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than half a billion dollars. Economists said import costs remained low
over the last fiscal due to the depressed prices of oil, food and
fertiliser in the global market amid the economic downturn. The
low import costs led to a reduced gap, despite a fall in exports,
counter to the country' s previous history of widening trade deficits
year-on-year. Bangladesh Bank governor Atiur Rahman told
bdnews24.com on Monday the reduced trade deficit has been good for
the country's balance of payments. He also praised farmers, for
bumper crops last year, and 'farmers' sons, the remitters', for their
contributions to the economy. The trade deficit stood at $6.94
billion for FY 2008-09, down by $576.39 million from the previous
year. The $7.52 billion trade deficit in FY 2007-08— a year of
natural disasters for Bangladesh coupled with food and oil price
hikes in the global market—was nearly double the $3.45 billion
deficit of FY 2006-07. Bangladesh Bank data shows imports costs
rose by just 4.06 per cent last fiscal, compared to a 26.07 per cent
increase in FY 2007-08 over FY 2006-07. According to the central
bank, Bangladesh imported goods worth $22.50 billion last fiscal,
and $21.63 billion in FY 2007-08. Low import costs more than offset
accompanying low growth in the export sector. Exports grew by just
10.31 per cent in the last fiscal year, compared to 27.45 per cent in
FY 2007-08. The country's exports totalled $15.56 billion in the
last fiscal, compared to $14.11 billion the previous year.
Bangladesh Bank boss Atiur Rahman said the reduced trade deficit has
positively impacted the country's economy and balance of payments,
despite the slow growth in both imports and exports. 'Reserves
reached a more than satisfactory level and are increasing daily.
Foreign reserves surpassed $7 billion just one-and-a-half months ago
and now stands at $8.3 billion,' said Rahman. He said remittances
from overseas workers have contributed to the country's reserves: 'We
can say farmers and their sons are contributing the most overall to
our economy.' 'On one hand, farmers are saving our foreign
currency from being used to import food with their bumper crops, and
on the other hand their sons are sending back foreign currency earned
through their backbreaking labour overseas,' said Rahman. Zaid
Bakht, senior research director of Bangladesh Institute of
Development Studies, also said the trade deficit had fallen because
food imports came down almost to zero and the cost of fuel and
fertiliser had reduced in the global market. 'However, imports of
capital machinery also reduced, and this is evidence of one kind of
sluggishness in the economy in terms of investment,' said Bakht.
'Whatever the reserves are, no benefits will come if investments do
not grow in the country,' he said. Imports of rice came down to
almost zero last fiscal as a result of bumper Boro and Aman crops.
This was in contrast FY 2007-08, when the twin disasters of flooding
and Cyclone Sidr caused widespread damage to many crops, and a global
food crunch caused prices to spiral in the international market.
The price of rice reached $1,000 from $400 per tonne that year, which
combined with rapidly increasing prices of fertiliser and oil to
imports more costly compared to any time in the past. Imports of
rice and wheat declined by 38.31 per cent in the last fiscal year in
comparison to the 2007-08 FY. Although it increased by 142.72 per
cent in the 2007-2008 FY compared to the previous one.
