UNITED INTERNATIONAL

UNIVERSITY
International Business
IBS 3121
Sec: D

Submitted to:
Mohammad Ahshanullah
Assistant Professor
Group Assignment- 1

Topic: BOP Statistics and Analysis of Bangladesh

Submitted by:
Group: "Friends Group"
Name
Noor Ibne Salehin
Toha Ibne Satter
Samir Chandra Sarker
Farzana Akhter
Syed Md. Kazem Ali

ID
111082071
111091303
111091221
111091282
111083036

Submission Date: 10-052011

BOP Statistics and Analysis of

Bangladesh

Export Import of Goods

Goods
Goods
Year
Exports
Imports
Balance
1976
399293223.9
816442562.3
-417149338.4
1977
476434798.7
1019059911
-542625112
1978
549261812.8
1339600097
-790338284
1979
655590633
1725772206
-1070181573
1980
793230497.8
2352840029
-1559609531
1981
790466640.3
2434769617
-1644302977
1982
768435438.6
2221081894
-1452646455
1983
723946923.5
1930717075
-1206770152
1984
931742139
2340009095
-1408266956
1985
999457038.6
2286425081
-1286968042
1986
879997897.8
2300712559
-1420714661
1987
1076878928
2445632544
-1368753616
1988
1291023746
2734413290
-1443389544
1989
1304772234
3300061977
-1995289743
1990
1672401690
3259359364
-1586957674
1991
1688658601
3074451943
-1385793343
1992
2097866552
3353792987
-1255926435
1993
2544671069
3657270508
-1112599439
1994
2934413942
4350523388
-1416109446
1995
3733288294
6057382132
-2324093838
1996
4009289722
6284612065
-2275322343
1997
4839914681
6550702464
-1710787782
1998
5141447358
6715723613
-1574276255
1999
5458282969
7535521631
-2077238662
2000
6399172401
8052920470
-1653748069
2001
6084729483
8133410948
-2048681465
2002
6102361384
7780131631
-1677770247
2003
7050128518
9491985574
-2441857056
2004
8150680503 11157146576
-3006466073
2005
9302474537 12501569435
-3199094898
2006
11553693155 14443352637
-2889659482
2007
12474289384 16669204360
-4194914976
2008
15441799603 21507005157
-6065205553

Export Import of Services

Year

Service
Exports

Service
Imports

1976
1977

67969721.07
64143706.18

131426647.6
184888483.2

1978

101003293.2

253143549.8

1979

132627678.4

372209006.9

1980

211479158.7

481175309.8

1981

211134163.7

463486469.6

1982

218190160.6

439734976.2

1983

215907276.6

405075851.1

1984

207480733.7

478008839.9

1985

237887454.7

477946810.1

1986

215034176.4

503013935.1

1987

247940897.8

494188084.1

1988

277644150.5

613116654.7

1989

334397273

726433219.7

Balance
63456926.57
-120744777
152140256.7
239581328.4
269696151.1
252352305.9
221544815.7
189168574.5
270528106.2
240059355.5
287979758.7
246247186.4
335472504.3
392035946.7

1990

391568085.2

700451342.3

1991

431049174

695278670.3

1992
1993

483351806.7
529414582.2

788775985
932154496.1

1994

589796979.8

1025033435

1995

698193828

1531215116

1996
1997

604835296.5
687296007.7

1166028555
1283720377

1998

723926775.8

1237089129

1999

777661816.3

1396716124

2000

815083370.3

1620214189

2001

752200851.3

1521505043

2002

848651864.6

1405725165

2003

1011675071

1711471831

2004

1083013795

1931428204

2005
2006
2007
2008

1248999468
1333832614
1616837918
1930436529

2206664286
2340476991
2884764553
3836794684

308883257.1
264229496.3
305424178.3
-402739914
435236454.8
833021287.9
561193258.8
-596424369
513162353.6
619054307.3
805130819.1
769304191.9
557073300.1
699796760.5
848414409.1
957664817.7
-1006644378
-1267926634
-1906358155

Investment Income
Income
Income
Year
Receipts
payments
Balance
1976
16325216.5
40136955.25
-23811738.75
1977
26541654.89
58707065.65
-32165410.76
1978
34519474.77
61497031.56
-26977556.79
1979
64386031.11
65933098.78
-1547067.67
1980
76325132.49
69734330.88
6590801.61
1981
41823337.7
97318153.71
-55494816.01

1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008

28917202.91
35928428.53
68128448.68
41641720.04
31697501.13
47422596.68
54848636.11
88720173.54
64196919.03
69955909.52
100058959.6
100146527.3
150494145.3
270090800.2
129381581.8
86608016.65
91450285.43
94345261.5
78355796.08
76632902.34
56762508.87
56538596.21
102560560.7
116559937.3
177418963.6
244052420.2
220211227.8

