The challenge of inflation is beyond the budget, noted economist Ahsan H Mansur said on Thursday (6 June).
“But the budget plays a supporting role. What really plays a major role is the government’s monetary policy. And the monetary policy has been tightened to a large extent… We have to be patient. We are hopeful that inflation will come down by December,” Mansur, executive director of Policy Research Institute (PRI) Bangladesh, told The Business Standard.
Speaking about the projected economic growth rate, he said, “I think there are some internal inconsistencies within the government. I do not think this year is a year of growth. I do not think this is a year of investment.
“I am of the opinion that the private investment target that has been projected has some inconsistency. The budget expects that private sector investment will increase by 29%, which is impossible.”
Mansur said at times like this when there is a liquidity crisis in the banking sector, when the government will crowd out much of banking sector funds, then the banks will not be able to facilitate the private sector with loans.
“The government is taking Tk1,36,000 crore from the banking sector. The banking sector can grow 10%-11% at most. It might get Tk1,70,000 crore to Tk1,80,000 crore deposits,” he projected.
“If the government takes Tk1,36,000 crore from this, what will be left for the private sector? So, the growth expected from the private sector is not possible for the budget,” stated the prominent economist.
Mansur further projected that investment will decrease, the growth rate will slow down, inflation will come down, and then the economy will stabilise.
“Then we will need to carry out tax reform and banking sector reform. Without reforming these sectors, hoping that the growth rate will always be around 7%-8% is absurd,” he said.
With an eye towards battling inflation, Finance Minister Abul Hassan Mahmood Ali today unveiled the Tk7.97 lakh crore proposed national budget for the fiscal year 2024-25.
He announced the largest-ever budget for Bangladesh before the Parliament today (6 June), a long way from the first budget of Tk786 crore placed by Tajuddin Ahmad for the FY1972-73.
Earlier in May, Prime Minister Sheikh Hasina had given the nod to the budget size.
