Boosted by a surge in remittances, the balance of payments (BoP) surplus reached US$909 million in the first ten months of the last fiscal (2006-07), despite a fall in foreign direct investment and foreign aid. The overall balance was only $43 million surplus during the same period of FY ‘06.

The trade imbalance, however, has increased almost 16 percent to reach $2.9 billion compared with the same period of the 2005-06 fiscal as imports surpassed exports. Imports rose by 17.83 percent compared with the same period of the fiscal. Meanwhile, exports marked a decrease over the corresponding period of the 2005-06 fiscal. The export growth in the July-April period in FY ‘07 marked 18.50 per cent, which was 20.18 percent in the 2005-06 fiscal.

Despite deficits in services and income, the current account surplus rose to $415 million from $392 million during the same period of the 2005-06 fiscal for strong growth in remittance. In the ten months up to April 30, remittances rose by 26 percent compared to the same period a year earlier, to reach $4.9 billion. The surge was mainly due to the increased use of official channels by Bangladeshis abroad to send their money home.

According to Bangladesh Economic Review 2007, the government took several initiatives to increase the remittance apart from creating opportunities for employment abroad. The measures include better links of the Bangladeshi banks with foreign exchange houses and fixation of annual minimum limit of exchange houses in the UK, US and Canada to increase remittance inflow through banking channels. The private commercial banks have also taken initiatives to increase their earnings from remittance services, the sources said.

A total of 2.5 lakh Bangladeshis went abroad in 2004-05, which was 9.75 percent lower compared to the previous year. But in 2005-06, the number stood at 2.91 lakh, which was 16.4 percent higher than the previous fiscal year’s, the review said. It said in the first ten months of the 2006-07 fiscal, the number of manpower export stood at 4.21 lakh, showing a 83.14 percent rise.

Foreign direct investment fell to $425 million in the July-April period, down 24 per cent, the FDI was $561 million in the previous fiscal. However, portfolio investment increased 215 percent to $60 million, compared to $19 million during the same period a year earlier.