New tools to stabilise food price, create jobs

The key challenge the interim government came up against on the economic front, upon assuming power, was inflation -- a legacy of the fallen regime. The inflation rate remained over 9.0 per cent since March 2023. To tame the intractable inflation, the central bank had raised the policy rate five times in 2024. The incumbent interim government continued the anti-inflationary measures through tightening monetary policy and the success rate has not been up to the expectation. As of March 7 last, the inflation rate was still hovering at around 9.32 per cent. The prices of the essentials remained a constant headache which refused to respond to any government measures to control it. Business syndicates' manipulations are blamed for the volatility of the essential commodity market in Bangladesh. It is against this backdrop that economists at a discussion event prior to the first-ever budget to be presented by the interim government in June this fiscal year, reportedly came up with a raft of suggestions including among others creation of a robust buffer stock of foodstuff to cushion consumers against any future artificial crisis that the syndicates might cause in the commodity market.

So far, the government followed the IMF-prescribed standard theoretical approach to curb inflation by using monetary tool. But considering the reality on the ground, measures somewhat off the beaten track are necessary. In this connection, creating a buffer stock of foodstuff is not a novel idea. Similar recommendations were also made under different governments in the past. However, it is always better late than never. The interim government, despite its limited term in office, can still start the process including building of the required infrastructure for the purpose. More importantly, farmers who produce foodgrains and other essential commodities should be empowered by providing storage facilities for their farm products. That would, to a large extent, help rid the market of the middlemen who are mostly responsible for the high price of locally grown essential commodities in the market. The interim government, in the upcoming budget should, therefore, make necessary allocations for building infrastructure for farmers so they can store their farm products and thereby contribute significantly to keep the essential commodity market stable.

Given the persisting inflationary pressure and the marked depreciation of Bangladesh Taka (BDT) against the US dollar (USD), the general public's real income has been eroding. Obviously, as a fall-out from these developments, the most affected are the low-income and the vulnerable segments of the population. Protection of this segment of the population should be high on the agenda. The economists present at the pre-budget discussion have spoken in favour of continuing the programme of open market sale (OMS) of essentials and further regularising it. It is also urgent that the ongoing social safety net programme is continued and its coverage further expanded adding at least 2.0 million more to the existing 10 million beneficiaries.

Then, to address the growing income inequity in society, some action will be required to create jobs, even temporary ones particularly for the group of people who live by the day. The economists' suggestion for creation of a 100-day employment-guarantee scheme is worth considering. Even more important will be to provide them with some skills enabling a more stable source of earning all the year round. Hopefully, the government would take due note of the well-meaning suggestions while preparing the next budget for FY (2025-26).