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Inflation may take a while to bring under control, said experts on Sunday.
Moreover, how long it will last or at what level the rate of inflation will stop entirely depends on the Russia-Ukraine war and the international market situation, they added.
They were speaking at a discussion “New challenges in the economy of Bangladesh,” organized by the Economic Reporters Forum (ERF) in Dhaka.
However, there were also differences among the negotiators regarding the macroeconomic situation including the increase in fuel oil prices, volatility in the foreign exchange market, and business regulations.
Minister of State for Planning Shamsul Alam was the chief guest at the event.
He referred to economists as pessimists and said that the economists do not see the achievements and potential of the country’s economy but foreign research organizations are highlighting the strength and potential of Bangladesh.
He also said that the increase in fuel prices is fueling inflation and it is true that people are suffering.
“There was no option without increasing the price. However, various initiatives have been taken,” he added, saying that inflation is expected to lessen by October.
“But there will be inflationary pressure. Bangladesh is moving ahead in a planned manner and there is no weakness. Due to the recent situation, Bangladesh is in an uncomfortable situation, not in a crisis,” he added.
The transition from LDCs and implementation of SDGs will all go well, he added.
Regarding coal-based power generation, he said that the country has high-quality coal reserves, but imported coal because of the response of the people.
“There were fears that coal mining could give away agricultural land, leading to collapse and turn mining areas into lakes as it did in many countries. Bangladesh did not want to take that risk,” he added.
Ahsan H, executive director of the Policy Research Institute (PRI) said monetary policy is not working to control inflation.
“The coming days may be worse as inflation may increase to 10% and the deficit in the balance of transactions will not decrease immediately,” he added.
However, export earnings and remittance influx will be increased and imports will be decreased slightly, Mansur further said.
The government is trying to meet the challenge of inflation by increasing supply, but rice production has decreased and the price of rice will further increase.
He said that the government has taken good initiatives in budget management but still, $13 billion should be brought from abroad to implement the budget.
More than Tk100,000 crore may be taken from the banks.
Chief Economist of Bangladesh Bank Habibur Rahman said that there will be inflationary pressure, but this inflation is entirely import-related.
However, Bangladesh Bank has taken various initiatives to control inflation, stabilize foreign exchange rates, and ensure stability in the financial sector.
Mohammad Hatem, executive president of the BKMEA said that the purchase orders are decreasing, leading to reduced production of big factories.
“The cost of production has also increased but buyers are reluctant to pay more and the government has given less time to repay the incentive loan,” he added, saying that this has created pressure on the manufacturers.
Moreover, the policy of NBR is against the manufacturers in various fields including bond licenses, HS codes and many more.
“The law has regulated oppression and torture against businessmen. However, addressing the challenges, the export sector of Bangladesh will continue to grow positively,” he added.
Businesses strongly recommended increasing the ease of doing business and simplifying the business regulations to increase the competitiveness of the country.
Barrister Nihad Kabir, chairperson of the BUILD, and Abul Kashem Khan, director of the FBCCI, also spoke at the event.
Sharmin Rinvi, president of the ERF, presided over the event while SM Rashidul Islam, general secretary of the journalists’ organization moderated the event.
(DT)
