Finance Minister Abul Hasan Mahmud has proposed the budget for the upcoming financial year 2024-25 with the aim of meeting the challenges of inflation, high interest rates existing in the global financial market, devaluation of money against foreign currency, climate change and development of human resources to adapt to the fourth industrial revolution. While presenting the proposed budget in the National Parliament on Thursday (June 6), he said that building a developed, sustainable and smart Bangladesh and implementing the promises made in the 2024 election manifesto is the focus of this year’s budget sector-wise and mid-term policy strategy.
The finance minister said that the contractionary monetary policy is being followed in Bangladesh in line with the various measures already taken by other countries to control inflation and as a part of this the interest rate has been increased at a significant rate. He said, ‘The policy interest rate has been raised to 8.5 percent and the upper limit of this rate corridor has been revised to 10 percent for the Standing Landing Facility (SLF) and the lower limit for the Standing Deposit Facility (SDF) to 7 percent. Apart from this, the system of determining the interest rate based on the six-month treasury bill has been abolished and the interest rate has been made market-based. The loan interest rate will be determined based on the banker-customer relationship subject to the demand for loans and the supply of loanable funds in the banking sector.
The finance minister mentioned that in addition to this, supportive policies are being adopted in fiscal policy to ensure the success of the measures taken under monetary policy to control inflation. He said, ‘Family Card, OMS etc. programs have been strengthened to protect common people from the pressure of inflation. Hopefully, as a result of these policies adopted by us, inflation will come down to 6.5 percent in the next financial year.’
The finance minister said that the country’s economy is currently facing some pressure due to high inflation, but due to the implementation of prudent and correct policies, the GDP growth trend is continuing. From the fiscal year 2009-10 to the fiscal year 2023-24, the average growth rate of Bangladesh was 6.71 percent, which is one of the highest among all countries in the world.
The finance minister said that in the last two budgets, the government had given full attention to reducing demand and increasing supply as inflation is one of our major challenges. In this context, he also mentioned that various austerity programs have been taken along with contractionary monetary policy in order to obtain macroeconomic benefits, as well as supportive fiscal policy, i.e. reducing expenditure, discouraging less important expenditure.
The Finance Minister said, ‘Yet inflation in the country remains rigidly above 9 percent mainly due to import price hike and internal supply chain failure. Therefore, in the budget of the next financial year, we will continue with fiscal consolidation i.e. reduction of budget deficit and budget austerity even if it is limited. However, if this approach is adopted in the long run, the pace of growth may slow down, so we will aim to gradually increase government spending in the second half of the next financial year. This will be possible if the amount of revenue collection can be increased. To that end, we will focus on increasing revenue collection along with phasing out tax exemptions.’
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