Lower trade deficit, restricted imports and higher foreign aid have underpinned an improvement in the country's balance of payments (BOP) situation at the end of April of the outgoing financial year.

Bangladesh Bank (BB) data shows the BoP shortfall came down to $106 million in April this year, from $ 419 million in March. In the July-April period of the previous fiscal, the deficit in BoP was as high as $502 million.

A BB high official said the BoP situation has been improved due to lower trade deficit as a result of tightening monetary policy, which also restricted imports and encouraged exports to new destinations and pursued for accelerating the remittance mobilisation.

“BB was serious in executing the monetary policy stance (MPS) and monitored banks regularly, especially on opening of letters of credit (LCs), since the MPS for January-June of the current FY came to force early 2012,” said the official, seeking anonymity.

The country also received around $1.5 billion as foreign loans including $ 300 million from the International Monetary Fund (IMF) that helps ease the pressures in balance of payments, he said.

The official said the merchandise imports in the first half of the current fiscal saw a significant growth that led the central bank to intervene into restricting import of non-productive items so that no abnormal burden could rise with regards to BoP.

Due to the high demand for petroleum products for the fuel-run quick-rental and rental power plants, the country’s import expenditure stood at $ 28.8 billion at the end of May since July 2011, up 11.82 percent compared to the same period of the previous fiscal, according to BB statistics.

Opening of LCs for import of food grains (rice and wheat), capital machinery, industrial raw materials and other products together declined by 6.97 percent this fiscal compared to the previous fiscal.

For food grains, the fall in imports was 70.10 percent while capital machinery 25.82 percent, industrial raw materials 8.05 percent and others imports saw a fall by 4.41 percent in July-April period of the 2011-12 fiscal.

On the other hand, earnings from merchandise exports rose to

$ 21.7 billion in the July-May period of the outgoing fiscal. The growth in exports over the corresponding period was recorded only 8.2 percent. The growth was almost half than the strategic target of 15 percent for FY 2011-12, according to data available from Export Promotion Bureau (EPB).

Meanwhile, the country received a total of $ 11.7 billion in remittance during the July-May period. The country received another $580 million as foreign direct investment during the same period.

The Daily Sun/Bangladesh/ 23th June 2012