BOP statistic and analysis of bangladesh by taranga salehin

7/31/2019 BOP statistic and analysis of bangladesh by taranga salehin

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Submission Date: 10-05-2011

BOP Statistics and Analysis of Bangladesh


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Export Import of Goods

Year GoodsExports

GoodsImports Balance

1976 399293223.9 816442562.3 -417149338.41977 476434798.7 1019059911 -5426251121978 549261812.8 1339600097 -7903382841979 655590633 1725772206 -1070181573

1980 793230497.8 2352840029 -15596095311981 790466640.3 2434769617 -16443029771982 768435438.6 2221081894 -14526464551983 723946923.5 1930717075 -12067701521984 931742139 2340009095 -14082669561985 999457038.6 2286425081 -12869680421986 879997897.8 2300712559 -14207146611987 1076878928 2445632544 -13687536161988 1291023746 2734413290 -14433895441989 1304772234 3300061977 -19952897431990 1672401690 3259359364 -15869576741991 1688658601 3074451943 -13857933431992 2097866552 3353792987 -12559264351993 2544671069 3657270508 -11125994391994 2934413942 4350523388 -14161094461995 3733288294 6057382132 -23240938381996 4009289722 6284612065 -22753223431997 4839914681 6550702464 -17107877821998 5141447358 6715723613 -15742762551999 5458282969 7535521631 -20772386622000 6399172401 8052920470 -16537480692001 6084729483 8133410948 -20486814652002 6102361384 7780131631 -16777702472003 7050128518 9491985574 -24418570562004 8150680503 11157146576 -30064660732005 9302474537 12501569435 -31990948982006 11553693155 14443352637 -28896594822007 12474289384 16669204360 -41949149762008 15441799603 21507005157 -6065205553


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Export Import of Services

Year ServiceExports

ServiceImports Balance

1976 67969721.07 131426647.6-

63456926.571977 64143706.18 184888483.2 -120744777

1978 101003293.2 253143549.8-

152140256.7

1979 132627678.4 372209006.9-

239581328.4

1980 211479158.7 481175309.8-

269696151.1

1981 211134163.7 463486469.6-

252352305.9

1982 218190160.6 439734976.2-

221544815.7

1983 215907276.6 405075851.1 -189168574.5

1984 207480733.7 478008839.9-

270528106.2

1985 237887454.7 477946810.1-

240059355.5

1986 215034176.4 503013935.1-

287979758.7

1987 247940897.8 494188084.1-

246247186.4

1988 277644150.5 613116654.7-

335472504.3

1989 334397273 726433219.7-

392035946.7


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1990 391568085.2 700451342.3-

308883257.1

1991 431049174 695278670.3-

264229496.3

1992 483351806.7 788775985

-

305424178.31993 529414582.2 932154496.1 -402739914

1994 589796979.8 1025033435-

435236454.8

1995 698193828 1531215116-

833021287.9

1996 604835296.5 1166028555-

561193258.81997 687296007.7 1283720377 -596424369

1998 723926775.8 1237089129-

513162353.6

1999 777661816.3 1396716124-

619054307.3

2000 815083370.3 1620214189-

805130819.1

2001 752200851.3 1521505043-

769304191.9

2002 848651864.6 1405725165-

557073300.1

2003 1011675071 1711471831-

699796760.5

2004 1083013795 1931428204-

848414409.1

2005 1248999468 2206664286-

957664817.72006 1333832614 2340476991 -10066443782007 1616837918 2884764553 -12679266342008 1930436529 3836794684 -1906358155


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Investment Income

Year IncomeReceipts

Income payments Balance

1976 16325216.5 40136955.25 -23811738.751977 26541654.89 58707065.65 -32165410.761978 34519474.77 61497031.56 -26977556.791979 64386031.11 65933098.78 -1547067.67

