Now the government mulls over an upward adjustment to electricity, gas, and fertiliser prices at one go as a measure to lower state subsidy burden, sources say.
On Wednesday, a high-level meeting discussed an immediate need for the adjustment, and if possible, completing it within the first couple of days of the upcoming year, they say.
"There is no alternative but to adjust the price of electricity, gas, and fertiliser," a senior finance ministry official said, quoting meeting minutes that covered entire gamut of economic situations and scenarios.
Finance Minister AHM Mustafa Kamal presided over the virtual meeting of the coordination council on fiscal, monetary, and currency exchange. Top officials of the ministry of finance, the National Board of Revenue, Economic Relations Division, and the central bank attended the meeting.
According to sources the meeting viewed that subsidy for electricity, gas, and fertiliser for public consumption has been mounting, and unless the prices are adjusted immediately, the volume of subsidy will become unaffordable.
The meeting also discussed the last price hike of these items and its impact on inflation. The meeting was told that price hike has some immediate impact on inflation but that gradually tapers out.
However, the meeting did not take any decision on lowering fuel- oil prices which the government raised in November amid price hike of the items on the global market. The government that time pledged to lower the oil price again when it declines on the international market.
An official said interest payment and subsidy remain as main challenges for the government this year and same challenges will persist next year, too.
While reviewing the current budget-implementation progress, the meeting was told that, until now, development-budget spending records a good going compared to last year.
"The meeting asked for expediting spending to achieve the 7.2- per cent economic growth," he said.
The meeting also discussed a handsome revenue growth, rising export earnings, and growing import, growth in capital-machinery import, foreign direct investment and higher credit disbursement.
However, the fall in remittance inflow is seen by participants as a concern among the economic indicators.
Higher electricity and gas uses, and growth in cargo handling at ports indicate that development is taking place in the country, the meeting views.
Average inflation may rise to 5.6 per cent this year while the International Monetary Fund recently said that rate could go up to 5.8 per cent creating pressure on common people, the meeting noted.
The minister at the meeting also asked the officials to initiate the procedure of revision of budget and check how much foreign assistance is available in the pipeline.
Recent interest adjustments in provident fund and national savings certificate also came up discussion. Growing savings-certificate sales and payments for golden-handshake programme in state-run mills are found to be exerting pressure on the economy.
Also they viewed that the introduction of Islamic Sukuk opened up an avenue for Islamic banks to invest funds and thus the government is getting increased amounts of money from banks.
The meeting asked for making e-chalan popular, because it helps lower the statistical gap between the revenue board and the ministry of finance. The automation of bonded warehouse and further mechanisation of agriculture were also discussed.
The meeting noted that the eighth five-year plan mentioned Tk 7.0-trillion budget for fiscal year 2022-23 and larger revenue earnings are targeted for that purpose.
"But the pandemic has slowed down many things," the meeting observed and so asked the officials concerned to review the needs, as a belt-tightening measure.
In the next fiscal year, the official says, the ADP size will be increased by 10 per cent.
The meeting also discussed the possible impact of Omicron variant of coronavirus. "But the variant spreads fast but is not deadly, thus its impact on the economy may not be high," it was stated.
There is a Tk 100-billion budgetary allocation and foreign assistance to fight pandemic through vaccination this fiscal year, they said.
Sources say the meeting also decided for joint effort of finance ministry and central bank for curbing possible inflationary pressures on the economy in the days ahead.
The inflation as measured by consumer price index (CPI) rose to 5.70 per cent in October 2021 from 5.53 per cent a month before on a point-to-point basis, according to the latest data of the Bangladesh Bureau of Statistics.
Bangladesh's import expenses jumped by 51.42 per cent to US$23.90 billion during the July-October period of FY'22 from $15.78 billion in the same period of FY'21 while export earnings rose by 20.45 per cent to $14.80 billion from $12.29 billion.
The meeting also noted an uptrend in credit flow into the private sector which rose to 9.44 per cent in October on a year-on-year basis, from 8.77 per cent a month ago.
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