Inflation
Inflation will ease by end of current fiscal year: Finance Minister
Finance Minister Abul Hasan Mahmud Ali on Wednesday expressed hope that the current pressure of inflation will ease to a bearable level by the end of the current financial year.
The finance minister expressed this hope while presenting the budget implementation progress report for the first quarter ((July-September) of the fiscal year 2023-2024 in the Parliament.
By the end of the current financial year, the expatriate income will also increase and the foreign exchange reserves will quickly return to their previous strong position, the finance minister said.
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Abul Hasan Mahmud Ali said that the country is experiencing significant inflationary pressure due to the increase in the prices of various daily necessities including energy in the international market and the rapid change in foreign exchange rates.
However, the current inflationary pressure is expected to come down to a bearable level by the end of the current fiscal year, he said.
The minister said that the government has taken various initiatives to control inflation.
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He said that in order to take more effective measures, the Bangladesh Bank is moving forward to implement some pragmatic measures involving monetary policy.
“Interest rates have been hiked several times and loan interest caps have been lifted,” he said.
The finance minister said that the current account balance was positive at the end of the first quarter (July-September) of the current financial year due to increase in exports, decrease in import costs and increase in repatriation income.
However, he said, due to negative growth in the financial account, foreign exchange reserves have decreased as compared with figures on June 30, 2023.
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The government has already taken various steps to increase foreign exchange reserves, he added.
He expected that the foreign exchange reserves to return to their previous strong position very soon.
BB announces new monetary policy to tackle inflation
Bangladesh Bank (BB) on Wednesday announced a contractionary monetary policy statement for the second half of the fiscal year 2023-24 to tame inflation.
“The central bank’s priority is to control inflation at any cost. To do this we set a policy of controlling currency flow outside the bank for another step to curb the growing inflation,” said Abdur Rouf Talukder, governor of the central bank.
Bangladesh has revised down the economic growth projection for FY 2023-24 to 6.5 percent from the initial 7.5 percent considering the ongoing challenges in the financial sector.
Bangladesh Bank authorises 90-day buyers' credit to import essentials for Ramadan
The authorities, however, revised the projection for inflation upwards to 7.5 percent from 6 percent as consumer prices persistently stayed high, according to the monetary policy statement.
The governor said that the central bank wants to bring down inflation to 7.5 percent by June. For this, the policy interest rate has been increased by 25 percentage points to 8 percent in the new monetary policy.
He said that the monetary target is downgraded to curb money supply cutting down private sector credit growth to 10 percent for June from the existing target of 11 percent.
Bangladesh Bank unveils SMART-derived interest rates for January
According to the new policy, the interest rate is being increased from 7.75 percent to 8 percent.
As a result, the interest rate of the money, which other banks will borrow from the BB, will increase.
Besides, the central bank hints to increase the reverse repo rate (now called the Standing Deposit Facility or SDF) minimum interest rate by 75 percentage points from 5.75 percent to 6.50 percent. If there is surplus money in the market, the central bank withdraws the money through reverse repo.
The cap on the special repo or standing lending facility (SLF) interest rate in the policy interest corridor has been reduced by 25 basis points to 9.50 percent from 9.75 percent. This will reduce the cost of borrowing money from the BB during liquidity crises in banks.
Bangladesh Bank dissolves National Bank’s board
The monetary policy announced for the first half of the current financial year (up to December) targeted private sector credit growth at 10.9 percent. But this target of credit growth like inflation has not been achieved. And till last November, credit growth in the private sector has been achieved at 9.90 percent, which is 1 percent less than the target.
Inflation, currency prime focus of BB’s next monetary policy
The Bangladesh Bank (BB) will announce its next monetary policy on Wednesday for the second half of the fiscal year 2023-24 to tame inflation and ease exchange rate pressure.
As part of the preparation, the draft of the monetary policy was approved at the central bank board meeting on Sunday.
Bangladesh Bank authorises 90-day buyers' credit to import essentials for Ramadan
Officials who attended the board meeting told UNB that the exchange rates would not be real market-based in the upcoming monetary policy as the foreign exchange market is not stable yet.
The government policymakers instructed to keep the market under control by following the crawling peg system.
