Bangladesh ends FY 2015-16 with $3.7 billion Balance of Payment surplus

Bangladesh has ended the 2015-16 financial year with a massive surplus in its balance of payments (BOP).

According to Bangladesh Bank data released on Thursday, the BOP surplus grew to $3.7 billion at the end of June, the last month of FY 2015-16.

This is the highest in the past six years. The 2009-10 fiscal had also ended with a $3.7 billion surplus.

Finance Minister Abul Maal Abdul Muhith thinks the latest $3.7 billion surplus was a result of a drop in international oil prices and cuts in food imports.

He said despite a trade deficit and a primary income shortfall, a significant surplus in secondary income was helping to maintain a current account surplus.

 

Also, a surplus in the capital and financial accounts was keeping the overall BOP favourable and had increased the foreign currency reserve to over $30 billion, Muhith said.

# Between July 2015 and June 2016, over $43.33 billion worth of letter of credits (LC) were opened for imports, which was 0.62 percent more than the amount spent during the same period last year

# Over $2.19 billion worth of LCs were opened for importing fuel oil in the last fiscal, which was 35 percent less than the figures during the same time in the previous year. In FY 2014-15, over $3.46 billion worth LCs were opened to import oil.

# During the last fiscal, over $1.08 billion worth of LCs were opened to import food products, which was 37.40 percent less than in the previous year. In FY 2014-15, the amount was over $1.73 billion.

# The opening of LCs to import capital machinery and raw industrial materials in the last fiscal increased by 10.28 percent and 4.23 percent, respectively.

# Compared to FY 2014-15, export earnings in the last fiscal rose by 9.72 percent. The total export earnings stood at $34.24 billion.

# Remittances from Bangladeshi expatriates, however, dropped by nearly 2.52 percent in the last fiscal.

Reserves at $30.43bn

On Thursday, Bangladesh Bank’s foreign exchange reserves stood at $30.43 billion.

On Jun 27, the reserves crossed the $30-billion landmark for the first time. They went down after clearance of import payments to the Asian Clearing Union (ACU).

But the reserves crossed the $30 billion mark again recently.

The current forex reserve is good enough for Bangladesh to clear import bills for the next eight months, going by an estimated monthly requirement of $3.5 billion.