Bangladesh is grappling with a growing deficit in its financial account balance, which swelled to $2.02 billion in August 2023, up from $946 million the previous month. The trade deficit also widened in August, reaching $1.01 billion, driven by a decrease in remittances and slower export growth. As a result, the country’s foreign exchange reserves have declined to $21.15 billion by the end of September, down from $23.26 billion in August.
The current account balance, which includes trade, services, and remittances, remained in surplus due to remittance income despite the trade deficit. However, the deficit in the overall balance of payments increased to $1.7 billion by the end of August, raising concerns about the country’s ability to make foreign payments. Factors contributing to this situation include a decrease in imports, declining remittances, higher interest rates on the dollar, currency depreciation, and reduced foreign direct investment. Experts emphasize the need for policy adjustments to address these challenges.