Bangladesh Bank unveils SMART-derived interest rates for January
“Crawling pegs help control currency movement, especially when there are threats of devaluation. The purpose of crawling pegs is to provide stability,” said an official of the BB involved in the preparation of the monetary policy statement.
The monetary policy will focus on controlling the growing inflation, which has been a burning issue over the last eight months.
Bangladesh Bank dissolves National Bank’s board
Economist and co-founder of PRI Dr Sadiq Ahmed, Director General of the Bangladesh Institute of Development Research (BIDS) Binayak Sen, and Chairman of the Economics Department of the Dhaka University Masuda Yasmin are in the monetary policy committee.
‘If US can raise hourly wage, we can follow that model; inflation is high there’: Momen
Foreign Minister AK Abdul Momen today (December 21, 2023) said Bangladesh wants peace and stability instead of conflict to keep the wheel of development going.
“We don’t want any conflict. We want peace and stability, and continuation of democratic trend,” he said while talking to journalists as he began his election campaign.
Momen, who is contesting from Sylhet-1 constituency, said the country has witnessed an unprecedented development over the last 15 years and that development needs to remain undisturbed.
He said people of this country sacrificed their lives for establishing democracy, justice and human rights.
Read more: Want to uphold Sylhet's political legacy: Momen
Responding to a question, Momen said BNP made a mistake and they should have joined the election to boost their credibility as a political party.
“They have lost a chance and their acceptability is also lost,” he said, referring to killing policemen and arson attacks on both private and public properties since October 28.
Saying that BNP lacks leadership and maturity, Momen said politics is for the welfare of people and the country, not for their destruction.
The foreign minister said the people with much enthusiasm will come to the polling centers to cast their votes freely.
Read more: US proposal for Boeing purchase under discussion for a while, not tied to election: Momen
“To increase voters’ presence, we will go everywhere,” he said, noting that many educated people refrain from casting their votes.
“I will request them to come to vote. I won’t ask them to vote for me… They can vote for their preferred candidates. We want a fair election, free of violence. We want to show the world a model election,” Momen said.
Eight US Congress members recently sent a letter to Stephen Lamar, president and CEO of American Apparel & Footwear Association (AAFA), saying that they think the minimum wage set for Bangladesh’s garment workers is not enough. When Momen’s attention was drawn in this regard, he said, “I thank them. They can do one thing. In New York, the hourly wage is 15 dollars. If they can make it 45 dollars and create a model, we can follow them. People in America are suffering due to high inflation.”
Read more: No external pressure; we’re under our own pressure: Momen
Political instability always causes economic uncertainty: Ahsan Mansur
Eminent economist Dr Ahsan H. Mansur has said that political instability or uncertainty always affects the economy adversely.
Dr Mansur, executive director of the Policy Research Institute (PRI), a Dhaka-based think tank, was talking to UNB on the ongoing political situation centred on the 12th national election and the opposition's hartal-blockade programs.
“Bangladesh's macroeconomy is facing challenges not seen in the last 25/30 years, so tackling the grave situation politically is very important,” he said.
The political unrest alongside the macroeconomic instability is a double blow for the domestic economy, so the current domestic situation is different from any other election period in the history of Bangladesh, Dr Mansur pointed out.
Read: Blockades are bad for economy, scare foreign investors: FBCCI President
He said, “If the national election is not credible to the international and domestic people, the concern will grow over what steps and reaction come from western countries, which is the export destination of most Bangladeshi products.”
Meanwhile, the foreign countries have expressed concern over a decent working environment for labour, security of labour organisations' leaders, and desired wages in the export-oriented garment industries, he said.
Bangladesh's human rights record was reviewed for the fourth time under the Universal Periodic Review (UPR), an important UN human rights mechanism. Bangladesh's human rights record is under the scrutiny of the UN, EU, and USA, in this case, the steps for a political resolution and securing labour rights are very crucial, he opined.
Regarding releasing the second instalment of the IMF’s USD $4.70 billion loan, Dr. Mansur, who is also a former senior economist of the IMF, said that there is no reason to delay the second instalment of the loan as Bangladesh met most of the conditions set by the global lender.
Read: Economy bears brunt of ongoing blockades and hartals ahead of polls: Dr Atiur Rahman
He said double-digit inflation has been prevailing in Bangladesh for a long time, while the South Asian countries including Sri Lank had succeeded in controlling inflation. In this area, Bangladesh has to do more to reduce the inflation rate to 4-5 percent.
