Bangladesh’s trade deficit has widened to record $33.24 billion in 2021-22 fiscal year as exports failed to match the huge import bills despite a rise.
Current account deficit also hit a record $18.69 billion, rising from $4.57 billion a year ago and putting pressure on the foreign currency reserves.
According to the latest accounts released by the central bank on Monday, Bangladesh spent $82.49 billion on imports in the last fiscal year – a nearly 36 percent year-on-year increase.
Petroleum products top the list of imported goods, followed by raw materials and capital machinery for industries.
Exports grew by 33.45 percent year on year, but still fell short against the imports at $49.24 billion.
The difference between imports and exports meant the trade deficit grew by 39.84 percent from $23.77 billion in 2020-21.
Bangladesh saw inward remittances slump by 15.12 percent to $21.03 billion year on year in 2021-22 after growing by more than 36 percent to record $24.78 billion in 2020-21.
The fall in remittances pushed the current account deficit to widen.
These factors have led to a balance of payments deficit of $5.38 billion, after starting the fiscal year with $9.27 billion surplus.
Bangladesh received more than $10 billion from foreign lenders and donors in the last fiscal year, but that could not help ease the pressure on the foreign currency reserves as the central bank resorted to releasing US dollars from the reserves to meet heightened demand driven by imports.
The government and the central bank have taken a series of steps to rein in rising import costs, such as limiting the imports of non-essential goods. It also cut fuel purchase which is causing rolling power outages.
These efforts paid off to some extent. Bangladeshi importers opened letters of credit, or LCs, in July to import goods worth $5.5 billion, down by 31 percent from June.
The central bank also started to review applications for LCs to import goods worth more than $3 million to stop over-invoicing, through which fraudulent businesses smuggle money out of the country.
It has cancelled five LCs for the import of goods worth $200 million in total.