THE country’s current account deficit registered its all-time high at $1.65 billion due to a negative growth in trade balance meaning more import payment over export earnings and such transactions in external trade in the Financial Year 2014-15. It was surplus by $1.40 billion in the FY 2013-14. But it has just reversed in FY 2014-15 as per a report by Bangladesh Bank and quoted by a national daily on Tuesday.BB officials said a large deficit in current account balance would put an adverse impact on the country’s macroeconomic situation in the coming months when the business people would start importing more on clearing of investment climate. They are now reluctant to expand their industrial units and waiting for congenial business climate. So the large deficit in current account balance is yet to put any negative impact on the macroeconomic situation, they said. Here lies the danger because when the economy will start to move forward the business people may find it hard to carry on international transactions because lower export earning over import payment. The financial account in the country’s balance of payments posted a negative amount of $5.11 billion in the FY15 from a surplus amount of $2.68 billion during the same period of FY14. The financial account includes foreign direct investment, portfolio investment, and medium- and long-term loans. The BB data, however, showed that the country’s overall trade balance dropped by 20.24 percent to $4.37 billion in the FY15 against $5.48 billion in the FY14 due to a large deficit in the current account balance.The reasons for this seem quite clear. The slower growth in export earnings was the main cause of the large deficit in the current account balance. The growth in the inward remittance maintained an upward trend in the last financial year, but it was not sufficient enough to minimize the large deficit in the current account balance in fiscal 2014-15. Deficit in current account is always a matter of inherent threat to bring pressure on import bill payment. The macroeconomic situation will deteriorate if the country maintains the large deficit in the current account for long. The government should take immediate measures to increase the export earnings by creating new markets abroad and removing trade impediments locally by helping to accelerate new investment in export industries. Essentially a deficit in the current account means that the country is spending more than it is earning by selling its products and services abroad. Here money laundering and leaving a part of export earning abroad may be playing a big role. The government, in our view, should stop its unproductive expenditures in foreign currency and take other cautions moves to stop further worsening the current account deficit.