He focused on a market-based foreign exchange rate to make the exchange rate sustainable instead of being controlled by the Bangladesh Bank or Bangladesh Foreign Exchange Dealers Association (BAFEDA).
Dr. Masur suggested policy reform and effective measures to stop money laundering or capital flight for a sustainable domestic foreign exchange market, in that the central banks have to apply their regulatory authority without bias or influence.
“Despite a huge workforce and advantage of geographical location, Bangladesh cannot attract big volume foreign direct investment (FDI) due to lack of policy reforms and weak regulatory authority. Political unrest will work as another barrier for FDI,” he pointed out.
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Regarding political resolution, he said that there is no alternative to dialogue amongst major political parties, and tolerance of opposition for those who are in strong positions or in power is very important.
Dr Mansur said all parties' participation in the upcoming election is the best option for Bangladesh in consideration of the overall current situation, while dialogue and level playing field for political parties are important issues.
He thinks that the situation is not normal, as what is happening in Bangladesh is being keenly watched around the world, so the authorities must proceed with reason.
Costly rental power plants keep getting extensions, even in the era of surplus capacity
Despite demand being nearly half of electricity generation capacity, the government of Bangladesh continues to extend the tenure of costly rental power plants.
The latest decision for extension of contract for a gas-based rental power plant was made in the Cabinet Committee on Government Purchase on November 8.
As per the decision, a 55 MW gas-based rental power plant of Precision Energy Ltd. will get an extension of 5 years to their existing contract with the state-owned Bangladesh Power Development Board (BPDB).
Under the Power Purchase Agreement (PPA), the BPDB will buy electricity from the plant at a tariff rate of US Cent 5.7 (equivalent to about Tk 6) per kilowatt hour while it has been buying electricity from base-load plants at around half the price.
Read: Despite surplus electricity, contracts of 10 rental power plants extended in four months
For instance, the government has been purchasing electricity from Summit-GE's Bibiyana 450 MW gas-fired power project at US 3.32 cents per kilowatt-hour, with a contract for a period of 22 years.
The government approved a PPA in October 2021 under which Consortium of (1) Edra Power Holdings Sdn Bhd, Malaysia and (2) Winnievision Power Ltd, Bangladesh, will set up the 660 MW base-load combined cycle plant and the BPDB will purchase electricity from the plant over a contract period of 22 years at a levelised power tariff of US 3.679 Cents (equivalent to Tk 2.94) per kilowatt hour to be run by local gas.
The move for continuing the extension of rental and quick rental power plants' contracts raised the eyebrows of the energy experts.
Many experts and power industry insiders believe that such a move to continue entertaining the costly rental power plants will increase the burden on the government for more subsidies, at a time when the sector has already been facing huge capacity payments' obligation with surplus capacity of electricity generation reaching about 50 percent.
Read: Power flow set up from Payra plant to Rampal sub-station
Last year, the government extended the contracts of at least 10 rental power plants with a new provision of “No Electricity, No Payment” but kept a fund allocation of Tk 6,564.08 crore to pay the owners of the rental power plants.
This time also Tk 1205.40 crore was kept as allocation while approving the latest extension proposal of Precision Energy's 55 MW Ashuganj gas-fired rental power plant which will be paid in in next 5 years.
According to the Power Division’s official statistics, as of September 13, 2023, the country's power generation capacity was 27,834 MW including off-grid renewable and captive power, while the highest generated in a day was 15,648 MW.
The BPDB official data shows the country generated 14,021 MW on September 26, while covering the excess demand by resorting to load shedding of 113 MW.
Read: 5 rental power plants with 457 MW get 2-year extension
The demand was decreasing with the coming winter and the country's power demand was recorded to be 10,954 MW on November 8 while on-grid installed capacity was showing 25,339 MW meaning that the surplus capacity was more than double at 14,385 MW.
State Minister for Power, Energy and Mineral Resources Nasrul Hamid, however, defended the extension of the rental power plants’ contracts saying that the deals were extended for “emergency necessity” to tackle the current situation when last year 10 rental power plants' contracts were extended.
“As there is a gas shortage, we have to run liquid-fuel based rental and quick rental power plants on full capacity to meet the demands," he had told UNB.
