Balance of Payment remains strong in July-October
Monday, 30 Nov -0001 00:00:00

Balance of Payment remains strong in July-October

The Country’s overall balance of payments (BoP) continued to show surplus trend in the first four months of current fiscal year despite significant decline in external assistance and lower inflow of foreign direct investment.

Overall balance stood at $82 million in the first four months of 2006-07, which was $133 million in the first quarter of the same fiscal.

The surplus balance in the first four months was lower compared to the first quarter figure of the current fiscal as the current account surplus slowed down during the July-October period, showed the central bank statistics.

However, there was a shortfall of $217 million in the overall balance in the first four months of 2005-06, showed the central bank data.

The central bank statistics showed that foreign direct investment dropped to $200 million in July-October period, which was $242 million in same period of 2005.

Foreign aid has also continued to decline as net aid inflow dropped to $22.7 million in the first four months of the current fiscal, which was $190.85 million in the same period of previous fiscal year.

The economic relation division data showed that total aid disbursement during the period under review declined to $172.00 million from $334.85 million in the first four months of 2005-06.

The repayment of principal amount of foreign loans was slightly higher to $149.3 million in the period, which was $144 million in the same period of last fiscal.

Robust growth of remittance coupled with lower trade deficit provided strong backup to the current account with a surplus of $344 million in the period under review which was $300 million in the same period of 2005.

But, the current account surplus slowed down in the period from the $408 million in the first quarter of the current fiscal mainly due to higher deficit in service trade and income.

The central bank statistics also showed that trade deficit stood lower at $688 million in July-October 2006 which was $742 million in the same period of 2005.

The export earnings and import payments registered 23.3 per cent and 17.6 per cent growth respectively during the July-October period.

Bangladesh Bank, projected that export would continue to grow at current rate while import growth would be moderate.

‘The trade deficit is expected to narrow further in FY07, though the volatile cost of petroleum products remains a source of disquiet in this prediction,’ said the review.

‘While the import of capital machinery and construction material may be benefited the economy in the medium to long term by increasing productivity capacity and providing infrastructure facility, the persistently high oil prices may continue to put pressure on current account balance in FY07’.

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