The financial account deficit surged to $581 million in the first five months (July–November) of FY2024–25, an increase from a $206 million deficit recorded in the July–October period, primarily due to higher loan repayments coupled with poor loan inflows.
Initially, the Bangladesh Bank had reported a $1,187 million financial account surplus for the July–October period, but revised the figure to a $206 million deficit, due to misrepresented offshore banking data by a shariah bank, BB officials said.
Experts warn that a substantial deficit in the financial account can lead to currency depreciation, rising borrowing costs, foreign debt accumulation, inflation, and potential risks to economic growth.
In the same period of FY2023–24, the financial account deficit was $811 million.
For FY2022–23, the deficit reached $2.14 billion, in stark contrast to the $15.45 billion surplus recorded in FY2021–22.
Bankers attribute the deficit to higher repayments on existing foreign loans compared to the inflow of new loans.
During July–November of FY25, the government secured $1,348 million in net foreign loans, down from $1,869 million in the same period of FY24.
At the same time, loan repayments rose to $1,079 million, up from $823 million a year earlier.
The financial account, a key component of the balance of payments, tracks a country’s financial transactions with the rest of the world, including investments, loans, and changes in financial reserves.
A decline in foreign direct investments (FDIs), net foreign loans, and grants further exacerbated the financial account deficit.
Net FDI inflows fell to $177 million in July–November of FY25, compared to $614 million in the same period of FY24.
Similarly, net aid flows dropped to $269 million, down from $1,046 million a year earlier.
However, the trade balance showed improvement, with the trade deficit narrowing to $7.88 billion in July–November of FY25, compared to $9.85 billion in the same period of the previous year, driven by reduced imports.
Import payments declined by 1.2 per cent to $26.01 billion during this period, compared to $26.32 billion in FY24.
At the same time, export earnings rose by 10.1 per cent to $18.12 billion, up from $16.46 billion in FY24.
Despite progress in addressing the current account deficit, which improved significantly to $226 million deficit in July–November of FY25 from $3.93 billion deficit in FY24, challenges remain.
The deficit in trade services widened to $1,972 million in July–November of FY25, up from $1,424 million in the corresponding period of FY24.
The country’s foreign exchange reserves, calculated under IMF guidelines, stood at $19.93 billion as of January 23, while the interbank dollar rate climbed to Tk 122 per dollar.