1980 76325132.49 69734330.88 6590801.611981 41823337.7 97318153.71 -55494816.01


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1982 28917202.91 154161378.7 -125244175.81983 35928428.53 117793181.7 -81864753.151984 68128448.68 135753897.8 -67625449.091985 41641720.04 153669802.7 -112028082.61986 31697501.13 167219028 -135521526.91987 47422596.68 172510865 -125088268.31988 54848636.11 180739659.2 -125891023.11989 88720173.54 196932135.1 -108211961.61990 64196919.03 179759891.9 -115562972.91991 69955909.52 166919902.7 -96963993.171992 100058959.6 165958606.2 -65899646.561993 100146527.3 175802103 -75655575.751994 150494145.3 188748662.1 -38254516.821995 270090800.2 201765164.2 68325636.021996 129381581.8 193062050.4 -63680468.64

1997 86608016.65 197977399 -111369382.41998 91450285.43 206136819.2 -114686533.71999 94345261.5 258469645.7 -164124384.22000 78355796.08 344811443.2 -266455647.22001 76632902.34 361927472.9 -285294570.52002 56762508.87 321992158.7 -265229649.82003 56538596.21 361309937.2 -3047713412004 102560560.7 473901863.7 -3713413032005 116559937.3 910190410.3 -7936304732006 177418963.6 1018116405 -840697440.92007 244052420.2 1211993047 -967940626.52008 220211227.8 991066003 -770854775.2

Current Account


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Year Merchandise trade

balanceServices trade

balanceInvestment income

balance1976 -417149338.4 -63456926.57 -23811738.751977 -542625112 -120744777 -32165410.761978 -790338284 -152140256.7 -26977556.79

1979 -1070181573 -239581328.4 -1547067.671980 -1559609531 -269696151.1 6590801.611981 -1644302977 -252352305.9 -55494816.011982 -1452646455 -221544815.7 -125244175.81983 -1206770152 -189168574.5 -81864753.151984 -1408266956 -270528106.2 -67625449.091985 -1286968042 -240059355.5 -112028082.61986 -1420714661 -287979758.7 -135521526.91987 -1368753616 -246247186.4 -125088268.31988 -1443389544 -335472504.3 -125891023.1

1989 -1995289743 -392035946.7 -108211961.61990 -1586957674 -308883257.1 -115562972.91991 -1385793343 -264229496.3 -96963993.171992 -1255926435 -305424178.3 -65899646.561993 -1112599439 -402739914 -75655575.751994 -1416109446 -435236454.8 -38254516.821995 -2324093838 -833021287.9 68325636.021996 -2275322343 -561193258.8 -63680468.641997 -1710787782 -596424369 -111369382.41998 -1574276255 -513162353.6 -114686533.71999 -2077238662 -619054307.3 -164124384.22000 -1653748069 -805130819.1 -266455647.22001 -2048681465 -769304191.9 -285294570.52002 -1677770247 -557073300.1 -265229649.82003 -2441857056 -699796760.5 -3047713412004 -3006466073 -848414409.1 -3713413032005 -3199094898 -957664817.7 -7936304732006 -2889659482 -1006644378 -840697440.92007 -4194914976 -1267926634 -967940626.52008 -6065205553 -1906358155 -770854775.2


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Capital Account


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FDI PortfolioInvestment

Year Amount Amount1983 403978.56 1267876.381984 -553269.4 1624686.991985 -7191558.371986 2436499.341987 3205086.76 -64516.131988 1838242.51989 247908.27 1704369.381990 3238781.19 280926.021991 1390444.32 2213918.751992 3721853.38 8729923.02

1993 14049886.52 8364969.871994 11147788.33 105861743.21995 1896372.13 -15230807.241996 13529831.54 -117042595.71997 136310534.1 -9892244.721998 187057212.5 -4089360.451999 179603006.3 -1272619.062000 280384629.7 1292999.312001 280384629.7 -3369753.382002 280384629.7 -2557564.252003 265507414.1 1630080.792004 444836578 4292383.822005 811382056.1 19443681.452006 697206284.1 28235273.72007 652818718.9 140986123.12008 973108114.5 9851297.52


