No relief from inflationary pressure anytime soon: Experts

Experts at a discussion on Sunday said there won't be relief from high inflationary pressure anytime soon as the rising price trend of commodities and services will continue for a while.

Addressing the programme titled "New Challenges in the economy of Bangladesh" organised by the Economic Reporters' Forum (ERF) at its auditorium in the capital, policymakers, economists and business leaders said the inflation rate depended on the Russia-Ukraine war and the price of commodities in the global market.

Speaking at the programme as the chief guest, State Minister for Planning Dr Shamsul Alam alleged that the economists of the country mostly focused on concerns rather than the country's accomplishments and possibilities.

"But, foreign research institutions have highlighted the strength and potentials of the economy of Bangladesh," he added.

On the issue of inflation, Alam said it was a result of the fuel oil price hike, adding, "There was no alternative to raising fuel oil price. But, the government has taken various steps and hopefully the inflationary pressure will come down by October."

He also stressed there was no weakness in the government's planning process despite the current discomfort.

Referring to the stockpile of high-quality coal, he said the government still relied on imports due to the sentiments of people, forcing it to prioritise political actions over economic considerations.

Executive Director of the Policy Research Institute Dr Ahsan H Mansur said monetary policy was failing to contain inflationary pressure, cautioning that point-to-point inflation may hit 10%.

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

Alleging that the government did nothing to rein in inflation, Mansur said the government was trying to face the challenges of inflation by increasing supply, but there has been less production of rice.

"The government has taken good measures for budgetary management. Despite this, the government will have to take $13 billion from abroad and some Tk1 lakh crore from the local banks for budget implementation," he added.

Executive President of the Bangladesh Knitwear Manufacturers and Exporters Association Mohammad Hatem said export orders were falling while large factories were having to reduce production.

"Under the circumstances, the production cost has increased while the manufacturers are also not getting the adjusted price of additional expenditure from the buyers. On the other hand, the businessmen are feeling pressure since the government has given them less time frame in repaying the loans under the stimulus package."

Alleging that the policy of the National Board of Revenue is not business-friendly in various areas, Hatem said no matter what challenges come, the export earning sectors would continue to maintain their uptrend.

Former president of the Metropolitan Chamber of Commerce and Industry Barrister Nihad Kabir said there was sufficient stock of coal in the country, but maximum utilisation of the country's resources was needed.

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

"There are some weaknesses in the management in economic and financial sectors and the future will turn bad if these weaknesses are not addressed. Staying competitive is the first challenge. Besides, various obstacles in doing business owing to policies and regulations are raising costs, which is also a challenge," she added.

Nihad said the price of essentials needed to be adjusted in line with the declining trend of fuel oil in the global market.

Former president of the Dhaka Chamber of Commerce & Industry Abul Kashem Khan said, "Energy has a big role in the dynamism that has been infused in the country's economy. But, the country is now import-dependent on energy and there is a need to rethink the issue. There should be a master plan to ensure optimum use of coal and gas in the country so that the country can become self-reliant on energy within the next 10 to 15 years."

Chief economist of the central bank Dr Md Habibur Rahman said the inflationary pressure would continue as it was caused by imports. "Despite this, the Bangladesh Bank has taken various steps to contain inflation, bringing stability to the exchange rate and ensuring discipline in the financial sector. For this, efforts are on to control inflation through improving the supply side without raising the interest rate."

Noting that the economy of Bangladesh was heading in the right direction, Habibur hoped the exchange rate of US dollar against the taka would come down soon.

The programme was presided over by ERF President Sharmeen Rinvy and its General Secretary SM Rashidul Islam moderated the event.