The Minister of Finance signals dissatisfaction with the restrictive policy aimed at limiting inflation

Finance Minister Abul Hassan Mahmood Ali said on Saturday that there was no denying that restrictive policies aimed at controlling inflation could slow down economic growth in the long run.

“While there is a need to adopt restrictive policies to control inflation, it cannot be denied that such an approach could slow down growth in the long run,” he said, addressing Parliament in his closing speech on the proposed budget for 2024-25 fiscal year.

However, he added that to become a developed, prosperous and intelligent Bangladesh by 2041, the country needs continuous high growth.

“In this context, we have framed this budget as a difficult challenge to balance the seemingly contradictory goals of achieving economic stability and sustaining growth,” he said.

He expressed great hope that under the efficient, experienced and wise leadership of the Prime Minister, the government would be able to bridge the gap between resources and opportunities and soon return to the path of high growth.

The Finance Minister said that in the proposed budget, the government has tried to provide necessary funds for education, health, agriculture, local government and rural development, electricity, communication, science and technology to build a smart Bangladesh.

“In addition, we have attached due importance to ensuring food safety,” he added.

That is why he said that in this year’s budget, the government has given top priority to ensuring macroeconomic stability while controlling inflation.

“Monetary policy has already taken various restrictive steps to control inflation; interest rate (repo) has been significantly increased to 8.5 percent and bank interest rates are fully market-based.”

He also added that a crawling dollar peg system has been introduced to boost foreign reserves by supporting exports and accelerating remittances.

“In line with the restrictive monetary policy initiatives, we have also adopted supportive fiscal policies such as fiscal deficit reduction, discouraging non-essential spending and austerity initiatives across sectors.”

As a result of the policy adopted by the government, the Minister of Finance announced that he expects inflation to decline to 6.5 percent in the next budget year.

He added that in the proposed budget the government plans to prioritize mobilising resources for investments and the development of infrastructure supporting employment.

“As a result of these initiatives, we expect GDP growth to be 6.75% in the next financial year and 7.25% in the medium term.”

He mentioned that the government is also taking multi-faceted actions to raise funds to cover government expenses.

“Before setting the rules for revenue collection, we carefully analyzed the proposals received through discussions with various public and private organizations, business organizations and stakeholders.”

Mahmood Ali said that to maintain the development momentum, the government has adopted various strategies to increase tax collection, including curbing tax evasion, with emphasis on increasing the tax-to-GDP ratio.

“We are undertaking various reforms in revenue management to increase revenue in the medium term by addressing existing challenges in revenue collection.”

At the same time, he said the government was reforming the country’s customs policy, keeping in mind the realities after moving from the list of least developed countries in 2026.

“Dependence on import tariffs is reduced to reduce anti-export bias.”

The Finance Minister said that Prime Minister Sheikh Hasina, who is the heir to the age-old ideals of the Father of the Nation, is carrying out the unfinished tasks of the Father of the Nation one by one, engaging all the citizens of the country with unwavering conviction after overcoming hundreds of thousands of setbacks.

“With the hands of the Prime Minister and the path indicated by him, we will achieve the sustainable development goal by 2030, and by 2031 we will join the group of high-middle-income countries and we will be able to create a developed, rich and intelligent Bangladesh by 2041, Inshallah.”