They opined that allocation must be given to support private sector credit in the next fiscal year instead of financing non-productive sectors.
State-run Agrani Bank Chairman Zaid Bakht termed inflation as ‘a major challenge’ for all economies with the devaluation of currencies against the US dollar amid the Russia-Ukraine war.
“In our country, Bangladesh Bank and Finance Ministry have been working to tame the inflation. When the price of commodities rises in the global market, there is no chance to control at the local level. The pressure diverts to forex reserves to keep the supply of dollar stable,” Dr Zaid, former research director of Bangladesh Institute of Development Studies (BIDS), told the Daily Sun.
Inflation is a decrease in the purchasing power of money, reflected in a general increase in the prices of goods and services in an economy.
The national inflation in March 2022 was 6.22 per cent, according to the Bangladesh Bureau of Statistics (BBS). However, the figure is much higher according to the independent researchers.
Dr Zaid thinks the inflation will remain high as the economy recovers from the pandemic situation with plenty of investments.
“The increase in export is good news for us. The government should avoid the non-productive expense to save the forex reserve” he added.
The eminent economist recommended continuing the food support for lower-income people by providing incentives in commodities.
Bankers mentioned that the inflation rate should be kept below the bank interest to maintain sustainability in the money market. Now, the inflation rate is higher than the bank interest rate as depositors get 5.50 percent to 6 percent profit on fixed deposits.
Former Chairman of Association of Bankers, Bangladesh (ABB) Syed Mahbubur Rahman thinks the budget should specify the reformation of money market as pressure on Taka and US dollar.
“The pressure on the local currency is visible with increasing borrowing from government agencies while the dollar becomes stronger. At this moment, we should need a prudent policy for money market and alternative investment like the bond market,” Syed Mahbub, managing director of Mutual Trust Bank, told the Daily Sun.
The former ABB chief suggested for cut the corporate tax to 20 percent for the banks and financial institutions that are supplying blood for the economy.
“The banks pay for provisioning amount on reschedule of loan. That creates pressure on operating profit. We are ready to pay tax from net profit,” he added.
The rural inflation was 6.52 per cent in March and urban inflation was 5.69 per cent. The food inflation was 6.34 per cent and no-food inflation was 6.04 per cent, BBS data shows.
