Current account deficit hits $1.6b as import bills surge

Infographic: TBS

Strong remittance growth was not enough to offset a rising import bill, pushing Bangladesh's current account balance deeper into the red at nearly $1.6 billion for FY2025-26, according to Bangladesh Bank data released today (9 August).

Central bank data showed imports on a free-on-board (FOB) basis rose 10.5% to over $71.1 billion, up from $64.36 billion a year earlier. On a cost, insurance and freight (CIF) basis, total import payments expanded by 10.1% to $75.24 billion.

Although workers' remittances grew 17.3% to reach $35.59 billion, the record inflows failed to fully absorb the widening trade deficit, which ballooned past $27 billion.

Balance of payments data showed that the current account deficit stood at $1.59 billion in FY26, compared with $138 million in FY25.

Exports, meanwhile, declined by about 1% to $43.86 billion in FY26 from $43.96 billion a year earlier. The combination of rising imports and falling exports pushed the trade deficit to $27.28 billion, up from $20.40 billion in FY25.

The sharp deterioration marks a reversal from the earlier trend, when strong remittance inflows and a narrowing trade deficit had helped reduce the current account deficit.

Ahsan H Mansur, former governor of the central bank, said the current account position had deteriorated after remaining comparatively healthy until May.

"The position of the current account balance has deteriorated, which was comparatively healthy till May. A rising current account deficit reflects a trade deficit, with imports rising and exports declining. The widening of the current account has created discomfort in the balance of payments," he said.

He also raised concerns about the recent slowdown in remittance inflows and its implications for the foreign-exchange market.

"Remittance inflows were below $3 billion in the last two months, which is concerning for the dollar market as well. Bangladesh Bank should relax the exchange rate and should not cap the rate," he said. "After Eid-ul-Adha, the country has not witnessed remittances above $3 billion, and the greenback would have come through informal channels."

Mansur said the gap between the exchange rate offered through the banking channel and that in the informal market should not be allowed to widen, as it could make the market volatile again.

Md Ezazul Islam, director general of the Bangladesh Institute of Bank Management (BIBM), said, "The financial account would have more deficit if the remittance inflows are lower."

Financial account strengthens

Despite the deterioration in the current account, the financial account improved substantially in FY26.

The financial account recorded a surplus of $7.89 billion in FY26, compared with a deficit of $3.59 billion in FY25. Trade credit, an important component of the financial account, also swung into positive territory at $3.09 billion, compared with a negative $3.14 billion a year earlier.

Experts said the improvement in trade credit helped strengthen the financial account.

"Trade financing has improved the financial account as it reached a positive $3 billion, which was negative in the previous fiscal year," Mansur said. "On the other hand, the financial account has improved for both reserves and inflow of remittances."

Trade credit refers to goods or services received with payment deferred to a later date. In balance of payments accounting, it is treated as a short-term capital flow under the financial account because it finances imports.

Meanwhile, the overall balance reached $6.60 billion in FY26, compared with $3.39 billion in the previous fiscal year.

Ezazul said the improvement in the overall balance of payments was driven by the stronger financial account, whose surplus increased by more than $4 billion.