Current Balance of Payment Situation of Bangladesh

Topics: International economics, Balance of payments, Macroeconomics Pages: 4 (1120 words) Published: March 18, 2013
Current Balance of Payment Situation of Bangladesh:

The economic performance of a country is reflected in its balance of payment (BoP) The balance of payment (BOP) refers to a method countries use to monitor all international monetary transactions at a specific period of time. Usually, the BOP is calculated every quarter and every calendar year. All trades conducted by both the private and public sectors are accounted for in the BOP in order to determine how much money is going in and out of a country. If a country has received money, this is known as a credit, and, if a country has paid or given money, the transaction is counted as a debit.

Bangladesh is an emerging economy in the world. The improvement of its economy also depends on the performance of its BoP.

In Bangladesh Balance of Payments statements are grouped under two major categories as given below:

1. Current Accounts
2. Capital and Financial Accounts

1. Current Accounts: The current account can be defined as a summary of the flow of funds between one specified country and all other countries due to purchase of goods and services or the provision of income on financial assets.

In Bangladesh although a continuous trade deficit is there, the current account balance (CAB) recorded a positive trend from Fiscal Year 2001-02 to Fiscal Year 2003-04. After that, it started to increase from Fiscal Year 2005-06 till Fiscal Year 2010-11. However, the incremental growth rate of current account balance is following an irregular trend over the years. In Fiscal Year 2010-11, current account surplus was USD 995 million although which was 73.37 percent lower than that of the corresponding previous fiscal year.

Negative trade balance with a deficit of USD 7328 million was the reason behind where imports surpassed the export earnings. In addition, receipt of workers’ remittance and foreign domestic investment (FDI) was 6.03 percent and 15.9 percent respectively lower than that of Fiscal...
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