Finance minister AHM Mustafa Kamal said Bangladesh Bank's initial attempt to stabilize the foreign exchange rate by increasing the supply of dollars in the market caused a temporary liquidity crisis in the market. As a result, the government's interest expenditure on deficit financing from bank sources increased.
He made the disclosure while unveiling the national budget for the fiscal 2023-24 at the national parliament on Thursday.
The finance minister said, “Import growth increased to 35.9 per cent in FY2021-22 from 8.6 per cent in FY2019-20. On the other hand, in FY2021-22, the expatriate income decreased by 15.12 per cent compared to the previous fiscal year."
"The current account deficit increased from US$ 4.58 billion in FY2020-21 to US$ 18.6 billion in FY2021-22 due to increase in import expenditure in the external sector and decline in remittances. Besides this, the financial account also turned negative due to slow implementation of foreign aided projects and export earnings repatriation. The twin deficit in the current account and financial account worsens the balance of payment situation," he added.
“Foreign exchange reserves decreased from US$ 46.39 billion in June 2021 to US$ 41.83 billion in June 2022 and gradually further declined to US$ 29.97 billion at present. At the same time, Taka depreciated against US dollar. In June 2022, the exchange rate of Taka against US dollar was Tk 93.5 per dollar. In 20 May 24, 2023 the exchange rate stood at Tk 108.1 per US dollar. Bangladesh Bank's initial attempt to stabilise the foreign exchange rate by increasing the supply of dollars in the market caused a temporary liquidity crisis in the market. As a result, the government's interest expenditure on deficit financing from bank sources increased,” added the foreign minister.