Staff Correspondent

The country's trade deficit for the first five months of the current fiscal year has reached an all-time high, according to the central bank. The latest Bangladesh Bank statistics reveal that the total trade deficit stood at $2,099 million in the July-November period, the first five months of fiscal 2007-08, up from $1,161 million in the same period a year ago.

Economists say the record deficit is due to increased food imports. Figures of the central bank reveal that the seven months from July to January of the current fiscal year saw 13.61 lakh tonnes of rice imported at a cost of $456 million. In the same period last year, 2.04 lakh tonnes of rice was imported at a cost of $42 million. Prof MA Taslim of Dhaka University's economics department told bdnews24.com Saturday that although imports had increased to a great extent, exports had not seen a corresponding rise.

"The abnormal rise in food imports was the main cause of the huge trade deficit," Taslim said. A trade deficit at this time of the year is common, the economist said, adding however: "Two successive floods and Cyclone Sidr caused colossal damage to crops, which added to deficit." However, he added that a bumper boro crop would go some way to mitigating the shortfall. The government has fixed this year's boro output target at 1.75 crore tonnes, whereas the target was 1.49 crore tonnes last year.

The land set aside for boro cultivation this year has also been increased by 4 percent, say government officials. "We expect a large boro crop this year, and hopefully food imports will fall. If that happens, the trade deficit will drop to a tolerable level," Taslim said. The professor of economics said that although remittances had also increased during the current fiscal, it was not enough to cover the import bill.

"Although the balance of payments had been surplus in the last six years, it is now more than one billion dollars in deficit," Taslim added. Regulatory Reforms Commission chairman Akbar Ali Khan told bdnews24.com that the government will have to make an all-out effort with this year's boro output. He said simply fixing a target was not sufficient, and the government would have to ensure the supply of fertiliser, seeds, diesel and electricity to farmers as well as providing adequate agricultural loans.

According to the Bangladesh Bank, total imports increased by 17.52 percent in the first five months of the current fiscal year, while exports rose only 2.4 percent. During the July to January period this fiscal year letters of credit were opened for 21.99 lakh tonnes of rice. The corresponding period last year saw letters of credit opened for importing 2.89 lakh tonnes of rice. Letters of credit for the import of wheat saw a 150 percent rise during the July-January period this fiscal year. Last year the rate of increase was 95 percent during the same period.

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