Bangladesh Bank (BB) estimates that the country’s external trade deficit in the immediate-past financial year will stand at $6.9 billion.
The deficit was $7.01 billion in FY 13 and $9.32 billion in FY 12.
The central bank says the lower trade deficit in 2013-14 fiscal was a result of relatively lower growth in import compared to export.
Export Promotion Bureau (EPB) statistics show that income from merchandise export in FY 14 stood at $30.17 billion, posting an 11.65 percent rise from the previous fiscal. On the other hand, the central bank data suggest 10 percent growth in import, the Daily Sun.
The central bank has projected a wider external trade, with assumptions of growth in both exports and import. Bangladesh Bank is also planning to intervene to consolidate the external-sector stability.
The central bank, in its monetary policy stance (MPS) announced on July 26 last for H1 (July-December) of FY15, said there will be a pick-up in imports as investor confidence grows amid signs of improved political stability after the January 5 polls and robust export growth as global trade volumes are projected to rise.
The BB also projects a slightly positive remittance growth partly due to the ‘low base effect’ arising from negative remittances in FY14. Growth in remittances inflow was minus 1.6 percent in FY 14 compared to FY 13.
According to BB projections for FY15, overall growth in exports will be 12 percent, import growth 15 percent and remittance growth will stand at 4 percent. It also forecasts that the historical pattern in the capital and financial account suggests that the overall balance will be in a surplus status.
“The MPS for H1FY15 aims to further consolidate the country’s external sector stability,” reads the MPS.
Over the next few months, the MPS stated that BB will continue to work closely with Ministry of Finance to review the Foreign Exchange Regulations Act in light of the fact that Bangladesh will be increasingly integrated with global financial and product markets.
BB will also continue to support a market-based exchange rate while seeking to avoid excessive foreign exchange rate volatility.
The central bank said the country’s foreign exchange reserves reached at $ 21.5 billion at the end of last FY from $ 15.3 billion at the end of FY13.
The central bank said it has continued its endeavors to protect Bangladesh’s external competitiveness by interventions in the domestic foreign exchange market with a net purchase of foreign currencies amounting to $3.15 billion during the 2013-14 fiscal.
The central bank says the current account balance (CAB) recorded a surplus of $ 1543 million during July-May period of FY14 compared to a surplus of $2346 million during the same period of the previous fiscal.
The outcomes of the monetary program and policies pursued in H1 FY15 will be reviewed in December 2014 in light of prevailing global and domestic economic conditions.
In the meantime, the central bank says the Monetary Policy Committee will sit periodically to make necessary policy adjustments.