We are apprehensive about inflation: Kamal

The government is apprehensive about the soaring inflation but it can be controlled, Finance Minister AHM Mustafa Kamal has said.

“We are trying to control the factors that fuel inflation. We cannot leave people unfed. If necessary, inflation will be controlled by importing food. We are moving in a flexible way,” he said at a post-budget press conference at the Bangabandhu International Conference Center (BICC) on Friday.

The minister continued, “When we [the government] took charge, the rate of inflation was 12 per cent. We have kept it within 6 per cent.

“We can achieve the inflation target for the next fiscal year. Inflation has now increased due to international factors. Now the situation is very bad and we are trying to deal with it. But we have to accept the global circumstances.”

Placing the proposed national budget in the Jatiya Sangsad on Thursday, Kamal said the government aims to keep the average inflation rate within 6 per cent in the fiscal year 2023-24 (FY24).

In the original budget for FY23, the target was 5.6 per cent, which was later revised to 7.5 per cent.

According to Bangladesh Bureau of Statistics (BBS) data, monthly inflation rate in April 2023 was recorded at 9.24 per cent, a slight drop from 9.33 per cent in March. The inflation rate soared to a record 9.52 per cent in August last year.

The average inflation rate was 5.65 per cent and 5.56 per cent in FY20 and FY21, respectively.

Details on inflation taming measures on June 18

The Bangladesh Bank will provide a detail of the government’s inflation taming measures in its Monetary Policy Statement due to be unveiled on June 18, Governor Abdur Rouf Talukder said at the press conference.

“There will be some measures to reduce demand in the monetary policy.”

Speaking about the forex reserve situation, the central bank governor said, “We had only $10 billion in reserves when the incumbent government assumed power but now Bangladesh has enough reserves to cover the import bills for five months.

“Our current account is almost balanced but the financial account, which was balanced in the last 14 years, is facing a deficit. Now our main work is to make a positive financial account.”

The forex reserve will increase if the financial account becomes positive, he said.

Reform in banking

Replying to a question about default loans, Abdur Rouf said, “We have already taken initiatives to reduce bad loans.”

The central bank fixed a target for private commercial banks to bring the non-performing loan (NPLs) rate to 5 per cent. The rate is 10 per cent for state-run banks.

The central bank governor said it will take time to bring down the NPLs of state-run banks because of some legacy issues.

In the meantime, replying to a query on the lack of indicators in the budget about reforms in the banking sector, he said, “We have identified the problematic banks, and the central bank has already taken several measures in this regard, including a three-year action plan.”

Budget not based on IMF conditions

The budget for FY24 was not based on the conditions of the International Monetary Fund (IMF), the finance minister said.

“Like in different countries, the IMF has come to Bangladesh and made some recommendations to help the economy. We take their prescriptions as per our needs, but do not follow them all in preparing the budget.”

In response to a question, he said, “It is good to work with the IMF. They provide advice on various aspects of economics. But we have not prepared the budget according to the IMF suggestions.”

However, he added that various organisations, including the IMF and the World Bank, have recommended increasing the country’s revenue, following which, several steps have been taken to increase the revenue collection.

“Even if the conditions are not met, their suggestions, which are necessary for us, have been considered.”

He also said the loan taken from the IMF is equivalent to one-and-a-half-month worth of remittance.

A budget for both rich and poor

Kamal said the budget for the next fiscal year is for both the rich and the poor.

“All our budgets are election budgets. We prepare the budget every year considering the welfare of the people.”

But in response to another question, he said the proposed budget has primarily focused on the poor people and the common people.

“You [journalists] used to say that the proportion of the middle income population in this country is high, but they do not pay tax. If all of them pay tax, then others would have to pay less. I think now is the time for everyone to pay taxes.”

Speaking about employment generation, the finance minister said, “I promised employment generation for two crore people. We have given employment to 2.45 crore people. Slowly, our employment is increasing and the scope of employment has also widened.

“I have delivered on the commitments I made about employment at different times in different budgets. We are trying to popularise the ‘Made in Bangladesh’ culture. The things that will be made in this country will meet our needs and create employment.”

Non-repatriated money in FY23

The government has decided to withdraw the tax exemption facility, offered last year for repatriating foreign currency, as no one used the facility, Kamal said.

In the last budget, the finance minister announced that if someone brings money from abroad, then only 7 per cent tax needs to be paid. For immovable property abroad that cannot be brought to Bangladesh, a 15 per cent tax will be levied while the tax rate would be 10 per cent for movable assets.

Hopeful about making the budget a success

Even though many economists have termed the proposed budget for FY24 a difficult one to implement, Kamal is hopeful about achieving its various goals.

He said all details of our previous projections and implementations have been detailed in the annex of the budget proposal.

“We have not failed. And if God wills, we will not fail this time nor in the future. We are confident about it.”

Replying to a question in this regard, the minister said the revenue collection of the National Board of Revenue was only Tk 59,000 crore when the ruling government first came to power, which has now risen to Tk 2.95 lakh crore.

“If it can rise from Tk 59,000 crore to Tk 3 lakh crore, whatever increase you are talking about, we can achieve it. We will be able to fulfil the projections that we have made.”

Minister Abdur Razzak, LGRD Minister Tajul Islam, Education Minister Dipu Moni, Commerce Minister Tupi Munshu, Finance Secretary Fatima Yasmin, Bangladesh Governor Abdur Rouf Talukder, and National Board of Revenue (NBR) Chairman Abu Hena Rahmatul Munim, among others, were also present on the occasion.