Bangladesh’s current account deficit reduced much in the first 11 months of the 2024–25 fiscal year, mainly due to a strong rise in remittance inflows.
From July to May, the deficit decreased to $432 million, a big improvement compared with $6.11 billion during the same period last year, according to new data from Bangladesh Bank.
It marked a positive shift in the country’s financial dealings with the rest of the world and came as a relief amid ongoing concerns about foreign currency reserves and overall economic stability.
The current account measures how much money flows in and out of the country through trade, services, foreign income, and remittances. This year, a big jump in remittance inflows played a key role in reducing the deficit.
Remittances, which fall under what’s called secondary income, rose to $28.1 billion during July–May, up from $21.77 billion in the same period a year ago. Of this, $27.5 billion came directly from remittances—a 28.7 per cent increase from the previous year.
Experts said that this increase is due to sending money through formal banking channels more, helped by government incentives and a rise in the number of Bangladeshi workers going abroad.
Despite the high remittances, Bangladesh still posted a deficit in its primary income account, which includes payments like interest, dividends, and wages to foreign investors and workers. This deficit widened to $4.55 billion, with $3.81 billion paid out and only $642 million earned.
The trade deficit also shrank slightly to $19.38 billion, down from $20.22 billion a year earlier.
Export earnings rose by 9.4 per cent to $40.86 billion, while import payments increased by 4.7 per cent to $60.24 billion.
However, the gap in the trade of services grew to $4.6 billion, compared with $3.85 billion last year due to more spending on international travel, transport, and business services.
Bangladesh’s financial account, which records foreign investments and borrowing, showed a smaller surplus of $266 million, down from $2 billion a year ago.
Foreign loan disbursements fell to $5.22 billion, while repayments rose to $2.43 billion, reflecting more cautious borrowing due to rising global interest rates.
As of July 10, the country’s foreign exchange reserves stood at $24.54 billion, based on IMF’s latest calculation method.