Limiting inflation to 5.6% quite ambitious: Sanem
The South Asian Network on Economic Modelling (Sanem) in its immediate budget reaction, has said the expectation of limiting the inflation rate to 5.6% in the next fiscal year is quite ambitious amid the current situation and shifting global economic factors.
"The implementation process of policies aimed to relieve the public from inflationary pressure has not been properly clarified in the budget," it said in a press release.
The think tank appreciated the continuation of TCB commodities sales to mitigate the effect of inflation on low-income people and the promises to continue taking actions against hoarders.
"If the inflation rate exceeds 6% anyhow, the actual interest rate [on deposits] will become negative. The budget has not addressed the matter," the Sanem said, adding that continuing 6% and 9% rates of interest was not desirable.
The organisation said the budget, placed by Finance Minister AHM Mustafa Kamal in Parliament on Thursday, does not have a balance between macroeconomic targets and development goals through policy coordination.
"The budget prioritises six challenges which are timely and appropriate. However, it is unfortunate that challenges of poverty and job growth have not been included."
Saying that three issues pertinent to the social safety net – poor allocation, target mismatch and lack of coordination – should have been addressed, the Sanem added that the government's proposal for a universal pension scheme is praiseworthy.
"But, the budget failed to show a concrete strategy in this regard."
"Although the budget says that Bangladesh has successfully overcome the adverse economic impact of the Covid-19, it is an overstatement considering ongoing high inflationary pressure, escalated current account deficit, negative growth in remittances, stress on the US dollar exchange rate, strain on the foreign exchange reserves and long-standing challenge of job creation," it said.
Among others, the lack of proper feasibility studies for megaprojects and major institutional issues have not been addressed in the budget, it said, while adding the amnesty for money launderers can encourage illicit money transfer and capital flight.