He also said these plants don’t oblige the government to make 'capacity payment' - i.e. payment for unused electricity, that was the case with some earlier contracts. “As a result, the cost of electricity from these extended rental power plants came down by 30-40 percent from the original cost," Nasrul Hamid said.
The government documents show that of the approved 5 plants in March last year, three belong to Summit Group, one belongs to Dutch-Bangla Group and one to Orion Group.
'Admit the mistake first'
About the country's growing surplus electricity and extension of rental power plants, vice president of Consumer Association of Bangladesh (CAB) Prof M Shamsul Alam said: “There will be a big indiscipline in the power sector as pressure for private sector’s capacity payment will continue to go up while import of primary fuel will be increasing. Finally, it will lead to energy insecurity."
Read: Deal period with rental, quick rental power plant owners can’t be extended: BPDB Chairman
In such a situation, he said, the only way-out is that the government has to admit first it has done a mistake by giving permission to the private sector for excessive power generation without consideration of the demand and then change the current policy and strategy.
Otherwise, the situation will be more difficult to manage as pressure from the International Monetary Fund (IMF) is coming to raise electricity tariff again. If so, it will further push up inflation, he added.
Despite challenges, govt hoping to restore economy’s pre-Covid momentum in current fiscal
The government of Bangladesh is hoping to return the economy to its pre-COVID growth momentum by the end of the current fiscal (2023-24), although that presents a significant challenge in the face of a clutch of economic headwinds.
The government’s vision for economic recovery is outlined in the "Medium Term Macroeconomic Policy Statement 2023-24 to 2025-26," prepared by the Macroeconomy Wing of the Finance Division, under the Finance Ministry.
It maintains that with the onset of the pandemic in 2020, the economy was knocked off its fast-paced growth trajectory for large parts of the last three years. The first confirmed cases of Covid-19 in Bangladesh were reported in March 2020, less than three months after the outbreak in Wuhan.
Recently published quarterly GDP data (in keeping with a condition set by the IMF) bears this out. It reveals that the economy contracted by a massive 7.86 percent in the last quarter of the 2019-20 fiscal (April to June 2020), as the virus spread throughout the globe.
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According to the quarterly data released retrospectively by the Bureau of Statistics (BBS) last month, GDP had grown by between 6.5 to 8 percent in the first three quarters of 2019-20. That reflects the extent to which the wind was knocked out of the economy by the negative growth (contraction) in the fourth quarter.
The slump induced by Covid would keep economic performance depressed through the first two quarters of the next fiscal (2020-21). It wasn’t until the 3Q (January to March, 2021) that the first signs of a recovery would become visible.
As the 2021-22 fiscal kicked in, Bangladesh looked ready to put Covid-19 behind it, having implemented a successful vaccination programme and lifted lockdown restrictions. The economy rallied robustly, and GDP growth touched 10 percent in the third quarter (January to March 2022).
Yet even as the recovery was underway, the seeds for it to stumble were sown halfway across the globe, with Russia going to war in Ukraine in February 2022. The resulting volatility in international energy markets and supply chain disruptions would knock the momentum out again, of the country’s post-Covid recovery.
Read more: World Bank forecasts Sri Lankan economy to grow by 1.7% in 2024
Although there was nothing like the contraction precipitated by Covid-19, the economy did experience a severe slowdown in the last quarter of FY22, slipping to just 2.6 percent from the previous quarter’s high of 10 percent.
“Bangladesh also braced for impacts on its economy. However, actual data shows that Bangladesh did impressively even during the height of the Covid-19 outbreak and is expected to return to pre-Covid growth trajectory by the end of FY 2023-24,” the statement surmises.
If everything goes according to plan and ‘assumptions hold’, it says that 8 percent GDP growth rate can be attained again in 2025-26.
“Therefore, the deviation of the actual from the planned growth envisaged in the 8th FYP (Five Year Plan) remained small,” it said.
Read more: Bangladesh economy hit hard by Ukraine war
The Macroeconomic Policy Statement mentions capital accumulation is key for development and hence the government aims to foster private investment along with public investment towards fulfilment of its goals..
Total investment in FY 2021-22 stood at 32 percent of GDP in which the contribution of the private and the public sectors were 24.5 and 7.5 percent, respectively. To achieve the long and medium-term growth targets, the level of investment will need to be increased further.
