Printing more money to bleed economy even more

The government has already printed a lot of new money creating a huge inflationary pressure on the economy. The taka has been greatly devalued by this.

Just recently, the Bangladesh Bank stopped printing money for the government after doing so for the government against its Tk 98,826 crore borrowing from the central bank in the recently concluded financial year of 2022-23.

When the central bank lends money to the government, it actually generates money, and increased money supply in the economy through the issuance of new currency drives up consumer prices and leads to inflationary pressure.

When the government is needed to stop this ongoing trend, ironically this is going to be more acute in the coming days.

After printing money for the last national budget, the budget for fiscal 2023-24 with a deficit of around Tk 2 lakh 62 thousand crore was passed recently.

Where will this huge money come from? Usually, the government borrows money from the banks. But since the current situation in the banking sector is precarious, thanks to looting and plundering of banks by the government’s crony businessmen, the only way is to print money through the central bank.

But the money already printed has bled the economy shooting up inflation, and printing more money will certainly turn the country’s economic condition even worse.

This has been rightly pointed out at a recent discussion on the budget organised by the Center for Policy Dialogue (CPD) in the capital.

If money is printed like this, the current crisis in the economy will take a terrible shape.

Inflation will increase.

Economists have pertinently pointed out the examples of Somalia and some other countries, including Russia that paid a heavy price by printing currency in this way.

Surely, there is a crisis of confidence in the country’s financial sector.

After the economic shock in the wake of the Ukraine-Russia war, the government wanted to bring down the cost of the government, but the austerity measures taken up ostentatiously at that time are now no more.

It has increased salaries of the government staff to meet inflation and allowed them to buy costly cars. Ironically, this will create even more inflation.

The economy is, therefore, in for a deepening crisis in the days ahead.