Persistent 9pc inflation unacceptable

Staff Reporter :
Claiming the persistent inflation rate of 9 per cent unacceptable, Bangladesh Bank’s former governor Dr Atiur Rahman has said that the country will also face three challenges-higher inflation, dollar exchange rate and earnings from exports and expatriates-in this year too.

“The inflation rate of over 9 per cent in the country is absolutely unacceptable.

It should be brought down between 4 to 5 per cent,” Dr Rahman said at a virtual discussion on “Thoughts of the beginning of the year: Which way is the economy of Bangladesh?” organized by the Unnayan Shamannay, a research and policy organization, on Thursday.

He also said that tightening the monetary policy is not the only right step for reducing inflation, as other steps are also required. “A big devaluation of the Taka against the dollar is increasing the import costs of essential items, resulting in higher inflation, so steps are needed to bring it to the market-driven rate,” he said.

Inflation should be brought under control through bringing coordination among the monetary policy, fiscal policy and social security programs, Dr Rahman added.

If necessary, the import duty should be reduced so that the cost of importing goods is reduced, the economist said.

According to the Bangladesh Bureau of Statistics, the country’s inflation stood at 9.49 percent in November.

Regarding the second challenge, dollar exchange rate, Dr Rahman, also chairperson of the Unnayan Shamannay said, “Dollar price is still uncontrolled. So, the exchange rate should be brought in a bundle. Like interest rates, exchange rates must be brought into a stable system in order to reduce volatility in it in the future.”

About the third challenge, decline in earnings from exports and expatriates, he said, “A large number of people are going abroad every year but income is not coming in at that rate due to two reasons.”

“Increasing the expatriate income, we should arrange training for the out-bound workers. Dollar price for the expatriates should be increased. Expatriates should be honored. Arrangements should be made so that they are not subjected to undue harassment at the airport,” Dr Rahman said.

Steps need to be taken to prevent sending expatriate income through illegal channels, he said.

“Exports earnings have declined at the end of 2023. It has an impact throughout the year.

In order to increase export earnings, attention should be given to new markets along with retaining old ones. Focus should be on product diversification,” he said.
He further said economic diplomacy should be strengthened if necessary to continue the trend of export growth.