The statement points out that there is room to increase the implementation rate of public investment. If the pace of implementation of development projects can be increased, the required level of investment can be attained.
“Recognising this, the government has taken steps to bring about some structural changes in both project design and implementation levels,” it says in the statement.
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The Finance Division document said that the Russia-Ukraine war has put global energy supplies at risk. Russia is a major global supplier of energy and hence when the war broke out, commodity prices spiked fast.
Bangladesh started to suffer from this like almost all other countries. By December 2022, point-to-point inflation rose to 8.7 percent and then further rose to 9.3 percent by March 2023.
However, global commodity prices are already falling, and central banks have raised policy rates and because of this it is expected that inflation will come down in the coming months.
The IMF has projected that the measures taken by the governments will help reduce inflation in the medium-term. The Finance Division has projected that average inflation will fall significantly to 6.0 percent in 2023-24, although there has been no indication of it through the first quarter (July to September).
Read more: Bangladesh Budget 2023-24 passed in parliament
In order to tame inflation and protect the incomes of the poor, the government has emphasised increasing the domestic production of essential items, while gradually tightening monetary policy.
The document says that food inflation hurts the poor the most. Keeping this in mind, the government through various measures, including subsidies and incentives, encouraged the growth of agricultural output.
To support the agriculture sector, disbursement of credit to the sector has been increased.
By the end of February 2023, the disbursement of agricultural credit and non-farm rural credit amounted to Tk. 210.66 billion in the first 8 months of the last fiscal, which was almost 14 percent higher, year on year.
Read more: Why inflation persists at a higher level in Bangladesh
With the help of supportive policies of the government, the general index of industrial production (medium and large-scale manufacturing) has been on the rise, reflecting expanded industrial production.
Dr Masrur Reaz, a prominent economist and public policy analyst, believes it would be very challenging to regain the pre-Covid momentum within the current fiscal, since a number of macroeconomic indicators have become unstable.
Talking to UNB, he suggested the government focus on stabilising the macroeconomic situation first, which would make the economy more sustainable in the long run.
Dr Reaz pointed out that high inflation, severe foreign exchange/dollar crisis preventing, among other things, opening of LCs, and the fluctuating value of domestic currency taka, should be resolved first.
Read more: Businesses should get opportunities to turn around before wholesale declaration of loan defaulters: FBCCI President
“To bring the economy back to its pre-Covid growth rate, these issues should be resolved first, which itself would be very challenging and difficult in a short time,” he opined.
Explaining further, Dr Reaz said: “The time is to stabilise the economy rather than focus on growth. In the long run, the economy will grow through reducing the high rate of non-performing loans, keeping inflation within reasonable limits and achieving exchange rate stability.”
Businesses should get opportunities to turn around before wholesale declaration of loan defaulters: FBCCI President
Mahbubul Alam, the new president of the country’s apex trade body, the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), has already written to Bangladesh Bank asking for opportunities for businesses struggling to pay instalments against loans to turn around their fortunes before declaring them as loan defaulters.
He also believes heightened inflation is a global issue, rather than unique to Bangladesh, as prices of daily essentials and energy prices have witnessed spikes across the world, including the USA and Europe.
Bangladesh is trying to curb inflation, but the global supply chain disruption creates crises on the supply side, which is the cause of the price hike in some cases, he pointed out.
Talking to UNB, Mahbubul Alam gave his opinions on different issues including inflation, the dollar crisis, export diversification, and the challenges in achieving the Sustainable Development Goals.
Read: Mahbubul Alam takes charge as FBCCI president
Alam was elected as the new president of the FBCCI as a leader of the Sammilito Oikko Parishad, for the 2023-25 tenure. The election was held on July 31 and he took charge as president on August 14. He also serves as President of the Chittagong Chamber of Commerce & Industry (CCCI).
Beyond his business acumen, Mahbubul Alam has received recognition in the form of CIP (Trade) and CIP (Industry) Awards from the Ministry of Commerce, Bangladesh. He is also a committed philanthropist, contributing to various social causes.
Internationally, he is the recipient of a "Certificate of Merit" from the World Customs Organization.