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OfficialReserveAccount

Year Amount 19

76

288917081.28197

7 241498635.31978 321264479

1979 413645569.5

1980 331184643.5

1981 159682646

1982 208528949.7

1983 545880999

198 408085843.6

4198

5 356198602.8198

6 434858520.9

1987 876251425198

8 1076508833198

9 532096152199

0 659565646199

1 1307945016199

2 1853480695199

3 2446571637


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1994 3174800894.21

1995 2376175760

199

6 18694800451997 1610776818

1998 1935771319

1999 1634375947

2000 1515788658

2001 1305630682

2002 1721734786

2003 2624623706

2004 3221759636

2005 2825004868

2006 3877163417

2007 5277479283

2008 5787356028


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Errors and Omission

Year Amount 1976 13258446.041977 -14733007.231978 21558466.841979 -4316318.811980 -74088389.011981 93735216.851982 -83403351.221983 -26399192.681984 -95201365.021985 -67810321.441986 8747375.851987 -123773084.61988 6622311.411989 -43113443.371990 -75702843.281991 -98425109.1

1992 -83968682.121993 69433545.171994 -257050062.51995 133337287.91996 113463803.61997 -75450346.561998 200989260.31999 257967351.92000 282354159.92001 -105958348.32002 -3493085272003 81143393.262004 -25028443.692005 -643947900.32006 -603531697.22007 -879540319.92008 89373472.92


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BOP at a Glance:

A balance of payments (BOP) sheet is an accounting record of all monetary

transactions between a country and the rest of the world. These

transactions include payments for the country's exports and imports of

goods , services , and financial capital , as well as financial transfers . The BOP

summarizes international transactions for a specific period, usually a year,

and is prepared in a single currency, typically the domestic currency for the

country concerned. Sources of funds for a nation, such as exports or the

receipts of loans and investments, are recorded as positive or surplus

items. Uses of funds, such as for imports or to invest in foreign countries,

are recorded as negative or deficit items.

When all components of the BOP sheet are included it must sum to zero

with no overall surplus or deficit. For example, if a country is importing
http://en.wikipedia.org/wiki/Exportshttp://en.wikipedia.org/wiki/Importshttp://en.wikipedia.org/wiki/Good_(economics_and_accounting)http://en.wikipedia.org/wiki/Service_(economics)http://en.wikipedia.org/wiki/Financial_capitalhttp://en.wikipedia.org/wiki/Transfer_Paymentshttp://en.wikipedia.org/wiki/Exportshttp://en.wikipedia.org/wiki/Importshttp://en.wikipedia.org/wiki/Good_(economics_and_accounting)http://en.wikipedia.org/wiki/Service_(economics)http://en.wikipedia.org/wiki/Financial_capitalhttp://en.wikipedia.org/wiki/Transfer_Payments


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more than it exports, its trade balance will be in deficit, but the shortfall will

have to be counter balanced in other ways such as by funds earned from

its foreign investments, by running down reserves or by receiving loans

from other countries.

While the overall BOP sheet will always balance when all types of payments

are included, imbalances are possible on individual elements of the BOP,

such as the current account . This can result in surplus countries

accumulating hoards of wealth, while deficit nations become increasingly

indebted. Historically there have been different approaches to the question

of how to correct imbalances and debate on whether they are something

governments should be concerned about.

The current account shows the net amount a country is earning if it is in

surplus, or spending if it is in deficit. It is the sum of the balance of trade

(net earnings on exports payments for imports), factor income (earnings

on foreign investments payments made to foreign investors) and cash

transfers . It's called the current account as it covers transactions in the

"here and now" - those that don't give rise to future claims.

The capital account records the net change in ownership of foreign assets.

It includes the reserve account (the international operations of a nation's

central bank ), along with loans and investments between the country and

the rest of world (but not the future regular repayments/dividends that the

loans and investments yield; those are earnings and will be recorded in the

current account).

