Govt fails to face up to inflation challengeJasim Uddin
When the finance minister AMA Muhith announced the national budget for the current fiscal year in June 2011, he had identified inflation as a major challenge. But the government has apparently failed to face up to the challenge, leaving livelihood of millions of people at stake.
The budget for FY 2011-12 had a target to bring down inflation to 7.5 per cent from 8.80 per cent in the previous fiscal year.
But the average inflation in the first 10 month of the current fiscal year was over 10 per cent while the point-to-point inflation came down to 9.93 per cent in April after hovering over double digit for the previous nine months.
Economists said that the government, which is mainly responsible for the high inflation because of its wrong policies, had not enough time in hand to bring down the inflation to the targeted rate of 7.5 per cent.
They pointed out the government’s high borrowings from banking sector and allowing a large number of rental power plants that triggered huge import of fuel oils, decline in foreign currency reserve, depreciation of Taka against dollar and price hike in international market resulted in higher inflation.
Prices of most of the food items, except rice, increased in last 10 to 12 months, while the non-food inflation including house rent soared during the period eating into major portion of earnings of millions of people who struggle to cope with the high prices.
According to the latest data of the Trading Corporation of Bangladesh, prices of essential items like soya bean oil rose by 17 per cent, pulse by 11 per cent, potato 121 per cent, onion 8.90 per cent, most of the fishes by 20-63 per cent, salt 43 per cent and egg by 46 per cent.
The price of rice, however, declined by 2 to 6 per cent because of bumper production of aman and boro.
Increase in power and fuel oil prices three times in last eight months also contributed to the soaring inflation.
Centre for Policy Dialogue executive director Mustafizur Rahman told New Age that although the food inflation was on the decline in last two months, the overall inflation would not come down to 7.5 per cent in the current fiscal year as non-food inflation is still too high.
The food inflation was 8.12 per cent in April while non-food inflation was 13.77 per cent with the average inflation remaining at 10.86 per cent.
Mustafiz predicted that the average inflation may, at best, reduce to 9.25 per cent at the end of the current fiscal year.
He said that inflation in the country rose because of price hike in global market and a rise in import costs due to depreciation of
Taka against the dollar
and the government’s excessive bank borrowings that led to a high growth in money supply in the local market.
He observed that the government’s macro-economic management was under stress due to high inflation.
Economists also said little release in foreign loans because of the government’s failure to implement projects and excessive import of fuel oils to run costly rental power plants resulted in shortage of foreign currency
that led to the depreciation of Taka.
Mirza Azizul Islam, finance adviser to the immediate past caretaker government, blamed the government’s excessive bank borrowings for the unabated inflation.
He observed that curbing inflation would remain a major challenge for the government in the next fiscal year as well.
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