Finance Minister Abul Hassan Mahmood Ali has said they may need another six months to bring inflation under control and the government is taking adequate measures to address it.
During the post-budget press briefing on Friday, he also said that the government’s inflation control measures led to a tighter proposed budget this year.
He mentioned that the Awami League government’s actions helped to keep inflation within the 9% range. Inflation reached 10% in 2010 after the Awami League came to power, up from about 9% in 2009.
“However, in less than two years, the government was able to control inflation and was in the range of 5%-6% in the next decade.”
In the last several years, he continued, the worldwide foreign exchange problems, exacerbated by the Covid-19 pandemic and the Russia-Ukraine war, have caused inflation to rise.
“We have taken all steps to control inflation and are considering what more we can do to curb it,” he said.
Journalists boycott BB governor in FM's post-budget briefing
Bank borrowing
Responding to a question on bank borrowing, the finance minister said that borrowing from the banks is a standard procedure of every budget. The rate is more in the developed countries and the Bangladesh government has kept it within 5%, so, it is not something to worry about.
Prime Minister's Finance Advisor Mashiur Rahman said the banks provide interest to their customers against their deposits.
“If banks cannot invest the deposited money, then how will banks pay interest? They have to close their business,” he added.
However, trade bodies expressed concern over the over reliance on the banks to cover the budget deficit. They said that a significant portion of the budget shortfall will be covered by increased bank borrowing. This heavy borrowing could make it harder for private-sector businesses to secure loans.
Regarding non-performing loans (NPL), Mashiur Rahman said the situation did not happen overnight. It is a result of weak governance over the years, which his government is now trying to solve.
NBR: Businessmen's demand led to black money legalization proposal
Black money whitening
In response to a question from journalists, NBR Chairman Abu Hena Md Rahmatul Muneem said that some businessmen and individuals had requested a provision for the whitening of black money.
"Because of audits, some businesses were not able to show their legitimate assets, which is why we have given this opportunity. Moreover, various reasons such as ignorance and carelessness during the buying and selling of land also led to resources being undisclosed," he added.
Responding to another question, he said that people who make black money do not keep it in the country. This is why the government is allowing those who want to keep their money in the country, but made some errors in declaring their wealth, the opportunity to pay the 15% tax and whiten their money.
When asked if he knew the size of the black economy in Bangladesh, he replied: "It is not within the NBR's jurisdiction to measure the black economy. There are other institutions to measure it."
In his budget speech, Finance Minister Abul Hassan Mahmood Ali mentioned that the introduction of a data verification system has incidentally created legal complications over the disclosure of undisclosed income and assets of various companies.
CPD: Provision to whiten black money unethical, promotes corruption
Will Benazir be allowed to whiten black money?
When journalists asked whether former Inspector General of Police (IGP) Benazir Ahmed will also be allowed to whiten undisclosed income by using the opportunity of 15% tax, Abu Hena Muneem said it is now under the court’s jurisdiction and money earned through crime cannot be legitimate either way.
Responding to another question, Mashiur Rahman, advisor to the prime minister, said that Benazir is out of the country now, according to the news of the media outlets, and he asked for time and the ACC accepted it.
“The search procedure is going on and once it is done, then we will take action. The judicial system will follow due procedure,” he added.
MCCI: Implementing budget is very challenging
Permanent TCB shops?
State Minister for Commerce Ahasanul Islam Titu said that they are working to establish permanent TCB shops to provide daily essentials at subsidized prices for the lower and fixed-income groups. Currently, TCB sells daily essentials through trucks.
In response to a question, he mentioned that they have reduced the source tax on essential goods to 1% from the existing 2% to help ease inflation. They will also request an increased allocation for the OMS.
Answering another question, he assured that the prices of two major imported essentials, sugar and oil, are under control.
"Our duty is to monitor the market, not to formulate and implement measures to control inflation. That responsibility lies with the Finance Ministry and the central bank," he added.
He noted that the Consumer Rights Directorate is monitoring the market and reported no market instability following the proposed budget for FY25. He also mentioned that they have abolished the minimum value-added tax on 10 products, reduced customs duty on 10 more products, abolished supplementary duty on 19 products, and reduced it on 172 products.
He acknowledged that food inflation is currently high due to global economic turmoil, which has also impacted domestically produced goods.
In response to a question, State Minister for Finance Waseqa Ayesha Khan said that the crawling peg system and offshore banking will help bring in more foreign currency.
"With offshore banking, we hope that non-resident Bangladeshis and foreigners will deposit funds, as the tax rate is zero," she added.
Regarding the stock market, NBR Chairman Muneem noted that the problems of the capital market are not related to tax, but other issues.
Answering a question about the allocation for research on the blue economy, State Minister for Finance Waseqa Ayesha Khan said that they have allocated Tk100 crore for research and other facilities related to the blue economy.
Financial risk statement included in national budget for first time
Journalists boycott BB governor
All of the people except Bangladesh Bank Governor Abdur Rouf Talukder spoke during the finance minister’s post-budget press conference.
Talukder was reduced to a silent spectator as the journalists in attendance threatened to boycott the press conference if the governor was allowed to participate in the briefing.
At the very beginning of the start of the QA session, Economic Reporters’ Forum (ERF) President Mohammad Refayet Ullah Mridha said that the Bangladesh Bank Governor banned journalists in the central bank. Following the decision, the reporters decided none of them would listen to him.
“I draw your attention to the fact that he should not make any speech in the press conference. If he does, we will boycott the program,” he added.
With the objective of battling inflation, the finance minister unveiled the Tk797,000 crore proposed national budget for the fiscal year 2024-25 on Thursday (6 June).
The proposed budget set a target of bringing down inflation to 6.5%, however, inflation has been above 9% for the past 14 months. The budget also set Gross domestic product (GDP) at 6.75%.
The finance minister was joined at the press conference by Minister of Local Government, Rural Development and Cooperatives Md Tazul Islam, Industry Minister Nurul Majid Mahmud Humayun, Planning Minister Major General (retd) Major General Abdus Salam, Housing and Public Works Minister RAM Obaidul Muktadir Chowdhury, Prime Minister's Finance Advisor Mashiur Rahman, Agriculture Minister Dr Md Abdus Shahid, Education Minister Mohibul Hasan Chowdhury Nowfel, Commerce Minister Ahasanul Islam Titu, Finance State Minister Waseqa Ayesha Khan, Cabinet Secretary Md Mahbub Hossain, Bangladesh Bank Governor Abdur Rauf Talukder, and National Board of Revenue (NBR) Chairman Abu Hena Md Rahmatul Muneem.
