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Dhaka [Bangladesh]December 8 (ANI): Bangladesh’s current account deficit widened further in October as imports continued to rise compared to total receipts from exports and remittances, The DailyStar reported. The current account records Bangladesh’s transactions with the rest of the world, especially net trade in goods and services.
According to sources, the widening deficit means that the pressure on the foreign exchange market continues to remain high. Bangladesh’s current account deficit stood at $4.5 billion at the end of October, according to data from the central bank, DailyStar reported.
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At the beginning of 2021, Bangladesh’s current account deficit was US$3.83 billion, a reversal from the US$4.05 billion surplus in the same period in 2020. Ahsan H Mansur, executive director of the Bangladesh Institute for Policy Research, said that, according to the DailyStar, the drop in remittance inflows suggests that capital flight is continuing.
According to news reports, between January and August, more than 784,000 male and female workers traveled from Bangladesh to other countries in search of work. The massive exodus of foreign workers may have played a key role in driving remittance receipts. However, between July and October, workers transferred only 2.03 percent of their funds.
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According to news reports, some people and entities have been laundering money from other countries through under- and over-invoicing trade. They persuaded migrant workers to send money to their families by offering better dollar rates than those offered by the Bangladesh Bank, thereby conducting illegal transactions.
Overbilling occurs when an exporter issues inflated invoices to an importer, generating payments that exceed the value of the goods shipped to launder money abroad. Under-invoicing occurs when the price of a product on an invoice is lower than the amount paid for it.
Over- and under-billing occur when an importer or exporter wants to reduce tariffs, or if a buyer or seller seeks to reduce their profits in order to pay less in taxes. Ahsan H Mansur stressed that it would be difficult to address the current account deficit without stopping the ongoing capital flight. “It has been widely reported that some borrowers who have defaulted on their loans have recently siphoned money out of the banking sector,” Ahsan H Mansur was quoted as saying by The Daily Star.
“Vested interests may launder money abroad by embezzling funds from the banking sector,” Mansour added.
Meanwhile, exports rose 8 percent year-on-year to $15.92 billion in the July-October period. Meanwhile, imports from July to October rose 6.72% year-on-year to US$25.51 billion. The development came despite the central bank’s decision to discourage purchases of products and services from international markets.
The current deficit is likely to narrow as the number of letters of credit (LC) issuance has declined in recent months amid banks’ reluctance to facilitate imports of non-essential and luxury goods.
Bangladesh Bank has injected about $6.5 billion into the market so far this fiscal year to help banks clear import bills. As of November 3, foreign exchange reserves totaled US$33.78 billion, down about 25% from US$44.88 billion in the same period last year. (Arnie)
(This is an unedited and auto-generated story from a Syndicated News feed, the content body may not have been modified or edited by LatestLY staff)
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