Expressed with the standard meaning for the capital account, the BOP

identity is:

The balancing item is simply an amount that accounts for any statistical

errors and assures that the current and capital accounts sum to zero. At

high level, by the principles of double entry accounting , an entry in the
http://en.wikipedia.org/wiki/Current_accounthttp://en.wikipedia.org/wiki/Balance_of_tradehttp://en.wikipedia.org/wiki/Factor_incomehttp://en.wikipedia.org/wiki/Transfer_paymentshttp://en.wikipedia.org/wiki/Transfer_paymentshttp://en.wikipedia.org/wiki/Capital_account#Central_Bank_operations_and_the_Reserve_accounthttp://en.wikipedia.org/wiki/Central_bankhttp://en.wikipedia.org/wiki/Accounting_identityhttp://en.wikipedia.org/wiki/Double_entry_accountinghttp://en.wikipedia.org/wiki/Current_accounthttp://en.wikipedia.org/wiki/Balance_of_tradehttp://en.wikipedia.org/wiki/Factor_incomehttp://en.wikipedia.org/wiki/Transfer_paymentshttp://en.wikipedia.org/wiki/Transfer_paymentshttp://en.wikipedia.org/wiki/Capital_account#Central_Bank_operations_and_the_Reserve_accounthttp://en.wikipedia.org/wiki/Central_bankhttp://en.wikipedia.org/wiki/Accounting_identityhttp://en.wikipedia.org/wiki/Double_entry_accounting


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current account gives rise to an entry in the capital account, and in

aggregate the two accounts should balance. A balance isn't always

reflected in reported figures, which might, for example, report a surplus for

accounts, but when this happens it always means something has beenmissedmost commonly, the operations of the country's central bank

BOP Imbalances

While the BOP has to balance overall, surpluses or deficits on its individual

elements can lead to imbalances between countries. In general there is

concern over deficits in the current account. Countries with deficits in their

current accounts will build up increasing debt and/or see increased foreign

ownership of their assets. The types of deficits that typically raise concern

are:

A visible trade deficit where a nation is importing more physical

goods than it exports (even if this is balanced by the other

components of the current account.)

An overall current account deficit. A basic deficit which is the current account plus foreign direct

investment (but excluding other elements of the capital account like

short terms loans and the reserve account.)

Causes of BOP Imbalances:

There are conflicting views as to the primary cause of BOP imbalances,

with much attention on the US which currently has by far the biggest

deficit. The conventional view is that current account factors are the

primary cause [11] - these include the exchange rate, the government's
http://en.wikipedia.org/wiki/Balance_of_payments#cite_note-10http://en.wikipedia.org/wiki/Balance_of_payments#cite_note-10


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fiscal deficit, business competitiveness, and private behavior such as the

willingness of consumers to go into debt to finance extra consumption.

A summery of the Statistical-annual data of

BOP

Export-Import


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Most newscasters are in fact reporting on the balance on trade in goods and

services. When a country exports more goods and services than it imports,

it has a trade surplus. When it imports more goods and services than it

exports, it has a trade deficit.

Because the balance on trade in goods and services is readily

understandable and quickly available to the news media, it receives the

most public attention. However other balances also exist, such as the

balance on services, the balance on merchandise trade, and the current

account balance. Another closely watched BOP balance is official settlement

balance. The official settlement balance reflects changes in a countrys

official reserves; essentially, it records the net impact of central banks

interventions in the foreign exchange market in support of the local

currency.

Current Account

The balance of merchandise trade reflects the competitiveness of a

countrys manufacturing sectors. The balance on services reflects theservice sectors global competitiveness. Although the balance in

merchandise trade often receives more publicity, the balance on services is

growing importance because of expansion of the service sector in many

national economies. The balance of goods and services reflects the

combined international competitiveness of a countrys manufacturing and

service sectors.

For these reasons, weve considered the export and import in goods and

services in case of Bangladesh to calculate the balance of payments from

the year 1976-2008.

If we just consider the graph, we can find that, Bangladesh consist a deficit

in balance of payment from the year 1976-2008. From 1976-1980, the

balance of payment has declined as export was much higher than import.

After 1980 to 1983 the BOP has increased a little (negative BOP).


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From the year 1985-1988 the rate of fluctuation was not so prominent. In

1989 it has declined than ever before. From 1990-1993 it has raised

(negative BOP) as export rate was higher than earlier. From 1994-1995 it

has again declined with negative BOP. In this case though the rate of exports was higher than before, but the imports on those years were also

higher than before. From the year 1996-1998, it has raised (negative BOP).

