Against the backdrop of rising costs of imports and falling remittances, a fallout of the Covid-19 pandemic, Bangladesh's current account deficit is at an all-time high.
In February, the current account deficit stood at $12.83 billion, up from $10.19 billion in the previous month.
The current account balance at the same time last year was a surplus of $825 million, due to slow pace of imports and large flows of remittance during the pandemic.
Zahid Hussain, former lead economist at the World Bank's Dhaka office, said the rise in commodity prices stemming from the global political instability had led to an increase in all kinds of import payments.
At the same time, exports and remittances had fallen, leading to an overall balance deficit, while it was at a surplus last fiscal year.
"To reduce this deficit, the central bank needs to raise the value of the dollar gradually. This will reduce imports, while exporters and remittance senders through banking channels will get additional benefits," he said.
He also advised caution in the use of reserves and to reduce the import of luxury goods.
The current account deficit as of December of the current fiscal year was $8.18 billion.
It is estimated that the deficit has been increasing by $2 billion for the past three months.
According to the central bank, the trade deficit widened to 80.48% in the current financial year (July-February). The trade deficit for the eight months was $22.30 billion. It was $12.36 billion in the same period last fiscal.
During this period, import expenditure increased by 46.70%, while export earnings increased by 29.80%.
The total import expenditure for the July-January period stood at $54.77 billion compared to $37.06 billion in the same period last year.
In comparison, export earnings increased from $24.70 billion to $32.07 billion.
Bangladesh received $15.30 billion in remittances in the first nine months of the current fiscal year, a decrease of 17.07% compared to the same period a year ago.
The interbank exchange rate of the US dollar also started rising in July last year due mainly to rising import payments as the exchange rate of the greenback was Tk84.80.
The central bank withdrew money from the banking system by selling $3.73 billion as of March 23, according to the BB data.
However, according to central bank officials, the surplus in the financial account has improved due to the increase in medium- and long-term loans as well as the increase in foreign exchange.
The financial account surplus was $10.93 billion during the July-February period of the current fiscal year, up from $6.47 billion in the same period of the previous fiscal year.
The soaring deficits in trade as well as the current account reflect the growing imbalance on the external front, thus creating mounting pressure on the country's overall balance of payments, experts have said.
Md Habibur Rahman, executive director and chief economist at the Bangladesh Bank, told The Business Standard that the trade deficit was widening as imports outweighed exports. In addition, the flow of remittances has also been reduced, coupled with the global rise in commodity prices, including that of oil, which has increased pressure.