Balance of Payments deficit crosses $2 billion mark

Bangladesh's balance of payment (BoP) deficit has crossed the $2 billion mark, the biggest in the country’s history.

But experts shrug off the figure saying it was still manageable. "This should not worry us much," said top BIDS economist Dr. Zaid Bakht, citing high reserves.

"Now that our foreign exchange reserves have crossed $25 billion, we can easily meet the cost of imports," Dr. Bakht said.

High remittances keep the reserves in good health, but a widening trade deficit thanks to plummeting exports value has tilted the BoP heavily against Bangladesh.

Even bigger volume of exports is fetching less money because of weaker euro and Russian ruble, the currencies of key destination countries for Bangladesh’s products.

Bakht also saw a silver lining in higher imports – another cause of current trade gap – as it would mean rising investments.
 

Bangladesh Bank released statistics on trade and payments for July 2014 to May 2015 on Wednesday.

In FY 2013-14, it stood at $1.36 billion.
 
A deficit would normally make it necessary for the country to go for loans to fill the gap.
 
Analysis of data provided by the central for the past 15 years reveals that the country has had a BOP surplus in 12 years and suffered a deficit only in 3 years.
 
Bakht said that imports of capital goods and machineries have driven up the Bangladesh's import bill sharply.
 
"But that is a positive for the economy as that means more investments. Since energy prices are low, a high import bill means investments are coming after return of political stability," said Bakht, a research director of Bangladesh Institute of Development Studies.