Staff Correspondent: The gross domestic product (GDP) growth and inflation targets in the budget for the current financial year 2023-24 are being revised. Considering the current economic situation of the country, the GDP growth target may be reduced to 6.5 percent. This target in the budget was 7.5 percent.
On the other hand, the budget aims to keep inflation within 6 percent. But inflation has shown no signs of abating in recent times. Therefore, the government wants to increase the inflation target in the current financial year and keep it within 7 percent.
A final decision on these matters will be taken at the meeting of the Coordination Council and the Asset Management Committee on Finance, Currency and Exchange Rate today. The meeting is scheduled to be held on a virtual platform under the chairmanship of Finance Minister AHM Mustafa Kamal to assess overall economy and budget management.
According to sources in the Ministry of Finance, the money supply situation in the country and information on government borrowing from the banking sector will also be presented in the meeting. The impact of the government’s economic policy strategy on the money supply and balance of payments will be reviewed.
Economists think that the country’s economy is facing crisis due to global influence and internal reasons including the Russia-Ukraine war. High inflation, dollar crunch, dwindling foreign exchange reserves are cause for concern. Several key indicators of the economy have negative trends. At such a time, political unrest is centered around the national elections. Therefore, it is not possible to achieve the target of GDP growth and inflation in the budget.
As the country’s export income situation is not going well, the import of capital equipment and raw materials for investment has also decreased. Last October and November there was a negative growth in exports for two consecutive months. Exports of ready-made garments in November last year decreased by 7.5 percent compared to the same month of the previous year. Earlier, export income decreased by 14 percent in October compared to the same period of the previous year. In the first four months of the current financial year, LC settlement of capital equipment has decreased y 40.99 percent compared to the corresponding period of the previous year. 35.72 percent decrease in industrial raw materials. On the other hand, credit growth in the private sector is decreasing due to the contractionary monetary policy adopted by the central bank to control inflation. Considering these things, there are indications that the investment and production situation in the private sector is not good.
And government investment is also slowing down. During last July-October, the implementation of Annual Development Program (ADP) has been 11.54 percent. This rate is the lowest in the last eight years. All in all, the analysts think that it is not possible to achieve the target of GDP growth in the budget.
Last November, the inflation rate on a point-to-point basis eased slightly, but it was around 9.5 percent. Inflation did not fall as per the 12-month average. Average inflation is 9.42 percent till November. Till October it was 9.37 percent. The average inflation rate has been above 9 percent since last June. Analysts say that it is not possible to keep inflation under the target given in the budget in the current trend.
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