Financial account deficit widens to $2.16 billion

Trade deficit and current account deficit both were reduced during the 10 months of the current fiscal year, but the financial account deficit stands at $2.16 billion, which is a big concern now.

Between July and April of 2022-23, the financial account registered a deficit of $2.16 billion in contrast to a surplus of $11.95 billion a year ago, as per the latest data from the Bangladesh Bank.

The deficit was $2.04 billion in July to March of this fiscal year.

A financial account is a component of a country’s balance of payments that covers claims on or liabilities to non-residents concerning financial assets.

Financial account components include direct investment, portfolio investment, and reserve assets.

Former director general of Bangladesh Institute of Bank Management Toufic Ahmad Choudhury recently said, “A negative financial account means that our foreign currency outflow has increased compared to the inflow.”

“It tells us that our foreign investment is not in good shape. We cannot also use foreign aid either,” he added.

“Since the current account deficit has slightly improved, the negative phenomenon of financial account’s impact is not much understood. If not improved, the situation would have been worse.”

Bangladesh Bank Governor Abdur Rouf Talukder said in a recent press conference that the current account is almost improved but the financial account faces a deficit now.

“Now our main work is to make a positive financial account,” he observed.

The forex reserve will increase if the financial account becomes positive, said the BB governor.

During July to April of this fiscal year, the trade deficit stood at $15.73 billion, down from $27.69 billion a year ago, mainly due to the falling trend of import against growing export.

The import fell by 14.40 per cent to $58.78 billion while export rose by 5.06 per cent to $43.04 billion.

On the other hand, the current account deficit stood at $3.77 billion during July to April, down from $15.48 billion a year ago.