Business Report :
It is undeniable that contractionary policies to control inflation can in the long run slow down economic growth, Finance Minister Abul Hassan Mahmood Ali said on Saturday.
“While there is a need to adopt contractionary policies to control inflation, it is undeniable that in the long run this approach can slow down growth,” he said, while addressing the parliament in his winding up speech on the proposed budget for the 2024-25 fiscal.
He, however, said to build a developed, prosperous, “Smart Bangladesh” by 2041, Bangladesh needs continuous high growth.
“In this context, we framed this budget with the difficult challenge of balancing the seemingly contradictory goals of achieving economic stability and sustaining growth,” he said.
He strongly hope that experienced and wise leadership of the prime minister, the government can bridge the gap between means and capabilities and return to the path of high growth soon.
The finance minister said in the proposed budget, the government has tried to provide necessary allocations in education, health, agriculture, local government and rural development, electricity, communication, science and technology sectors with the aim of building a smart Bangladesh.
“Besides, we have given due importance on ensuring food safety,” he added.
Therefore, in this year’s proposed budget, the government has given the highest priority to bringing macroeconomic stability along with inflation control, he said.
“Monetary policy has already taken various contractionary steps to control inflation; The policy rate [repo] has been raised significantly to 8.5% and bank interest rates have been fully market-based.”
Moreover, a crawling peg system has been introduced in the dollar exchange rate to increase foreign exchange reserves by encouraging exports and accelerating remittances, he added.