Financial account rebounds to over $4b surplus in 11 months

The country's financial account staged a major recovery to register a surplus of $4.16 billion during the first 11 months of the fiscal 2025-26, rebounding from a deficit of $214 million in the same period of the previous fiscal year.

The balance of payments data, released by the Bangladesh Bank yesterday (8 July), indicates that a sharp turnaround in trade credit was the primary driver behind this financial account surplus.

The trade credit position – which involves short-term capital flows from deferred payments on imports – surged to a surplus of $2.90 billion during the July-May period, recovering from a deep deficit of $2.57 billion recorded during the corresponding period of FY25.

Economists see stronger external financing

Former Bangladesh Bank governor Ahsan H Mansur said the financial account should remain in a healthy surplus as the trade credit position has turned positive after remaining in deficit in the previous fiscal year.

Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue, said the financial account had improved significantly, reflecting stronger external financing. However, he noted that a stronger financial account also implies higher debt obligations in the future because loans received today increase future debt servicing liabilities.

He added that inflows from development partners such as the World Bank, the Asian Development Bank and the International Monetary Fund also strengthen the financial account by increasing foreign currency inflows.

Trade deficit widens on weaker exports

Despite the improvement in the financial account, the country's trade deficit widened to $23.98 billion during the first 11 months of FY26 from $19.38 billion in the corresponding period of FY25.

Exports declined by 2% during the period, while imports rose by 6.30%.

Mansur said the larger trade deficit reflected sluggish export growth, adding that higher imports are generally positive for the economy as they support production and economic growth.

Remittances support current account

The current account deficit narrowed despite the widening trade gap, supported by robust remittance inflows.

The current account deficit stood at $301 million during July-May of FY26, compared with a deficit of $778 million in the same period of FY25.

Remittance inflows during the first 11 months of FY26 totalled $32.77 billion, marking a 19.10% year-on-year increase.

Mansur said remittances had played a key role in improving the current account balance. However, he cautioned that remittance inflows weakened in June after several months of stronger performance and said sustained inflows would be important for maintaining external sector stability. 

He added that a prolonged decline in remittances could indicate a resurgence of informal channels for transferring funds abroad.