Balance of Trade(BOT) Bangladesh has had a negative trade balance since independence in 1971. In the mid-1980s, the annual pattern was for exports to cover only around 30 percent of the cost of imports (see table 14, Appendix). Merchandise exports reached the value of US$1 billion in FY 1987 for the first time, and in that year import payments were US$2.6 billion, leaving a trade deficit of over US$1.5 billion, about average throughout the 1980s. The annual deficit was limited by government controls to between US$600 and US$700 million on capital goods and US$500 million on nonagricultural industrial commodities. The largest component in the latter category was crude oil and petroleum products. In addition, Bangladesh incurred a debt each year for grain and other food needs, always higher than US$200 million, and sometimes going to double or even more (at least US$607 million in FY 1985). The country had a positive balance on nonfood agricultural production, because jute and ready-made garment exports eliminated the deficit in fibers, textiles, and garments. In FY 1986, the United States was the leading buyer of Bangladeshi exports, taking some 25 percent of the total. The American portion had increased from 16 percent the year before and 12 percent the year before that. The dynamic new element was readymade garments; the United States purchased over 80 percent of this new industry's production, adding to Bangladesh's traditional base of jute manufactures (mostly carpet backing) and
Balance of Trade(BOT)Bangladesh has had a negative trade balance
since independence in 1971. In the mid-198s! the ann"al pattern #as
for e$ports to cover onl% aro"nd & percent of the cost of
imports (see table 1'! (ppendi$). )erchandise e$ports reached the
val"e of *+,1 billion in -. 1987 for the first time! and in that
%ear import pa%ments #ere *+,/.0 billion! leaving a trade deficit
of over *+,1.1 billion! abo"t average thro"gho"t the 198s. The
ann"al deficit #as limited b% government controls to bet#een *+,0
and *+,7 million on capital goods and *+,1 million on
nonagric"lt"ral ind"strial commodities. The largest component in
the latter categor% #as cr"de oil and petrole"m prod"cts. In
addition! Bangladesh inc"rred a debt each %ear for grain and other
food needs! al#a%s higher than *+,/ million! and sometimes going to
do"ble or even more (at least *+,07 million in -. 1981). The
co"ntr% had a positive balance on nonfood agric"lt"ral prod"ction!
beca"se 2"te and read%-made garment e$ports eliminated the deficit
in fibers! te$tiles! and garments. In -. 1980! the *nited +tates
#as the leading b"%er of Bangladeshi e$ports! ta3ing some /1
percent of the total. The (merican portion had increased from 10
percent the %ear before and 1/ percent the %ear before that. The
d%namic ne# element #as read%made garments4 the *nited +tates
p"rchased over 8 percent of this ne# ind"str%5s prod"ction! adding
to Bangladesh5s traditional base of 2"te man"fact"res (mostl%
carpet bac3ing) and seafood. The ne$t biggest c"stomer for
Bangladesh (b"t #ith onl% /8 percent of the (merican vol"me) #as
6apan! #hich chiefl% p"rchased fro7en seafood. Other important
c"stomers in -. 1980 #ere Britain! Ital%! 8a3istan! +ingapore! and
Belgi"m. Trade #ith comm"nist co"ntries #as also significant.
(lmost 1 percent of e$ports #ere "nder barter terms #ith the +oviet
*nion! 9hina! B"lgaria! :"ngar%! and 97echoslova3ia.Balance of
8a%ment(BO8)The contin"ing trade deficit has been offset in small
part b% private transfers! mainl% from earnings of #or3ers in the
)iddle ;ast! b"t large amo"nts of foreign aid and heav% short-term
borro#ing are needed to handle the balance-of-pa%ments problem. In
-. 1991"ota s%stem on te$tiles and clothing "nder the CTO #as d"e
to e$pire in /1! and Bangladesh #ill need to improve the
performanceand >"alit% of its garment e$port sector.
