Bangladesh鈥檚 current account deficit shrank in July-February of the current financial year due mainly to a sharp increase in remittance inflow, according to Bangladesh Bank data.
The deficit dropped to $1.26 billion in the first eight months of the 2024-25 financial year compared with that of $4.07 billion in the same period of the previous financial year.
The current account is a key indicator of a country鈥檚 external financial health. It measures the gap between the money Bangladesh earns from the rest of the world and what it spends on foreign goods, services, and income payments. It includes exports and imports, income from foreign investments, and transfers like remittances.
The main reason for the improvement in the current account was a significant rise in remittances, which boosted the country鈥檚 secondary income.
In July-February of FY25, the secondary income rose to $18.8 billion compared with that of $15.36 billion in the previous year. Of the secondary income, $18.48 billion came from remittances sent by Bangladeshis working abroad.
The country continued to face a primary income deficit 鈥� payments made to foreigners for interest, dividends, and salaries. This deficit stood at $2.86 billion, as the income paid out ($3.33 billion) far exceeded the income received ($470 million).
Bangladesh鈥檚 trade deficit also declined slightly in the period.
It dropped to $13.69 billion in July鈥揊ebruary of FY25 compared with that of $14.32 billion in the same period of FY24.
This was driven by a 9.1-per cent growth in exports, which rose to $30 billion from $27.54 billion.
Imports, however, rose by 4.5 per cent to $43.73 billion compared with those of $41.87 billion, which limited the overall improvement in the trade balance.
The financial account, which tracks foreign investments and loans, however, showed a higher surplus of $1.41 billion in July鈥揊ebruary of FY25, compared with that of $654 million in the same period of FY24.
The net foreign loan inflow stood at $3.85 billion during the period, lower than the $4.99 billion received in the same period of FY24. However, repayments of the previous loans increased to $1.75 billion from $1.26 billion a year earlier.
The trade services deficit, which covers payments for things like international travel, transport, and business services, widened to $3.5 billion compared with that of $2.41 billion. This reflects a rise in foreign exchange spent on service-related imports.
As of April 6, Bangladesh鈥檚 foreign exchange reserves, measured as per the International Monetary Fund guidelines, stood at $20.46 billion.
The interbank exchange rate rose to Tk聽122 per US dollar, continuing pressure on the local currency.
