The New Nation - Internet Edition

BUSINESS REPORT

Bangladesh's trade deficit is likely to have risen by 57 per cent to around $6 billion in the 2007-08 fiscal year that ended in June, due to sharp rises in global food and fuel prices, a senior central bank official said on Sunday.

"The import bills will be at more than $20 billion compared with export earnings of nearly $14 billion, leaving about $6 billion trade deficit in 2007-08 fiscal year," said the official, who asked not to be named.

The import bill for the 2006-07 fiscal year was nearly $16 billion while export earnings were $12.18 billion, central bank data showed.

"It is a real reflection of soaring prices in international markets, especially of foodgrains and oil products as well as fertiliser," said Mustafizur Rahman, executive director of the Centre for Policy Dialogue, a private think tank.

Natural disasters that hit Bangladesh, home to more than 140 million people, last year destroyed nearly 3 million tonnes of rice and wheat, leading to a sharp rise in foodgrains imports.

Rocketing food prices also pushed the impoverished South Asian country's annual consumer price inflation into double digits through the 2007-08 fiscal year, officials said.

Mustafizur said the huge trade gap had a tremendous pressure on the balance of payment, but comfortable receipts of remittances helped cushion its impact.

Bangladesh's more than 5 million expatriate workers sent home a record $7.94 billion in the just-ended fiscal year, nearly 33 percent higher than in 2006/07.

"The government must ensure smooth inflow of remittances to offset the shocks of rocketing import bills," Mustafizur told journalists.

The central bank has injected more than $700 million into the banking system since November 2007 to keep the local currency taka stable amid high demand for dollars because of increased import payments.

A top business leader emphasised increasing substitute production to lessen the dependence on foreign goods.

"The government has reduced the import duty on raw materials to 7 percent from 10 percent and on intermediary products to 12 percent from 15 percent in current fiscal year to help raise local production," Annisul Haque, president of Federation of Bangladesh Chambers of Commerce and Industry, told journalists.