Surplus in current account, yet huge deficit in financial account

Surplus in current account, yet huge deficit in financial account

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Bangladesh has witnessed a significant decline in imports including capital machinery due to the ongoing dollar crisis and central bank tightening. Commercial banks have been cautious in opening letters of credit (LCs), while export earnings have been steadily increasing. Ultimately this reduced the overall trade deficit.

According to Bangladesh Bank data, the current account surplus stood at US$1.92 billion in December last year. Foreign earnings have largely contributed to the surplus, as inward remittances have consistently hovered around USD2 billion over the past five months.

However, there is a significant deficit in the financial account. The deficit at the end of December was US$5.39 billion, although the surplus at the end of 2022 was US$140 million.

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