The country's overall trade deficit widened by over 17 per cent to US$ 5.701 billion in the first eight months of the current fiscal year (FY '12) following higher import of petroleum products, officials said Monday.

"Higher import of fuel oil has widened the overall trade deficit during the period under review. But it might ease slightly in the coming months because of a falling trend in import of food grains along with unnecessary luxury items," a senior official at Bangladesh Bank (BB) told the FE.

The overall trade deficit rose to $ 5.701 billion in July-February of the FY '12 from $ 4.859 billion during the corresponding period in the previous fiscal, according to the central bank statistics.

During the period, export earnings stood at $ 16.006 billion against the import payments of $ 21.707 billion.

Import of food grains such as rice and wheat, in terms of settlement of letters of credit (LCs), witnessed a negative growth of 36.83 per cent to $ 704.01 million in the period from $ 1.11 billion of the corresponding period last fiscal.

The import of fuel oils increased by 49.63 per cent to $ 3.00 billion in the first eight months of FY '12 from $ 2.00 billion of the same period in the previous fiscal, the BB data showed.

The central banker also said the BB has already advised the commercial banks to make credits available to the priority sectors, including the productive ones, in line with the newly announced monetary policy.

On January 26 last, the BB unveiled a 'restrained' monetary policy aiming to bring down inflation to single-digit from the current level of over 10 per cent through discouraging credit flows to unproductive sectors.

The country's current account balance decreased by nearly 32 per cent to $ 681 million in the period under report from $ 999 million in the same period of the previous fiscal.

However, the overall balance of payments (BoP) has recorded a deficit of $ 516 million during the period under review from $ 222 million in the corresponding period in the previous fiscal.

The overall BoP entered the negative territory in FY '11 after a decade due to widening of the trade gap, lower growth of remittances and deficit balance in the financial account.

Financial Express/Bangladesh/ 17th April 2012