Bangladesh News

Finance and Planning Adviser Mirza Azizul Islam yesterday said the view of the World Bank (WB) that reducing banks’ credit will help rein in potential inflationary pressure is not right.

“We have to decide it by considering two factors–if excess aggregated demand has been created and, at the same time, if supply has been affected,” Mirza Aziz told reporters at his secretariat office.

He said many people think that inflation takes place only due to the increased supply of currency. “But inflation is a price–it is an aggregate price in which demand and supply are involved,” Aziz said.

“Now, if reducing banks’ credit adversely affects the supply, it will be difficult to control inflation,” he added while talking to the press after a pre-budget discussion with a Bangladesh Economic Association (BEA) delegation led by its President Qazi Kholiquzzaman Ahmad.

At the discussion, the BEA members opposed the recent hike in prices of kerosene and diesel. They suggested utilising the money recovered from corrupt people by the joint forces to subsidise the two petroleum products.

The WB on Wednesday in a commentary on the recent fuel price hike suggested tightening banks’ credit to control potential inflationary pressures caused by the increase.

On the WB suggestion, the finance adviser said, “Economists may have different views but we will have to examine those suggestions in the context of reality.”

Asked about the exemption limit of income tax, the finance adviser said no decision has been made yet about increasing the existing tax-free income slab.

“There are two views to be considered before increasing or decreasing the tax-free income slab–per capita income and purchasing capacity,” Aziz said.

The next budget will focus on three aspects–investment in the power sector, improving human resources, and alleviating poverty, he told the BEA representatives at the discussion.

BEA President Kholiquzzaman urged the government to reconsider the prices of kerosene and diesel as the increased prices will affect the poor worst.

“The country’s agriculture will also be hampered because of the recent fuel price hike,” he told reporters after the discussion.

He also suggested setting an employment generation target for next one year and forming an “employment commission” to achieve that target.