Bangladesh's trade deficit shrinks 48% in FY23
Bangladesh's trade deficit has decreased to -$17,155 million in fiscal year 2022-2023 – down from -$33,250 million in the previous fiscal year – due to the tightening of imports, according to data from the Bangladesh Bank.
The country's imports went down by 15.76% to $69.49 billion in the year ending on 30 June, while exports rose by 6.28% to $52.34 billion, helping the country reduce its trade gap.
According to the central bank data, the current account deficit of the country has decreased from $18.64 billion in the fiscal year 2021-22 to $3.33 billion in the last financial year.
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The current account deficit has improved due to the decrease in trade deficit.
However, the country's financial account surplus was $15.46 billion in the previous financial year.
The financial account deficit stood at $2.14 billion at the end of the 2022-23 fiscal year ending in June.
In other words, the financial account is not very comfortable due to various reasons including the decline in foreign direct investment over the last one year. However, the financial account deficit has come down in June compared to last May.
Central bank officials said trade balance, current account balance and financial account balance improved in June compared to last May. This trend is expected to continue in the new financial year as well.
Earlier on 12 July, the opening of import letters of credit (LCs) saw a decrease in the last month of the just-ended fiscal year, which bankers said occurred due to various restrictions imposed by the central bank and the dollar crisis.
According to the central bank data, import LCs worth $4.75 billion were opened in June, which was the lowest in June, and a 44% decrease in LC opening compared to the same month of FY22.
Import LCs worth about $5.84 billion were opened in May and LCs worth $4.85 billion were opened last April, data shows.
A total of $94.27 billion worth of LCs were opened in the fiscal year 2021-22, which dropped to $69.36 billion in the fiscal year 2022-23. That is, LC openings decreased by about $25 billion or 27% year-on-year.
Bankers said it has become difficult for traders to open LCs to import goods due to various restrictions of the central bank. Traders are discouraged from opening LCs as there is a 100% margin on imports of certain products.
However, a senior central bank official, wishing not to be named, told The Business Standard, "Money laundering through over-invoicing has been reduced due to increased vigilance in the opening of import LCs. As a result, the total LC amount also decreased."
He also pointed out that total imported goods have not decreased much in FY23 compared to FY22.
