346 million in inflows and $108 million in outflows.

In recent times, Bangladesh Bank has beefed up its monitoring of import-export activities, which has cut the siphoning of money abroad through over- and under-invoicing, said a central bank official.

Thanks to the healthy balance of payments, foreign currency reserves have piled up.

On November 18, the reserves stood at $26.33 billion, which was $25.02 billion at the end of June.

Since the reserves are at a satisfactory level, the central bank is in a comfortable position regarding exchange rate management, the official said.

In the inter-bank foreign exchange market, the average exchange rate hovered around Tk 77 a US dollar in the last four months.

However, the dollar has gained slightly against the taka this month. On November 18, the exchange rate was Tk 78.69 against a dollar.