It indicates that the country has surplus foreign currency to pay for foreign liabilities
The country's current account balance saw a surplus during the ongoing Covid-19 pandemic, reaching over $3 billion during the July-August period of the current fiscal year.
The amount was only $204 million during the same period of the last fiscal year.
This is a positive sign for foreign trade management, indicating that the country has surplus foreign currency to pay for foreign liabilities.
According to the latest data of the central bank, during July and August of fiscal year 2020-21, the country's trade deficit narrowed by 66% to $698 million with a significant decrease in import payments.
Trade deficit was $2.05 billion during the same period of the previous fiscal year 2019-20.
Data shows that during the first two months of the current fiscal year, the country's import payment decreased by around 14%, while export earnings increased by 2.39%.
During July-August of FY21, import payment was $7.43 billion, vs $8.62 billion for the same period of the previous fiscal year.
Export earnings of July-August of this fiscal year was $6.73 billion, vs $6.57 billion during the same period of the last fiscal year.
A central bank official said remittance plays an important role in increasing foreign currency reserves, which then helps strengthen the forex market.
During July-August, remittance grew by around 50% to $4.56 billion compared to the same period last year.
Meanwhile, the country's private sector credit also grew and that had a positive impact on export growth, the Bangladesh Bank official said.
In August, private sector credit increased by 9.36% year-on-year, while the growth was 9.20% in July.
Dr Khondaker Golam Moazzem, research director of Centre for Policy Dialogue, told The Business Standard, "We can see a comfortable picture of the country's balance of payment as our import payment has decreased. Recently both quantity and value of import have decreased amid lower demand in local market and price fall in the international market."
"On the other hand, now the export market is comparatively better. It is not going to change soon. So, we can be hopeful about the country's present international trade scenario. Though it is an unusual scenario, development agencies are feeling comfort with our balance of payment. For that reason they have shown eagerness to provide loans to the country," he added.
Ahsan H Mansur, executive director of the Policy Research Institute, said, "Balance of payment is showing an unusual trend because of the changing international trade pattern during pandemic. So, it cannot clearly be said how the recent surplus of current account balance can help the country's international trade strengthen. But it is a good sign that there are some positive trends in foreign trade, such as the decreasing trade deficit ."