Inflationary pressure to continue: Speakers 

Speakers at a discussion on Sunday said the country’s strong inflationary pressure will not go anytime soon as the prices of essential commodities and services keep going upward.

Government policymakers, economists and business leaders came up with the observations at a discussion program titled “New Challenges in the Economy of Bangladesh” organised by the Economic Reporters’ Forum (ERF) held at its auditorium in the capital.

However, they pointed out that the outcome of the Russia-Ukraine war and the prices of essential commodities on the global market will determine how long the high inflationary trend continues, or where it ends up.

Bangladesh Bank Chief Economist Dr Habibur Rahman, Policy Research Institute (PRI) Executive Director Dr Ahsan H Mansur, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Executive President Mohammad Hatem, Business Initiative Leading Development (BUILD) Chairperson Nihad Kabir and FBCCI Director Abul Kashem Khan attended the program as panellists.

PRI Executive Director Dr Ahsan H Mansur said the monetary policy is not working well to contain the inflationary pressure while bad times are looming large as the general point-to-point inflation may hit double digits.

He observed that the deficit in the balance of payment would not go away very soon though export earnings and the inward remittance would increase, imports decline, and there will be a desirable balance in foreign trade.

“The price of rice will keep increasing and it won’t work only alleging the market for the spiral. Although permission was given to import rice, there was no that much import of rice. Despite this, the government will have to borrow $13 billion from abroad and around Taka one lakh crore from local banks for budget implementation.” Dr Mansur said.

Speaking at the programme as the chief guest, State Minister for Planning Dr Shamsul Alam alleged that the economists of the country mostly tend to express concerns while they cannot see the attainments and possibilities of the country.

“There was no alternative to raise the fuel oil prices. But the government has taken various steps and hopefully, the inflationary pressure will come down by October,” he said.

Referring to the coal-based power generation, he said although there was a stockpile of high-quality coal in the country, the government had to import coal due to the reaction of the commoners as sometimes it needs to prioritize political actions and reactions over economic considerations.

“As there is an apprehension of losing farmland if coal is extracted on a wholesale basis, Bangladesh did not want to take that risk for which coal is being imported,” the state minister added. 

The chief economist of the Central Bank Dr Md Habibur Rahman said that the inflationary pressure would continue as it is caused by imports. 

“Despite this, the Bangladesh Bank has taken various steps to contain inflation, bring stability in the exchange rate, and ensure discipline in the financial sector,” he added.

Habibur said that hopefully the exchange rate of the US dollar against the Taka would come down soon and there would be an improvement in other sectors.

BKMEA Executive President Mohammad Hatem said that the export orders are failing while the large factories are being compelled to reduce their production. 

“Under the circumstances, production cost has increased while the manufacturers are also not getting the adjusted price for additional expenditure from their foreign buyers. On the other hand, businessmen are feeling pressure since the government has given them less time in repaying the loans under the stimulus packages,” he added.

Former President of MCCI barrister Nihad Kabir said that there is sufficient stock of coal in the country and there is a need to ensure maximum utilization of the country’s natural resources.

She said the import dependency of the country on energy has reached such a state that the government had to stop power generation at some plants due to the increase in LNG price, putting an impact on the growth potential.

“Various obstacles are being created in doing business owing to policies and regulations and thus raising the business cost. This is also a challenge,” she added.

Nihad said that the common people are now feeling the heat as the prices of essentials like rice, fish and chicken have increased in the market which needs to be adjusted in line with the declining trend of fuel oil prices in the global market.