Bangladesh’s balance of payments (BoP) swung to a $3.4 billion surplus in the first eight months of the fiscal year, reversing a deficit of $1.16 billion a year earlier, according to Bangladesh Bank.
But the improvement masks deeper strain, as the trade deficit widened to $16.9 billion and the current account slipped further into the red, exposing a fragile external position held up mainly by remittances and short-term inflows.
The current account remained in deficit at $1 billion, reflecting persistent pressure from trade, services and income outflows.
The widening merchandise trade gap remained the main source of stress.
Export earnings declined 2.6 per cent year on year to $29.26 billion, while imports rose 5.6 per cent to $46.17 billion.
That pushed the trade deficit to $16.91 billion, widening by more than $3 billion from the same period last year.
The slowdown is evident in the country’s export backbone.
Readymade garment (RMG) exports fell 2.6 per cent to $26.09 billion, indicating that the key foreign exchange-earning sector has yet to recover even as import demand picks up.
Pressure is also building beyond goods trade.
The services deficit widened to $3.84 billion as payments for transport, travel and other services continued to rise.
At the same time, the primary income deficit stood at $3.09 billion, while official interest payments increased to $1.44 billion, reflecting higher external debt servicing obligations.
A sharp rise in remittance inflows helped cushion the pressure.
Workers’ remittances grew 21.4 per cent to $22.45 billion, lifting total private transfers to $22.82 billion.
The inflows prevented a much larger current account deficit, though they were not enough to offset the widening trade gap.
The deficit also deepened in February after standing at just $319 million in July-January, signalling renewed pressure.
The financial account provided additional support, but the nature of inflows raises questions about durability.
The surplus increased to $4.08 billion from $0.44 billion a year earlier, yet net foreign direct investment fell to $0.87 billion from $1.06 billion, indicating weak long-term investor confidence.
Instead, the bulk of inflows came from “other investment”, which rose to $3.3 billion, driven by a surge in trade credit to $2.56 billion and positive banking flows of about $1.04 billion.
This suggests that short-term and trade-related financing, rather than stable capital inflows, is supporting the external position.
At the same time, longer-term external financing weakened.
Disbursement of medium- and long-term loans fell 27.8 per cent to $2.79 billion, while amortisation payments rose 18.8 per cent to $2.08 billion.
Net aid inflows also dropped sharply to $0.71 billion from $2.11 billion, pointing to tighter external financing conditions.
Despite the pressure, reserve indicators improved.
As of end-February, gross official reserves rose to $35.11 billion, while reserves measured under BPM6 reached $30.36 billion, up from $26.18 billion and $20.95 billion respectively a year earlier.
Import cover increased to 5.1 months of goods and services imports and 5.8 months of goods imports, providing a stronger buffer against external shocks.
Economists say the data reflect an external adjustment driven more by inflows than by structural improvement.
Bangladesh Institute of Bank Management (BIBM) Director General Md Ezazul Islam told TIMES that higher imports, weaker exports and rising service payments are widening the trade gap, while strong remittance inflows have prevented a sharper deterioration.
He warned that pressures could intensify in the coming months as Ramadan-linked import settlements have already added to February’s strain.
Middle East tensions may raise import costs further, adding to the strain.
Any pickup in domestic investment could also increase imports of capital machinery and raw materials, “widening the deficit again,” he added.
