The New Nation - Internet Edition

Staff Reporter

The overall balance of payment (BoP) of the country continues to be surplus despite shortage in current account balance for widening trade deficits and unfavorable receipts from services and other sources.

The overall BoP during the first two months (July-August) of the current fiscal year (2007-08) stood at US$130 million as against US$107 million in the corresponding period of the previous fiscal, showing a rise of 21.50 percent.

The surplus BoP was registered mainly due to sharp rise in current transfers owing to increased flow of remittance and growing inflow of foreign direct investment during the period, sources in the Bangladesh Bank (BB) said.

The country has a surplus of $170 million in the financial account, the central bank, says in its Major Economic Indicators: Monthly Update-November 2007. Although there was a robust growth of inward remittances, the current account balance showed a deficit of $68 million during the period, they added.

The current account deficit, however, is expected to come down in the near future due to higher inflow of remittances and an upward trend in the overall export performance. The overall balance of payments is likely to improve further as the country is set to receive foreign aid and foreign loans because of the recent cyclone, an official of BB said.

The overall trade deficit was estimated at $717 million in July-August period of the fiscal 2007-08 because of higher import payments. The deficit was $156 million in the corresponding period of the previous fiscal, according to the BB statistics.

"Despite larger current transfer of $1.128 billion, the current account balance recorded a deficit of $68 million during July-August, 2007 against the surplus of $389 million during July-August, 2006 due to larger deficit in trade balance, service and income," the Update adds.

The flow of net foreign direct investment (FDI) stood at $132 million in the period. That was against $137 million of the same period of the previous fiscal year. The portfolio investment was recorded in the period at $43 million against a $1.0 million deficit in the corresponding period of the previous fiscal term.