Bangladesh’s current account slipped back into deficit in the first quarter (July–September) of FY2025–26 as import payments rose faster than export earnings, signaling renewed pressure on the country’s external stability.
According to Bangladesh Bank data, the country recorded a current account deficit of $481 million in the first quarter, reversing from a $488 million surplus in the same period a year earlier.
The current account is a vital part of a country’s balance of payments (BoP), reflecting the net flow of goods, services, primary income (such as interest and dividends), and secondary income (mainly remittances).
The deficit mainly stemmed from a widening trade gap and growing external payment obligations.
The trade deficit jumped to $5.7 billion in July-September from $4.6 billion a year earlier, as imports climbed 10.6 per cent to $16.8 billion while exports rose only 5.1 per cent to $11.1 billion.
Readymade garment exports, which account more than 85 per cent of total exports, rose by just 4.3 per cent, reflecting subdued global demand and limited export diversification.
BB officials said that import growth accelerated after the government relaxed earlier restrictions and global commodity prices remained high.
Imports of petroleum products surged by 46 per cent and capital machinery imports rose by nearly 25 per cent, driving up overall import costs.
This imbalance, combined with rising interest payments on external debt, deepened the primary income deficit to $1.27 billion from $1.1 billion in the same quarter last year.
One of the most concerning developments was the 45 per cent year-on-year rise in official interest payments on foreign loans, reaching $578 million.
Economists warned that this trend reflects Bangladesh’s mounting debt burden and exposure to global interest rate shocks, which could weigh on fiscal and external stability.
The services account also weakened, with net payments widening 37 per cent to $1.25 billion due to higher spending abroad on travel, education, and business-related services.
Remittance inflows provided some relief, increasing 16 per cent to $7.6 billion in July–September, supported by stronger inflows from Saudi Arabia, the UK, and Malaysia.
The uptick follows government efforts to channel remittances through formal routes. Still, the improvement was insufficient to offset widening deficits in trade and income accounts.
Despite the weaker current account, the overall balance of payments turned positive, reaching a surplus of $853 million due to a sharp rebound in the financial account.
The financial account posted a $1.6 billion surplus, compared with a $1 billion deficit a year earlier, mainly driven by short-term external borrowing and higher liabilities in the banking sector rather than sustainable investment inflows.
Foreign direct investment remained low at $318 million, while portfolio investment continued to decline amid weak investor confidence.
Bangladesh’s gross foreign exchange reserves, measured under the IMF’s BPM6 standard, stood at $26.6 billion at the end of September—slightly higher than in August but well below pre-crisis levels.
Experts said that without meaningful export diversification, stronger investment inflows, and tighter fiscal and monetary management, the current account deficit could deepen in the coming quarters, putting renewed pressure on the balance of payments.
