Despite tightening imports, Bangladesh faces a deficit of $8.22 billion in foreign transaction

Despite tightening imports in the fiscal year 2022-23, Bangladesh faced an overall foreign transaction deficit of $8.22 billion, which was $6.65 billion in FY22, said a latest report of Bangladesh Bank (BB).

The Bangladesh Bank‍‍`s balance of payment of foreign currency transactions revealed the information on Thursday.

The report said that in the recent past FY23(July-June) Bangladesh imported goods worth $69.49 billion. During this period $52.34 billion worth of products were exported.

Due to this, Bangladesh has a trade deficit of $17.15. In FY23, imports decreased by 15.76 percent, while exports increased by 6.28 percent.

The concerned BB officials said that imports are more than exports, the prices of all kinds of products including energy on the rise in the world market. The remittances and exports are not as expected, foreign investment is decreasing, in this effect, Bangladesh is falling into a trade deficit in external trade.

The trade deficit of FY23 created a large gap in the overall trade balance. This deficit is over $8.22 billion.

An increase in the deficit in the overall current account means the amount of foreign exchange coming into the country from various sources is greater than what is being paid out. In this, the central bank has to sell dollars from foreign exchange reserves.

Bangladesh Bank sold $13.5 billion in FY23. The BB also sold $7.62 billion in the previous FY22. Thus, the foreign exchange reserves are continuously decreasing due to the sale of dollars. The reserves stood at $30.84 billion as of June 25.

The foreign direct investment (FDI) decreased by 2.87 percent to $4.50 billion in FY23 that was $4.63 billion in the FY22.

Bangladesh received remittances of $21.61 billion in the FY23 that was $21.03 billion in the FY22.

The country faced the foreign exchange deficit due to higher import than export, slowdown of remittances and FDI flow, said BB officials.