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Post Budget Press Confce In City

Inflation will come down by year end, Mahmud hopes

Published : Saturday, 8 June, 2024 at 12:00 AM  Count : 282
Finance Minister Abul Hassan Mahmood Ali said the size of the budget has been reduced so that there is no pressure on commodity prices. He said that inflation will come down by the end of this year.

He said this at a post budget press conference at Osmani Memorial Auditorium in the capital on Friday.

Industry Minister Nurul Majid Mahmud Humayun, Planning Minister Maj Gen (retd) Abdus Salam, Housing and Public Works Minister RAM Obaidul Muktadir Chowdhury, Agriculture Minister Md Abdus Shahid, Local Government, Rural Development and Cooperatives Minister Tajul Islam, Prime Ministers Economic Adviser Moshiur Rahman, Education Minister Mohibul Hasan Chowdhury Nowfel, Commerce State Minister Ahsanul Islam Titu, State Finance Minister Waseqa Ayesha Khan, Cabinet Secretary Mahbub Hossain, Governor of Bangladesh Bank Abdur Rauf Talukder, Finance Secretary Dr Md Khairuzzaman Mozumder and National Board of Revenue (NBR) Chairman Abu Hena Rahmatul Munim were present in the press briefing.

Earlier, the size of the proposed budget for the fiscal year 2024-25 presented in the national parliament yesterday is Tk 797,000 crore. The budget deficit is estimated to be Tk 251,600 crore. And without grants, the deficit will be Tk 256,000 crore. Which is 4.6 per cent of the total GDP.

In response to the question whether there will be a liquidity crisis in the bank, the Finance Minister said that taking loans from banks is done by all the finance ministers in all the budgets. All governments do. Developed countries take much more, we keep it at just under 5 per cent. So its not that important. There is no reason to worry about it.

During inflation, the tax-free life span has been kept the same in the budget. When asked for an explanation on this, the Finance Minister said, "I have spoken about inflation in the budget speech."

He said, we are hoping that inflation will come down by the end of this year. Lets see, we have to try. Now you have noticed that we have reduced the size of the budget. So that there is no pressure on commodity prices.

The Finance Minister said inflation is still at 9 per cent. Due to global pressures on the currency, the value of the taka has fallen. This causes inflation to rise. Necessary steps have been taken to control inflation and further steps will be taken.

However, the government will also be careful to ensure that growth does not suffer too much in the context of this policy stance, he said.

"All the necessary support has been continued so that our agriculture, industry and service sectors can continue their normal activities."

"As a result, growth of 5.82 per cent has been achieved in the current financial year despite a contractionary policy. We will be able to achieve 6.75 per cent growth in the next fiscal year."

In the outgoing 2023-24 fiscal year, former Awami League finance minister AHM Mustafa Kamal announced a goal of restricting inflation to 6 per cent. Later it was revised up to 7.5 per cent. But even that goal could not be achieved.

According to data from the Bangladesh Bureau of Statistics, the 11-month average inflation rate in the current fiscal year till May stood at 9.73 per cent, the highest in many years. This naturally means intense pressure on lower and middle-class families to afford daily necessities.

The Finance Minister intends to bring down inflation to 6.5 per cent as reserves are dwindling, the global economy remains unstable, and the government is steadily increasing the price of electricity by withdrawing subsidies according to the loan conditions from the International Monetary Fund.

Economists are skeptical that the current Finance Minister will be able to stick to his confident target of 6.5 per cent average inflation when it has remained above 9 per cent for two years.

"We have taken all the necessary steps to control inflation and are reviewing what further steps can be taken."

"The measures taken by us have made it possible to keep inflation at 9 per cent. In the budget speech presented on Thursday, I mentioned the steps taken under monetary policy and fiscal policy,"

Highlighting the context of inflation due to the Russia-Ukraine war after the Covid-19 pandemic, the Finance Minister said, "Inflation is still at 9 per cent in our country.

If the developed countries of the world increase interest rates in their countries to control inflation, the capital flow in our country will continue to decrease. At the same time, the volume of international trade also increased to a great extent."

"This results in a large deficit in our current account balance. All in all, the pressure on the foreign exchange reserves increased and this led to a significant depreciation of the taka against foreign currencies. This is one of the main reasons why we have high inflation."

Recalling the formation of the Awami League government in 2009, the Finance Minister said, "I want to remind you that inflation was at a high level after we came to power, but we brought it under control within two years.

"I would like to firmly inform you that the steps we have taken will reduce inflation in the future."
He hoped these measures would start to bear fruit before 2025.

"We expect it to begin to decline by the end of this year. Lets see. We must try. And, as you have noticed, we have reduced the scope of the budget a lot so that there is no pressure on prices."

Mahmood Ali also noted that steps are being taken to protect poorer families from the bite of inflation.

"All the programmes that are being implemented to protect the common people from inflation, including OMS and Family Card, will be continued and, if necessary, the issue of expanding their scope will be taken into consideration."

State Minister for Commerce said, "Inflation has been taken as a challenge in the proposed budget for the fiscal year 2024-25.

Since the month of Ramadan, the prices of oil and sugar are still in equilibrium. The tax on import of paddy and rice has been increased to 2 to 1 per cent in the budget.

Stating that efforts are being made to bring inflation under control in the country, he said, "Now one crore citizens are getting subsidized products through Trading Corporation of Bangladesh (TCB).

In the upcoming budget period, TCB is working on providing products through permanent stores to provide products at fair prices. If this happens, more and more people will benefit from it.

Minister of State for Finance Waseqa Ayesha Khan said, this time, Tk 100 crore have been allocated for research on Blue economy.

The NBR Chairman said the issue of automation has been started to increase the capacity. We have received approval from the Finance Division regarding manpower recruitment.

In response to a question at the press conference, the NBR Chairman said, "Black money occurs due to various reasons. Apart from the traders, the public has demanded that black money be whitened.

We had information that some traders could not display all their assets due to audit related issues. That is why we have made this proposal.

He said that the matter will be discussed in parliament and the parliamentarians will decide on it.

In response to the question whether there is any initiative in the budget regarding marine economy, the Finance Minister said that in the proposed budget, Tk 100 crore have been allocated for the study of Marine economy and other issues.

The Finance Secretary said that the letter came from NBR regarding recruitment of manpower. We have increased manpower. Hope to increase the number further in the future.

In response to another question about inflation, Finance Secretary Khairuzzaman Majumdar said loans are taken from foreign and domestic sources to meet the budget deficit.

We felt it was not possible to collect additional revenue through the National Board of Revenue (NBR). For this reason, the target of borrowing from the bank has been set. This bank loan has nothing to do with the banks cash crunch.



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