Achieving 6% inflation target challenging: CPD

The Center for Policy Dialogue (CPD) has expressed its concerns about the current state of the economy, saying achieving the target inflation rate of 6% would be challenging.

In an immediate reaction to the proposed budget on Thursday, the think tank noted that the stable state of macroeconomics has been disrupted, with various pressures and challenges emerging.

Fahmida Khatun, executive director of the CPD, said one of the major issues addressed was inflationary pressure and rising commodity prices.

She stated that the proposed solutions presented in the budget for the upcoming fiscal year to curb inflation would not be effective.

The think tank had earlier suggested fiscal measures to combat inflation, such as waiving taxes on certain imported daily necessities. But no such initiatives were seen in the budget, said the economist.

Additionally, Fahmida Khatun pointed out concerns regarding the income tax system. While the budget increased the tax-free income threshold from Tk3 lakh to Tk3.5 lakh, it has imposed a mandatory income tax payment of a minimum of Tk2,000 for individuals seeking 38 government services, regardless of their financial income. The CPD criticised this decision as reckless and called for the rule requiring a minimum payment of Tk2,000 to be dropped.

Furthermore, the CPD expressed disappointment with the lack of emphasis on the reforms that were supposed to be implemented. Fahmida Khatun highlighted the fact that the budget did not provide details about the terms and conditions set by the International Monetary Fund (IMF), despite the IMF being mentioned three times in the budget document. The CPD noted that there were indications in the budget regarding targets that align with the IMF conditions.

She stated that both the recognised issues and the proposed solutions in the budget were inadequate to address the ongoing economic crises. The CPD will provide a detailed response to the proposed budget, taking into account the economic context and the challenges faced by the country.