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The country's overall trade deficit widened further in the first eight months of the current fiscal year (FY) 2017-18 mainly due to higher import payments against lower export receipts, officials said.
The deficit rose by nearly 93 per cent or $ 5.64 billion to $ 11.73 billion in the July-February period of FY 18 from $ 6.09 billion during the same period of the previous fiscal, according to the latest central bank's statistics released on Sunday.
"Higher import payment obligations, particularly for rise in fuel oils and industrial raw materials, pushed up the overall trade deficit significantly during the period under review," a senior official of the Bangladesh Bank (BB) told the FE while explaining the main reason behind widening the trade deficit.
The overall import jumped by 26.22 per cent to $ 35.82 billion in the period under review of FY 18 from $ 28.38 billion during the same period of the previous fiscal, the BB data showed.
On the other hand, the country's export earnings grew by 8.06 per cent to $ 24.09 billion in the first eight months of FY 18 against $ 22.29 billion in the same period of the previous fiscal.
The central banker has expressed the fear that the overall trade deficit may widen further in the coming months if the falling trend in export earnings continues.
Alone in March 2018, export receipts stood at $ 3.05 billion, down by 1.38 per cent over the same month last year. The monthly target was, however, missed by 3.15 per cent.
The monthly export target was $ 3.15 billion for the month of March last.
The overall export earnings, however, grew by 6.33 per cent to $ 27.45 billion in the July-March period of the FY 18 from $ 25.82 billion in the same period of the FY 17, according to the state-run Export Promotion Bureau (EPB) statistics.
The BB data also showed that the deficit in service trade also increased to $ 2.96 billion in the first eight months of FY 18 which was $ 2.12 billion in the same period of the previous fiscal. Trade in services includes tourism, financial service and insurance.
"The overall import growth increased rapidly following higher imports of capital goods particularly for implementation of various infrastructure projects," Mustafa K Mujeri, former director general of Bangladesh Institute of Development Studies (BIDS), told the FE.
He also said the upward trend in imports may continue in the coming months ahead of the holy month of Ramadan. "The implementation of Rooppur Nuclear Power Plant (RNPP) project has also pushed up the overall import payments."
Mr Mujeri, also former chief economist of the BB, recommended better monitoring of LC (letters of credit) opening to help curb less productive imports.
"The authorities concerned should take effective measures immediately for reducing the possible pressure on the country's balance of payments (BoP)," the senior economist noted.
Meanwhile, the higher trade deficit pushed further up the current-account deficit during the period under review despite an uptrend in inward remittances.
Bangladesh's current-account deficit reached $ 6.32 billion during the July-February period of FY 18 against $ 963 million in the same period of the last fiscal year. It was $ 5.35 billion a month ago.
The inflow of remittance, however, increased by nearly 16 per cent to $ 9.25 billion in the first eight months of FY 18 from $ 8.0 billion in the same period of FY 17.
Meanwhile, the financial account recorded a surplus of $ 5.74 billion during the July-February period of FY 18 which was $ 2.96 billion in the same period of FY 17.
Higher inflow of medium- and long-term loans helped maintain a robust surplus in the financial account, according to the BB officials.
However, the gross inflow of foreign direct investment (FDI) increased by only 4.55 per cent to $ 2.27 billion during the July-February period of FY 18 from $ 2.18 billion in the same period of FY 17, the official data showed.
On the other hand, net FDI inflow rose by 0.80 per cent to $ 1.26 billion from $ 1.25 billion.
Bangladesh's overall balance of payments (BoP) slid to a deficit of $ 978 million during the period under review, which was surplus of $ 2.45 billion in the same period of FY 17.
The BoP deficit was $ 1.03 billion a month ago.
"The deficit may go up further after payments to the Asian Clearing Union (ACU) for two months covering the March-April period," the central banker hinted.
The BoP deficit was $ 354 million in the July-December period of FY 18. It was $ 360 million in the first quarter (Q1) of the current fiscal.