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Fallout of crop losses Staff Correspondent The trade deficit almost doubled to over $6 billion last fiscal year from $3.45 billion in the fiscal year 2006-07 on rising food imports driven by crop losses, according to Bangladesh Bank. The trade deficit stood at $6.26 billion in fiscal 2007-08, up from $3.45 billion in 2006-07.
The gap between import expenditure and export earnings was just $2.89 billion in 2005-06 fiscal.
Finance and planning adviser AB Mirza Azizul Islam and central bank governor Salehuddin Ahmed are now hoping for better with the recent reprieve in petroleum and food prices in international markets.
They said the positive impact of falling global prices were already being reflected on import expenditure.
"We had to import food on a huge scale after crop losses due to last year's twin floods and cyclone Sidr," the finance adviser told bdnews24.com Tuesday.
"And the price hike of food in international markets made things all the worse."
The price per tonne of rice soared to $1000 from $400, Mirza Aziz pointed out.
"Prices of petroleum and fertiliser also reached unusual highs, pushing import bills abnormally high in the last fiscal compared with any period."
Bangladesh Bank chief Salehuddin Ahmed was of the same opinion. "Last year's high import expenditure was mainly caused by sudden increase of food prices."
"However, we have had a good Boro (rice) harvest. We are also expecting good production of Aman."
"And at the same time, food and petroleum prices are on the decline in the international market," the governor told bdnews24.com.
He said he expected a positive impact of these trends on import bills.
However, Mustafizur Rahman, executive director of private think-tank Centre for Policy Dialogue, doesn't see things getting better in the near future.
He said prices of apparels, Bangladesh's major export item, are also dipping, he said.
"The target on export earnings could not be achieved in the last fiscal despite a 15 percent growth."
"The prices of our major export product, readymade garments, declined drastically in the international market," he said.
If the decline continues, the trade deficit will increase in this fiscal year too, he warned.
President of BGMEA Anwar-ul Alam Chowdhury Parvez was also far from sanguine in his outlook for the sector.
"Before, we could earn $10 by exporting a single T-shirt. Now we can't get more than $8," the Bangladesh Garment Manufacturers and Exporters Association chief said.
President of Bangladesh Knitwear Manufacturers and Exporters Association, Fazlul Huque added: "The prices of apparel are declining as consumers in US and Europe are squeezing their budgets due to recession."
According to Bangladesh Bank statistics, the country imported products worth $20.37 billion against export earnings of $14.11 billion in 2007-08 financial year.
In fiscal year 2006-07, the import bill was around $15.97 biilion against export earnings of $12.18 billion.
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