Staff Reporter :
Finance Minister Abul Hassan Mahmood Ali stated on Friday that the government will continue its contractionary policies to control inflation, which is expected to decrease by the end of this year.
“Instability in the global economy is the cause of inflation in Bangladesh. Since controlling inflation is our highest priority, contractionary policies will continue for some more time. Additionally, duties for the import of daily essential commodities have been reduced. We expect inflation will come down by the end of this year,” he said.
The finance minister emphasized that the government has taken all necessary steps to control inflation and is reviewing additional measures. He made these remarks at a post-budget press conference at the Osmani Memorial Auditorium in Dhaka on Friday.
The minister aims to reduce inflation to 6.5 percent as reserves dwindle, the global economy remains unstable, and the government gradually increases electricity prices by withdrawing subsidies, following the loan conditions set by the International Monetary Fund.
According to the Bangladesh Bureau of Statistics, the 11-month average inflation rate for the current fiscal year until May was 9.73 percent, the highest in many years. This has put intense pressure on lower and middle-class families to afford daily necessities.
The government will ensure that economic growth does not suffer too much under this policy stance, Ali said. “All necessary support has been continued so that our agriculture, industry, and service sectors can maintain their normal activities.
As a result, we achieved a growth rate of 5.82 percent in the current fiscal year despite a contractionary policy. We aim to achieve 6.75 percent growth in the next fiscal year.”
Highlighting the impact of the Russia-Ukraine war on inflation following the Covid-19 pandemic, the finance minister noted, “Inflation is still at 9.0 percent in our country.
If developed countries increase interest rates to control inflation, capital flow to our country will decrease. This, coupled with increased international trade volume, results in a large deficit in our current account balance.
Consequently, the pressure on foreign exchange reserves has increased, leading to a significant depreciation of the taka against foreign currencies. This is one of the main reasons for our high inflation.”
Recalling the formation of the Awami League government in 2009, Ali said, “Inflation was high when we came to power, but we brought it under control within two years. The measures we have taken will reduce inflation in the future and will start to bear fruit before 2025.”
Addressing concerns about a potential liquidity crisis due to planned government borrowing, he stated, “Taking loans from banks is standard procedure. All finance ministers and governments have done so. In developed countries, borrowing is much higher; we keep it at only 5 percent. There is no reason to worry about it.”
Regarding the opportunity to whiten undisclosed money, Abu Hena Md Rahmatul Muneem explained that the provision was introduced due to demand from businesses and the general public.
“Some businessmen could not show their assets on tax files due to audit-related issues. That’s why we proposed introducing this provision. Besides, it aims to bring undisclosed money under taxation,” he said.
“Money turns black when land is bought and sold, and those who create black money send it abroad and enjoy it there. This money is not used in the country’s economy. However, the issue will be discussed in parliament, and lawmakers will make the final decision,” the NBR chairman added.
Responding to a query about former Inspector General of Police Benazir Ahmed’s ability to whiten undisclosed income, Muneem stated, “It is now under court jurisdiction.”
Finance Secretary Md Khairuzzaman Mozumder addressed the need to increase manpower in the NBR, saying, “A letter regarding the recruitment of manpower has been received from the NBR. We have already improved the letter, and further improvements will be made in the future.”