6 percent inflation target ‘unrealistic’: Economists

Anisur Rahman Khan :
Though the proposed national budget for fiscal year 2023-24 has revealed an expectation of an annual average inflation rate of approximately 6 per cent, but economists termed the target as ‘unrealistic.’
According to economists, the government has to borrow huge amount of money to implement the proposed budget, but the banking sector won’t be able to supply this money.
Sales of savings certificates are decreasing and it would be difficult to bring Tk 12 billion from abroad, the economists have said.
Apart from this, they also mentioned that the implementation of the universal pension scheme would be difficult to materialize right now, as it requires a separate body and necessary infrastructure.

However, Finance Minister AHM Mustafa Kamal on Thursday placed Tk7.61 lakh crore national budget for the fiscal year 2023-24 in the Jatiya Sangsad.
Giving reaction on the proposed budget for FY24, Dr Ahsan H Mansur, Executive Director of the Policy Research Institute (PRI), said that the government has taken a bank loan over Tk 80,000 crore in the current fiscal year to meet the expenditure and Tk 20,000 crore more will be taken to meet the demand.
The concerned authorities have to print the money, which will put an impact on inflation, Dr Mansur said adding that the government will have to take loan over Tk 150,000 crore to implement the next budget.

The economist observed that banks will not be able to supply the huge amount of money as the government will have to print money again.
Such initiative would increase the inflation and will affect the reserves, Dr Ahsan H Mansur said.
Selim Raihan, a professor of economics at Dhaka University said that the government had not taken any policies to keep inflation in check.

“We have witnessed no significant initiatives from the government in terms of currency policy, duty tax policy, or market management policy, which could have contributed to controlling inflation,” he added.
According to Selim Raihan, this prolonged high inflation has disproportionately burdened the underprivileged and impoverished segments of our society, while the affluent may have remained relatively unaffected.

Considering the announced proposed budget, it becomes essential to monitor how monetary policies will be implemented, especially given the International Monetary Fund’s inclusion of this issue as a condition.
Consequently, the target of maintaining a 6% inflation rate in the coming year appears highly ambitious, he observed.
Research and Policy Integration for Development chair Mohammad Abdur Razzaque said, “The inflation target in the proposed budget for the financial year 2023-24 is quite unrealistic as the proposed 7.5 per cent GDP growth would not be achieved with 6 per cent inflation.”

Keeping inflation around 6 per cent is impossible after setting a 7.5 per cent expansionary growth target, he said.
He said that if the government opted for a market-based exchange rate, the taka would depreciate and inflation would increase. In FY23, the government’s target was to keep inflation around 5.6 per cent.
According to the Bangladesh Bureau of Statistics, inflation rose to 9.24 per cent in April due to commodity price spirals.