The government will continue with its cautious and accommodative policy to tackle instability in balance of payments (BoP) and foreign-exchange reserves in fiscal year (FY) 2023-24.
On the other hand, the central bank, as part of the government's plan to remove defaulted loans and other anomalies in the financial sector, will implement various procedural guidelines, being prepared as per BASEL-III, in phases.
Finance minister AHM Mustafa Kamal in his speech for the FY '24 proposed budget said instability in BoP lessened following the government's adoption of the time-befitting strategy.
"We'll remain cautious and adopt an accommodative policy in the coming FY as well," he added.
Mr Kamal said the gap between multiple exchange rates is being brought to a minimum level with the aim of making the exchange rate gradually market-oriented.
To rebuild the foreign-exchange reserves, the current initiatives of verifying the accuracy of the prices of imported items along with implementation and monitoring of procedural requirements on LC opening, disposal and related issues will continue in future.
To encourage the use of formal channels in sending remittance, he said, a 2.5-per cent incentive is provided and remitter-friendly processes, including the mobile financial services, are being promoted.
All fees required for sending remittance through Bangladeshi banks and exchange houses have been exempted, according to the minister.
Thanks to these initiatives, he said, remittance income is on the increase. Import growth has declined and is returning to normal. "Concurrently, we're carrying out export promotional activities to augment our export income. Steps are being taken for disbursement of foreign loans in the pipeline. Hopefully, the reserve situation will improve in a short period of time."
However, latest statistics show, a downturn in remittance continues as Bangladesh saw receipts drop 10.27 per cent year on year in May, in a further pressure buildup on the country's foreign-exchange reserves.
The sharp fall in remittance inflow mounts the pressure on the country's falling forex reserves, which now dropped below US$30 billion as on Thursday.
The remittance inflow stood at $1.69 billion in the just-past month compared to $1.88 billion in the same month a year ago, the Bangladesh Bank (BB) data showed.
Compared with the remittance earned in April 2023, it increased but the increase is as little as $6.72 million.
Officials at the central bank said the latest fall in the reserves is due mostly to two factors --growing sales of the greenback to banks to settle their LC-related payments amid forex dearth and comparatively lower earnings from the source of remittance in May.
Seeking anonymity, a BB official said the central bank sold around $12.0 billion up to May of this fiscal compared to US$7.62 billion in the entire financial year of 2021-2022. "This put pressure on the reserves."
They were expecting the volume of remittance to increase in April when the Muslim-majority country celebrated Eid-ul-Fitr, the largest religious festival for Muslims across the globe.
"But we did not receive the expected level of foreign currencies from the remitters this time. We hope the latest hike in the exchange rate for remittance will encourage the remitters to send in more foreign currencies in the coming days," the official said.
Very recently, Bangladesh Foreign Exchange Dealers' Association (BAFEDA) and the Association of Bankers, Bangladesh (ABB) had increased the exchange rate on remittance by Tk 0.50.
With the revised rates by the foreign exchange dealers and banks, the Bangladeshi expatriates working abroad are now getting Tk 108.50 per dollar. According to the BB data, the volume of forex reserves dropped to $29.91 billion on May 01, 2023 from $30.96 billion recorded on the previous day.
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