Current Account

154161378.7
117793181.7
135753897.8
153669802.7
167219028
172510865
180739659.2
196932135.1
179759891.9
166919902.7
165958606.2
175802103
188748662.1
201765164.2
193062050.4
197977399
206136819.2
258469645.7
344811443.2
361927472.9
321992158.7
361309937.2
473901863.7
910190410.3
1018116405
1211993047
991066003

-125244175.8
-81864753.15
-67625449.09
-112028082.6
-135521526.9
-125088268.3
-125891023.1
-108211961.6
-115562972.9
-96963993.17
-65899646.56
-75655575.75
-38254516.82
68325636.02
-63680468.64
-111369382.4
-114686533.7
-164124384.2
-266455647.2
-285294570.5
-265229649.8
-304771341
-371341303
-793630473
-840697440.9
-967940626.5
-770854775.2

Year
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008

Merchandise trade
balance
-417149338.4
-542625112
-790338284
-1070181573
-1559609531
-1644302977
-1452646455
-1206770152
-1408266956
-1286968042
-1420714661
-1368753616
-1443389544
-1995289743
-1586957674
-1385793343
-1255926435
-1112599439
-1416109446
-2324093838
-2275322343
-1710787782
-1574276255
-2077238662
-1653748069
-2048681465
-1677770247
-2441857056
-3006466073
-3199094898
-2889659482
-4194914976
-6065205553

Services trade
balance
-63456926.57
-120744777
-152140256.7
-239581328.4
-269696151.1
-252352305.9
-221544815.7
-189168574.5
-270528106.2
-240059355.5
-287979758.7
-246247186.4
-335472504.3
-392035946.7
-308883257.1
-264229496.3
-305424178.3
-402739914
-435236454.8
-833021287.9
-561193258.8
-596424369
-513162353.6
-619054307.3
-805130819.1
-769304191.9
-557073300.1
-699796760.5
-848414409.1
-957664817.7
-1006644378
-1267926634
-1906358155

Investment income
balance
-23811738.75
-32165410.76
-26977556.79
-1547067.67
6590801.61
-55494816.01
-125244175.8
-81864753.15
-67625449.09
-112028082.6
-135521526.9
-125088268.3
-125891023.1
-108211961.6
-115562972.9
-96963993.17
-65899646.56
-75655575.75
-38254516.82
68325636.02
-63680468.64
-111369382.4
-114686533.7
-164124384.2
-266455647.2
-285294570.5
-265229649.8
-304771341
-371341303
-793630473
-840697440.9
-967940626.5
-770854775.2

Capital Account

FDI

Portfolio
Investment
Amount

Year
Amount
1983
403978.56
1984
-553269.4
1985
1986
2436499.34
1987
3205086.76
1988
1838242.5
1989
247908.27
1990
3238781.19
1991
1390444.32
1992
3721853.38
1993
14049886.52
1994
11147788.33
1995
1896372.13
1996
13529831.54
1997
136310534.1
1998
187057212.5
1999
179603006.3
2000
280384629.7
2001
280384629.7
2002
280384629.7
2003
265507414.1
2004
444836578
2005
811382056.1
2006
697206284.1
2007
652818718.9
2008
973108114.5

1267876.38
1624686.99
-7191558.37
-64516.13
1704369.38
280926.02
2213918.75
8729923.02
8364969.87
105861743.2
-15230807.24
-117042595.7
-9892244.72
-4089360.45
-1272619.06
1292999.31
-3369753.38
-2557564.25
1630080.79
4292383.82
19443681.45
28235273.7
140986123.1
9851297.52

Official
ReserveAccount
Ye
ar
19
76
197
7
197
8
197
9
198
0
198
1
198
2
198
3
198

Amount
288917081.28
241498635.3
321264479
413645569.5
331184643.5
159682646
208528949.7
545880999
408085843.6

4
198
5
198
6
198
7
198
8
198
9
199
0
199
1
199
2
199
3

356198602.8
434858520.9
876251425
1076508833
532096152
659565646
1307945016
1853480695
2446571637

199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8

3174800894.21
2376175760
1869480045
1610776818
1935771319
1634375947
1515788658
1305630682
1721734786
2624623706
3221759636
2825004868
3877163417
5277479283
5787356028

Errors and Omission

Year
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991

Amount
13258446.04
-14733007.23
21558466.84
-4316318.81
-74088389.01
93735216.85
-83403351.22
-26399192.68
-95201365.02
-67810321.44
8747375.85
-123773084.6
6622311.41
-43113443.37
-75702843.28
-98425109.1

1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008

-83968682.12
69433545.17
-257050062.5
133337287.9
113463803.6
-75450346.56
200989260.3
257967351.9
282354159.9
-105958348.3
-349308527
81143393.26
-25028443.69
-643947900.3
-603531697.2
-879540319.9
89373472.92

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

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

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 been
missedmost 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

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

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 the
service

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).

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 capitalpoor 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

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 decreases
when 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 numerical
signs. 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, securities
purchases, etc., are not recorded at the correct time relative to the actual

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 in
recorded

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