Bangladesh’s balance of payments surplus exceeds $4 billion in July-October

Bangladesh’s balance of payments surplus has continued to rise amid the coronavirus pandemic, exceeding $4 billion in the July-October period.

In the same period last year, the key economic index was in $1.52 billion deficit which stood at around $5 billion in the end of the last fiscal year.

The surplus was $3.57 billion in the first three months of the 2020-21 fiscal year, according to data published by Bangladesh Bank on Wednesday.

Growing remittance inflow and exports, and a drop in imports and fuel oil prices in the international market have caused the balance of payments surplus, analysts say.

The huge surplus has brought some relief to the government amid the pandemic crisis, but analysts doubt how long the surplus will last.

Bangladesh’s economy may slip back into a deficit in balance of payments if the surge in COVID-19 infections and deaths continue in the US, Europe and other parts of the world, said Ahsan H Mansur.

The executive director at Policy Research Institute said remittance inflow and export may drop while import costs may increase, and these factors will cause a balance of payments deficit again.

He urged caution in fixing economic policies.

AB Mirza Azizul Islam, who advised the 2007-08 caretaker administration on finance, also said the government should make decisions upon careful appreciation of the situation on the ground instead of making self-congratulatory moves.

“No-one knows when the crisis will be over,” he said.

After closing the 2019-20 fiscal year with around $18 billion in trade deficit, import costs exceeded export earnings by $3.23 billion in the July-October against $5.72 billion in the same period last year.

Remittance inflow in the period grew 42.16 percent year on year to $8.96 billion in the period.

Mid-term and long-term foreign loan assistance for Bangladesh increased by 83 percent year on year to $1.65 billion in the first four months of the 2020-21 fiscal year.

Foreign direct investment, however, has dropped 30.77 percent to $720 million in this period as the pandemic continues to ravage the global economy.