BoP suffers a $357 mn deficit in the first quarter

Bangladesh's Balance of Payment (BoP) has declined in the first quarter of the new fiscal after enjoying a surplus over the past two and a half years.

But economists and researchers say the trend is 'temporary'.

In the July-September period, the country recorded a $357 million BoP deficit against a $666 million surplus around the same time last year.

BoP resembles a country's transactions with the rest of the world for a specified period.

A BoP surplus indicates a country need not borrow to fund its regular transactions.

Bangladesh finished the last two fiscals on a surplus that subsequently declined steadily.

It had a $2.525 billion surplus in the 2012-13 fiscal, but it came down to $1.547 billion in the last fiscal.

Bangladesh Bank data published Thursday showed the first three months of the current fiscal encountered a sudden $357 million deficit.

There was a $327 million surplus during the July-August period.

Bangladesh Institute of Development Studies (BIDS) Research Director Zaid Bakht said a sudden increase in imports and waning export income had affected the BoP.

"It's true that our current account balance has become negative after a long time. But I think it's temporary," he told bdnews24.com.

"It will return to surplus within a few months," Bakht assured.

Bangladesh suffered a BoP deficit of $447 million in 2011-12 fiscal down from $1.686 billion the year ago.

Data showed import cost increased by 13.63 percent in the July-September period.

According to the Export Promotion Bureau, export income declined by one percent in the July-October period against a 20 percent increase around the same time last year.

Centre for Policy Dialogue (CPD) Executive Director Mostafizur Rahman said there was nothing to worry about, pointing out that Bangladesh had a $22 billion reserves, enough to foot import bills and other expenses.

Bakht said both the export income and remittance had shown a relative decline in October after the Eid-ul-Azha.

He believes the situation would become stable in the coming months once the export income and remittance inflow increased.

According to him, although the BoP was at a comfortable level in the past two years, the current account surplus resulting from declining imports was not good for the economy.

"Political stability after the national polls has boosted businessmen and investors' confidence. That's why the import cost has increased, leading to the BoP deficit," he explained.