Alam said in the present economic reality, suppose an entrepreneur has 12 factories; among them one or two will have fallen into problems, but the other 10 would be running well. In this situation, if the business group was declared as defaulter, the entrepreneur would not run the other factories, and a large number of employees would lose their jobs.
Read: Large defaulted loans have distressed domestic economy: Experts
He acknowledged that in the last two years, a huge volume of loans went into default as many businessmen are not paying their instalments. The FBCCI president said, the federation (FBCCI) has already written a letter to the Bangladesh Bank (BB) to not declare any company as defaulter without understanding the reality.
He suggested running the factories as an option to get a return. He opposed wholesale declaration of loan defaulters rather than giving opportunities to improve.
Alam agreed that the businessmen have to return the loan money, otherwise the banks will be in trouble.
Regarding the dollar crisis, the FBCCI president emphasised enhancing remittance earnings by sending more skilled human resources abroad, along with the unskilled manpower already being sent.
Read more: Banks’ chief executives must bear responsibility to control defaulted loans: BB Governor
He also urged the government to develop a system through which remittances could be sent easily to Bangladesh using legal channels from the Middle East and other areas of the world.
Alam, the owner of Chattogram-based M/S Alam Trading, also emphasised enhancing the capacity of foreign missions of Bangladesh so that those missions can arrange trade fairs to display different traditions and non-traditional products as part of the export diversification campaign.
Regarding SDG achievement, the FBCCI president said the capacity of domestic businesses must increase to compete with global manufacturers in the age of free trade.
Alam said, “Despite different types of obstacles and unfavourable environment, the entrepreneurs of Bangladesh have survived and continued running their businesses even during the Covid-19 pandemic period.”
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The FBCCI president emphasised massive research and innovation activities involving youths for Bangladeshi companies to cope with the requirements of the 4th Industrial Revolution,
However, he doesn’t buy into the hype that Artificial Intelligence or machine learning will affect employment in Bangladesh, as he believes many jobs still exist that require a human hand.
The FBCCI president also focused on increasing domestic rearing of chicken, pigeons, cows, and goats which will help to meet a large portion of the consumption demand for eggs, milk, and meat.
It is not possible to supply readymade products, eggs, meat, milk, and other essential items to everyone, he said. Some people have to develop self-dependency when it comes to agricultural items, he pointed out.
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Why inflation persists at a higher level in Bangladesh
Inflation continues to persist at a high level in Bangladesh, affecting the lifestyles of common people severely as they struggle to survive on limited earnings in the aftermath of the Covid-19 pandemic.
Figures released on Sunday showed general inflation remained virtually unchanged at 9.69 percent on a point-to-point basis for the month of July, having been 9.74 percent in June, said the Bangladesh Bureau of Statistics (BBS).
The Ministry of Finance and Bangladesh Bank (BB) have blamed the external factors for inflation while they failed to adopt the right fiscal and monetary policy measures, said economists.
Read: General inflation virtually unchanged at 9.69 percent in July
Talking with UNB former governor of the Bangladesh Bank Dr Atiur Rahman said Bangladesh could not go for adequate tightening of the monetary policy in time to rein in inflation while the US Federal Reserve continues to raise policy rates persistently.
He said, the Reserve Bank of India (RBI) has also been raising policy rates consistently, while agriculture production rising consistently to strengthen the supply side. The market imperfections caused by growth curtail the root cause of higher food inflation and other necessities.
The depreciation of the Taka had also been raising imported inflation at these times. The rent-seeking on the roads by some quarters besides higher transport prices due to readjusted fuel prices may have also been fuelling inflation from the supply side, Dr Atiur said.
Read: Bangladesh Bank working to normalise inflation and dollar crisis despite geopolitical challenges
He suggested the ways out may be to further tighten monetary policy and reduce public expenditure to reduce public borrowing from the central bank to align fiscal policy along with tighter monetary policy.
The competition commission and Consumer Protection Authority must wake up to break the curtails. The roads should also be made rent-free to facilitate smooth flows of goods and daily necessities.
The exchange rate must be stabilized at a single rate and hurdles for small entrepreneurs in opening letters of credit with adequate dollar support could ensure smooth supplies of imported goods for consumption and raw materials for continued production of goods and services could also help stabilize the prices of the same.
