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‘Inflation is main challenge in national budget’

Published : Monday, 3 June, 2024 at 12:00 AM  Count : 123
State Minister for Finance Waseqa Ayesha Khan claims that Bangladeshs foreign debt is not significantly high compared with the countrys Gross Domestic Product, or GDP.

Though the debt is being taken for operating development activities, the state minister has objections to the phrase "debt-dependent development" to describe Bangladeshs strategy.

Waseqa is one of the seven new state ministers appointed to the cabinet on Mar 1. She has been serving as a female MP from the reserved seat for three consecutive terms. She is the first female finance state minister of Bangladesh.

Waseqa, who is involved in preparing the national budget proposal for the next fiscal year on Jun 6, spoke to bdnews24.com about different aspects of the economy. However, the budget is the main focus.

She said the implementation of plans in the Awami Leagues electoral manifesto will get the highest priority in the budget. The state minister for finance pointed to a plan to maintain macroeconomic stability by keeping the budget deficit at a bearable level and controlling inflation.

The government is taking contractionary measures to keep inflationary pressure bearable. Reports say that the GDP growth target for the coming fiscal year is 6.5 percent. How will this inconsistency be handled in the budget?

Answer: High inflation can generally be prevented in two ways - by reducing consumer demand and increasing the supply of goods in the market.

The conventional approach to monetary policy mainly tries to reduce inflation by reducing consumer demand. Fiscal policy encourages production growth through incentives and subsidies. Efforts to reduce inflation can be strengthened by lowering demand through austerity under these policies.

Under the monetary policy, the LC margin on the import of essential goods has been relaxed. In this respect, contractionary monetary policy has been taken by increasing the central banks policy rate.

The interest rate on various treasury bills also increased significantly until May compared with the same period in the previous year.

The market-based interest rate has been fixed since May 8. The policy interest rate has also increased.

Maintaining austerity in government spending, market monitoring and emergency import of daily necessities are among the measures taken under the fiscal policy.

The government has decided to exercise maximum restraint to reduce expenditure, imposing a ban on using funds in land acquisition, car purchases, et cetera.

Attempts are being made to keep the overall budget deficit at the level of the actual deficit of the 2022-23 fiscal year.

Fertiliser subsidies have been standardised to keep agricultural production costs under control. As the prices are climbing in the global market, a Tk 260 billion subsidy was given in that sector in the last year.

The government has strengthened market monitoring to prevent price hiking in search of excess profits. A special unit is working to monitor the prices of daily necessities in the market.

Solving the problem of the supply in the market through import is a conventional method which is being followed by the government.

Other steps the government is taking include identifying supply chain flaws by comparing prices at different stages of production.

The extent of social security programmes for low-income people is being increased. Programmes such as distributing free food or at lower cost, family cards are underway. —bdnews24.com



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