It has declined in 1999. It has little bit raised in 2000. And after 2002-2008

it has just fallen with negative BOP.

As Bangladesh is a developing country, its export rate is lower than the

import rate. Thats why the negative balance in payments is occurring,

which is ultimately bringing a deficit in our economy. Though our garment

economies are much more shinning sectors, but there are so many other

goods for what we have to depend on other countries to import. Thus our

import rate is increasing day by day then export and we are facing deficits

in our economy. As Bangladesh is a developing country so the balance on

services are not so common in our country as services agencies, or

companies are not so available here so we have just considered the

balances in exports and imports.

Capital Account

Foreign direct investment (FDI) is a potent weapon of economic

development, especially in the current global context. It enables a capital-

poor country like Bangladesh to build up physical capital, create

employment opportunities, develop productive capacity, enhance skills of local labor through transfer of technology and managerial know-how, and

help integrate the domestic economy with the global economy.

In Bangladesh, FDI inflows are reported under the capital and financial

account of the countrys Balance of Payments (BOP) statement which

provides the direct effect on the BOP. Thus the inflow of FDI plays an

important role in determining the surplus/deficit in the capital and financial

account of the BOP statement. The initial impact of an inflow of FDI on


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Bangladeshs BOP is positive but the medium term effect could become

either positive or negative as the investors increase their imports of

intermediate goods and services, and begin to repatriate profit.

Official reserve account

The official reserve account, a subdivision of the capital account, is the

foreign currency and securities held by the government, usually by its

central bank, and are used to balance the payments from year to year. The

official reserves increases when there is a trade surplus and decreaseswhen there is a deficit. Sometimes the central bank will use it to attempt to

change the exchange rate to what the government perceives as more

favorable.

In theory, the current account and the capital and financial account should

balance, whereby a current account surplus is deployed on external

investment and/or reduction of foreign debt, while a current account deficit

is funded by foreign borrowing or depletion of assets. In practice, however,

this is not the case, because all balance of payments items are measured

independently, irrespective of actual payment flows.

Errors and omissions

Errors and omissions are a balancing item, i.e. a net figure, so that errors in

individual items may cancel each other out if they have opposite numericalsigns. Thus the errors and omissions item is not necessarily a measure of

the quality of the balance of payments accounts, and a low figure need not

imply more accurate accounting.

There are three main explanations for imperfect balance of payments

measurements. First, a lag may occur because of individual transactions,

for example investments in transportation hardware, borrowing, securitiespurchases, etc., are not recorded at the correct time relative to the actual


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payments flow. At constant prices and exchange rate, a lag will be leveled

out over time. Second, valuation errors may creep in when the price of

individual items is not correctly measured, neither in foreign nor domestic

currency. Third, a balance of payments error may stem from an error inrecorded volume. Individual items may be overestimated or

underestimated due to documentation errors, or because transactions or

capital movements between residents and non-residents are estimated

rather than absolute. As a ratio of total current account and capital and

financial account flows, errors and omissions have increased in pace with

rapidly growing total flows. The persistent negative error can probably be

attributed to underestimated investments.

The abolition of currency controls and new investment opportunities,

compounded by large changes in the financial sector, have not made data

collection any easier in recent years and explain part of the growing error.

Over the period 2000 to 2005, the errors and omissions figure was

persistently negative, implying that it was systemic. The main explanation

could lie in liberalizations of capital movements, in particular because data

collection methods were not updated in good time to reflect new foreign

currency regulations.

Ending Summery

As per the annual data (1976-2008) and its graphical presentation, the

condition of BOP can be easily understandable. It shows the fluctuations

with its surplus and deficits. So the negative and positive balance of payments reflects the condition of Bangladesh BOP.

References:

http://www.bangladesh-bank.org/econdata/bop.html

http://en.wikipedia.org/wiki/Balance_of_payments
http://www.bangladesh-bank.org/econdata/bop.htmlhttp://en.wikipedia.org/wiki/Balance_of_paymentshttp://www.bangladesh-bank.org/econdata/bop.htmlhttp://en.wikipedia.org/wiki/Balance_of_payments


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BOP statistic and analysis of bangladesh by taranga salehin

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