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The country’s trade deficit narrowed by 91.89 per cent or $975 million in July, the first month of the current fiscal year 2020-2021, as exports soared and imports dropped amid stagnation in local investment.
On the other hand, the country’s exports have already gained some momentum in July after three months of stagnation due to the coronavirus outbreak and the subsequent imposition of the countrywide shutdown for around two months.
As a result, the country’s current account balance posted a $1.97-billion surplus in July of FY21 against $108 million in deficit in the same month last year.
As per the Bangladesh Bank data, the country’s merchandise trade deficit dropped to $86 million in July of FY21 from $1.06 billion in the same month of the previous fiscal year.
Elaborating on the state of the country’s economy in the context of balance of payments in July, Policy Research Institute executive director Ahsan H Mansur told New Age said that it was not a positive indication but rather indicated that the country’s domestic economic activities remained sluggish.
The export situation has been recovering and would regain its pre-pandemic position by the end of this year, he said, adding that the domestic sector, including the import situation, still remained dismal.
The stimulus package has helped the country’s export sector and that is why exports have recovered but the package designed for the small and medium entrepreneurs was not picking up pace, he said.
The SME sector employs the largest proportion of the total workers in the economy and it would not be possible to revive the domestic economy without vibrancy returning to the sector, he mentioned.
Even though the BB has announced to formulate a credit guarantee scheme for the SMEs, the scheme has yet to start functioning, he said.
Mentioning that the 9-per cent lending rate cap had backfired for the SME sector, the PRI ED said that the government should either form a Tk 1,000-crore fund to issue a 5-per cent interest subsidy for the SMEs or increase the ceiling to 13 per cent for the SMEs.
Responding to why the SME sector did not get that much focus considering the emphasise given to the industries, he said that people working in the sector did not have the voice to raise their problems and to realise their demands.
As per the BB report, the country’s import payments in July of FY21 fell by 19.42 per cent, or $943 million, to $3.91 billion in July against $4.86 billion in the same month of FY20.
On the other hand, the country’s export earnings in July stood at $3.25 billion, down by 1.96 per cent from $3.31 billion in the same month last year.
In FY20, the country’s trade deficit widened by 12.79 per cent year-on-year due mainly to a plunge in export earnings during the countrywide shutdown amid the coronavirus pandemic.
Both exports and imports were hit severely after the outbreak of the coronavirus in the country.
Export earnings recovered in the last couple of months but import earnings remained stagnant during the period.
