Current account surges despite soaring trade deficit
Higher foreign aid disbursement, FDI, remittance key contributors
Rejaul Karim Byron
Although the trade deficit posted a 27 percent increase in the first quarter of the current fiscal year, the current account balance is showing a surplus with an increase in disbursement of foreign aid, inflow of foreign direct investment (FDI) and remittance growth.In the first quarter, current account balance recorded a handsome surplus of $284 million, which was $227 million in the same period of the previous fiscal year. Foreign aid disbursement during this period stood at $444.46 million rising from $151.55 million in the same period of the last fiscal year (FY), recording a staggering 194 percent rise. The reason behind this sudden rise is an extra $300 million aid from the World Bank (WB) and International Monetary Fund (IMF) which was disbursed as special programme support in August this year. During the FY 2004-2005 the country received $46.76 million in July which was $49.22 million in the same month of the previous FY. In August of this FY, the country got $335.16 million, which was $33.19 million in the corresponding month of the last FY. During the current FY the country in September received $62.54 million which was $69.14 million in the corresponding month of the last FY. The foreign aid rose in the first quarter of the current FY due to the WB and IMF disbursement but monthly figures show that there was little jump in project aid implementation. FDI flow, during this period, recorded a 6.25 percent surplus to reach $102 million from $96 million, which was recorded in the first quarter of last FY. Bangladesh Bank and Board of Investment (BoI) sources said FDI flow is increasing slowly but steadily. India's Tata Group plans to invest $2 billion. France, Taiwan and UAE have also shown keen interest to invest in some sectors. BoI sources said the country may receive $800 million in FDI in 2005. The country received $833.72 million in remittance in first quarter of the current FY showing growth rate of 13.48 percent in this period. The remittance inflow was $734.78 million in the first three months of FY '04 recording a growth rate of 0.82 percent. However, trade deficit hit a 27 percent high in the first quarter of the current FY due to rise in oil prices in the international market and increase in import of consumer goods. During the first three months of FY '05, trade deficit rose to $394 million posting an increase by $86 million from $308 million in the first quarter of last FY. During the period, Bangladesh exported goods worth $2292 million against imports of $2686 million.
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