Inflation to decline by year-end

Taming the steep inflation is an onerous task and the government has taken it as a high priority and proposed tax waivers on a basket of necessaries to contain inflationary pressures, say government ministers.

While defending the overall measures set forth in the budget he has authored for the next fiscal year, Finance Minister Abul Hassan Mahmood Ali takes another six months to the yearend to bring inflation under control.

"Inflation will begin to decline by the end of this year," Mr. Ali said to flurries of questions at a post-budget press conference organised by the Ministry of Finance at the Osmani Memorial Hall in Dhaka on Friday.

He said there are many things in the budget speech he delivered in the Jatiya Sangsad and that he reduced the size of the budget so that there should be no pressure on commodity prices.

The proposed 2024-25 fiscal budget has set a target of shooting down the stubbornly steep inflation to 6.5 per cent, from a near-double-digit high.

Meanwhile, the rate of inflation remained above 9.0 per cent for the past 14 months, hitting 9.73 per cent in May.

Gross domestic product (GDP) growth has been set at 6.75 per cent for the next fiscal year. The rate was 7.5 per cent in the original budget for the current financial year. Later it was downsized to 6.5 per cent by official count.

The finance minister, Abul Hasan Mahmud Ali, argues that inflation has increased mainly due to the war in Ukraine.

However, apart from external crises, independent economists also blame it on domestic market manipulation by oligopolies.

The minister also said the country's forex reserves started dropping after the beginning of the war.

"To my mind, this is the main reason behind the stubbornly higher inflation."

He said the government had already taken many measures to mitigate the inflationary pressure on the economy and on consumers, for that matter.

"We may widen the OMS activities for the poor," he said about one of the healers of pains for the commoners.

About a macroeconomic mechanism for brakes on price rises the finance minister said the contractionary monetary policy would continue in order to contain inflation.

To a question on foreign-exchange reserves, State Minister for Finance Ms Wasika Ayesha Khan said the government enacted an offshore act recently and that the number of offshore banks accounts now surged.

"There are very good responses from the clients as the banks are offering higher interest rates on deposits of such foreign currencies."

Finance Secretary Dr Md Khairuzzaman Mozumder, who was the moderator in the briefing session, said the budget's size has been trimmed to contain the higher inflation in the economy. The policy rate now increased to 8.5 per cent and it will take time to work.

On the drying up of foreign sources in coffer, the finance secretary said the government now would have to rely on the domestic sources.

He was replying questions relating to higher borrowing target from the banking sources. "We had dependency on the saving certificates, but this is expensive for us."

The finance secretary thinks the bank borrowing may go down once the revenue-earning performances become better.

While replying to a question on the higher prices of commodities, State Minister for Commerce Ahsanul Islam Titu told the press meet that the budget has proposed to reduce the tariffs from 2.0 per cent to one per cent for some key essentials.

Mr. Titu also said they are aware of inflation and higher prices of commodities in the market. "We have imported onion when its price was higher in the local market."

On higher corporate taxes, chairman of the National Board of Revenue (NBR) Abu Hena Md. Rahmatul Munim said there is little scope to reduce the taxes as they have to generate revenues, for financing the budget.

The NBR chairman said the revenue authority has been providing tax incentives to the stock market for long. "Is there any improvement of the share market?"

At one stage of the programme, president of the Economic Reporters Forum (ERF), Mohammad Refayet Ullah Mirdha drew attention of the finance minister to BB access taboo. "The Governor of the central bank has banned the entry of journalists into Bangladesh Bank. Therefore, we have decided that none of us will listen to him. I draw your attention that he should not make any statement. If the governor gives any speech, we will boycott it."

During a nearly two-hour-long event, Governor Abdur Rouf Talukder maintained silence.

Minister for Local Government, Rural Development and Cooperatives Tajul Islam, Industries Minister Nurul Majid Mahmud Humayun, Planning Minister Major-General (retd) Abdus Salam, Housing and Public Works Minister Ram Ubaidul Moktadir Chowdhury, Prime Minister's Finance Adviser Dr Mashiur Rahman, Agriculture Minister Md. Abdus Shaheed, Education Minister Mahibul Hasan Chowdhury Naufel and Cabinet Secretary Md. Mahbub Hossain were also present at the press meet.

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