The country’s negative balance of current account eased during the first 11 months of the past fiscal year (FY21) compared to the same period of the previous fiscal year.
Bangladesh Bank statistics showed the current account deficit stood at US$1.85 billion in the July-May period of FY21 against US$4.43 billion deficit in FY20.
Despite the surge in trade deficit, robust growth of remittance contributed to keeping the current account deficit at modest level during the period under review.
The inflow of remittance, sent by the non-resident Bangladeshis abroad, stood at $22.83 billion recording a 39.50 per cent growth in the July-May period.
The annual inflow of remittance, however, reached $24.74 billion in FY21 against $18.20 billion in FY20. The 36 per cent jump in annual inflow of remittance is the highest growth in the last 30 years.
The Eighth Five Year Plan (8FYP) said: “Despite chronic trade deficits, the current account balance of Bangladesh has turned positive with the rise of remittances.”
“The chronic trade deficits resulting from the import-dependent development programs that arguably involves rising imports of machinery, capital goods, and industrial raw materials, has been regularly offset by consistently rising remittance inflows to yield current account surpluses for 13 of the last 20 years,” the document added.
The monetary policy statement for FY21 earlier projected that the annual current account deficit may stand at $4.87 billion. With the estimate for June is yet to be completed, it is now safe to presume that the annual current account deficit will not cross $3.0 billion.
The deficit of the current account in the FY20 was recorded at $4.49 billion.
“The good side of current account deficits is that it signifies excess of investment over national savings, indicating that we are finally displaying an appetite for meeting the yawning infrastructure gap that, once bridged, will yield enormous returns in terms of growth over the medium and long-term,” added the 8FYP.
