A visiting IMF mission Monday discussed with Bangladesh finance authorities a strategy to lower energy and fertiliser subsidies by hiking already-high prices of the two key items, officials said.
At a meeting with the finance-division officials of the Ministry of Finance at the Bangladesh secretariat, the International Monetary Fund team also inquired about the subsidies allocated on budget and off-budget or through state-owned enterprises (SOEs) in the fiscal year 2022-23 and the projection for the period of FY2024-2026.
Also, the size of arrears in subsidies accumulated in FY'23 and plan to clear them came up for discussion at the meet-one of a series meant for a review of Bangladesh's latest economic health before release of the next tranche from a credit package.
Sources said the team also discussed the strategy for better targeting the beneficiaries of social-safety net and the methods of transferring the benefits and further digitisation of the delivery system.
The requirement of technical assistance and capacity-building needs for better handling subsidies and social-safety-net programme were also discussed.
According to a senior official at the finance division the IMF team also talked Medium Term Macroeconomic Framework for the period of FY 2024-2026, budget-financing strategy for FY 2024-2026 and beyond, social- spending trend in health and education sectors, and the public-investment trend, climate investments and finance.
Also discussed were ways of strengthening fiscal-risk analysis, including climate-change aspects, implementation status of the updated climate-fiscal framework, climate budget-tracking system, its current usage and way forward, and the disaster-risk financing, among others.
Sources said the IMF officials on the day also met officials of the Bangladesh Bureau of Statistics (BBS). The visiting team was told that the BBS had already brought changes in calculation system of consumer price index (CPI) in line with the agency's suggestion on the inflation-determining gauge.
Also the base year for CPI calculation has been changed to 2021-22 from 2005-06 in the past. The number of goods and services has also been increased in the index, they were told.
The BBS officials also informed the IMF team that the preparation for publication of quarterly report on gross domestic product was at the final stage. The BBS has signed memorandum of understandings with the central bank, the National Board of Revenue and other agencies concerned to this effect.
They said the quarterly publication on GDP may begin next January, sources said.
The BBS officials also informed the IMF team that their preparation for constant publication of information on GDP growth of the last 50 years continuous is almost completed.
On the day, the IMF team also had consultation with revenue-board officials in the capital.
Former research director of Bangladesh Institute of Development Studies (BIDS) M Asaduzzaman told the FE the price of fertiliser had already been increased by 60-80 per cent in the last six months that severely cut profits of the farmers who were struggling with rocketing fossil-fuel prices.
There is no condition the farmers could bear any further hikes of input prices.
"If the government is forced to raise energy and fertiliser prices in line with the IMF suggestions, then they must compensate the farmers to keep prices of grains and other foods within the reach of commoners," he said.
Consumers Association of Bangladesh (CAB) vice-president SM Nazer Hossain notes that the surge in fertiliser and diesel prices have also affected the essentials market which has battered the commoners already.
He says it is a record that food inflation as per the government statistics maintains above 12 per cent for the last few months.
The rise in input cost would further surge prices of rice, vegetables, fruits, dairy, meat, fish and other essentials.
"The government shouldn't raise prices of fertiliser and fossil fuels if it wants to prevent a possible famine," he says, on a note of worry.
syful-islam@outlook.com
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