Read: Ex-governors optimistic MPS can claw back inflation, implementation the key
The regulators should keep on communicating well in anchoring the inflation expectations so that inflation does not get embedded in consumer psychology.
Dr Zahid Hussain, the former lead economist of the World Bank's Dhaka office, told UNB that no measure has been taken to rein the inflation so far.
He said the reigning repo rate is not affecting the market, and the increase of 1.0 percent in interest rate from July is not making any impact on the money market.
He pointed out that printing currency to meet government expenditures is also fuelling inflation.
Read: CPD dismisses budget's projections on growth, inflation, revenue collection
Dr Zahid said there is no control over pricing of essentials products in the market, and businesses are making hefty profits showing supply-side uncertainty in the wake of the foreign exchange crisis.
Dr Ahsan H Mansur, former economist of IMF and executive director of Policy Research Institute (PRI), told UNB that the BB printed more currency (taka) in a single year than it had in the last 50 years, which brought additional inflationary pressure.
Denying the BB claim of printing money as a regular matter that has no impact on inflation, Mansur said printing money against the US dollar, which commercial banks sold to the central bank is a different issue.
Explaining the situation, Dr Mansur said despite the dollar crisis, the printing of high-speed money (printing currency) is continuing, which obviously brings impact on higher inflation, resulting in Bangladesh’s inflation rising while Sri Lanka and other Asian countries’ inflation is falling.
Bangladesh Budget 2023-24 passed in parliament
The parliament passed the Tk 7,61,785 crore national budget for FY 2023-24 -- with the goal of achieving 7.5 percent GDP growth rate and keeping annual inflation at around 6 percent.
Finance Minister AHM Mustafa Kamal moved the Appropriations Bill 2023, seeking a budgetary allocation of Tk 11,10,840 crore which was passed by voice votes.
READ: Budget will help to build Smart Bangladesh: Speakers
Earlier today, the parliament passed the Finance Bill 2023 with some changes.
Following the proposal mooted in the House by the Finance Ministry for the parliamentary approval of the appropriation of funds for meeting necessary development and non-development expenditures of the government, the ministers concerned placed justifications for the expenditure by their respective ministries through 59 demands for grants.
READ: Proposed budget for FY 2023-24 fails to address macroeconomic challenges, says CPD
Earlier, the parliament rejected, by voice votes, a total of only 503 cut-motions that stood in the name of opposition members on 59 demands for grants for different ministries.
A total of 10 MPs, including from Jatiya Party and Gono Forum, submitted their cut-motions on the budget. They are: Kazi Firoze Rashid, Rustam Ali Farazi, Mujibul Huq, Fakhrul Imam, Pir Fazlur Rahman, Shamim Haider Patwari, Begum Rawshan Ara Mannan, Hafiz Uddin Ahmed, Mokabbir Khan, and Rezaul Karim Bablu.
READ: It’s anti-people designed to plunder national wealth: BNP on National Budget for FY24
They were, however, allowed to participate in the discussion on Commerce Ministry and Health Services Division.
Later, Speaker Dr Shirin Sharmin Chaudhury quickened the process of passing the demands for grants for different ministries without giving a lunch break.
Opposition and independent MPs were present in the House when the Appropriation Bill was passed, and they did not raise objection to passing the bill.
READ: Supplementary budget for outgoing fiscal passed in JS
Finance Minister AHM Mustafa Kamal on June 1 placed a Tk 7,61,785 crore budget for Bangladesh for FY 2023–24, which is 15.2 percent of the GDP, with a philosophy of ensuring a hunger- and poverty-free, knowledge-based, and 'Smart Bangladesh' by 2041.
7.5% GDP growth rate with an expectation of keeping annual inflation at around 6%
The allocation for operating and other sectors is Tk 4,36,247 crore, while Tk 2,63,000 crore will go to the Annual Development Programme.
The total revenue is estimated at Tk 5 lakh crore. Out of this, Tk 4,30,000 crore will be collected by the National Board of Revenue and Tk 70,000 crore from other sources.
Read more: Unrealistic budget won’t help overcome economic crisis: Fakhrul
The overall deficit in the proposed budget for FY 2023-24 will stand at Tk 2,61,785 crore, which is 5.2 percent of GDP. Out of the total deficit, Tk 1,55,395 crore will be financed from domestic sources and Tk 1,02,490 crore from external sources.