Kamal: Keeping foreign reserves stable would be a great challenge

Finance Minister AHM Mustafa Kamal on Thursday said maintaining imports at a reasonable volume and keeping foreign reserves stable would be a great challenge in fiscal year 2022-23 (FY23) due mainly to a stress on the exchange rate originating from the increased demand for US dollar in the local market.

In his budget speech in the Jatiya Sangsad Kamal said despite the COVID pandemic, during FY2020-2021, remittance earning was impressive. Due to the sluggish economic recovery in Bangladesh’s major overseas labour markets because of the COVID pandemic and the ongoing Russia-Ukraine conflict, there has been a stagnation in remittance earning in the current fiscal year (FY22).

On the other hand, he said with the speedy economic recovery from the COVID pandemic situation in Bangladesh, import volume has increased at a record high level.

Consequently, during the July-April period of FY22, the current account deficit stood at US$ 15.3 billion, he said, adding that related to that, there has been a stress on the exchange rate originating from the increased demand for US dollar in the local market.

To manage this crisis, Bangladesh Bank released US$ 6.08 billion up to June 1, 2022 in the local foreign exchange market, he added.

In October 2021, the finance minister said the amount of foreign exchange reserve was US$ 48 billion, which has now declined to US$ 42 billion. Besides, Taka is being depreciated against US dollar, and since July 1 of current fiscal year to June 6, 2022, Taka depreciated against US dollar by around 7.9 percent, he said.

“So, along with containing inflation, maintaining imports at a reasonable volume and keeping foreign reserves stable would be a great challenge for us,” he added.