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CPD warns inflation will stalk future PDF Print E-mail
Friday, 06 June 2008

Rising global prices of food and fuel and domestic supply constraints have driven inflation, which will be a major concern in the coming years too, the Centre for Policy Dialogue said in report on the economy, published Wednesday, reports

It also said the population below the poverty level of income experienced an income erosion of almost 37 percent in January 2007 to March 2008.

"An additional 1.2 crore people have fallen below the poverty line in recent times because of high inflation," CPD's executive director Mustafizur Rahman said in a media briefing.

"Increasing global prices of food, fuel and fertiliser are emerging as causes for concern," CPD warned.

The report that focused on FY 2007 pointed to a number of positive developments.

It cited growth of manufacturing industries, robust performance of export sector, revitalised capital market with 121 percent growth in DSE market capitalisation and high growth of remittance inflow.

Rahman said the trend of a hike in the annual development programme implementation towards the end of a fiscal year has been witnessed this year as well.

Implementations rose from 42 percent (July 2007-March 2008) to 55 percent in (July 2007- April 2008).

This means an additional 13 percent utilisation in just one month (April), Rahman said.

The private research firm suggested strengthening institutional capacities for further ADP implementation as it remained identical to poor performances of the recent past.

Only 51 percent of the original allocation of the ADP for the power sector has been spent in the current fiscal year, CPD says.

"Poor implementation in such an important sector has negatively affected the economy as most of the other sectors depend widely on power," the CPD executive director told reporters.

He stressed the need of readjusting fuel prices.

"However, it needs to be crafted very carefully."

Rahman suggested assessment of factors such as international price movements, productive sectors, people's purchasing power and equity concerns while readjusting fuel prices.

Increased budgetary support and input supply for higher food production in 2009 has been recommended in the report.

"Financial supports in matters like, seeds, fertiliser, irrigation, research and extension would be much needed to boost farm output to face the global food price crisis," said Uttam Kumar Deb, senior researcher of CPD.

He stressed the use of ICT and electronic media for dissemination of agricultural technologies' promotion.

Speaking on a budget deficit, Prof Rahman said the coming year's deficit would amount over 6 percent of GDP. Last year's budget witnessed the deficit at 4.2 percent of GDP, according to the CPD economic review.

The report warned that interest payments could become a major concern in the coming years.

Bangladesh now spends around 13 percent of the "expenditure budget" on interest payments and the percentage is on the rise.

The review also stated that production of small-scale industries rose at relatively slow pace compared to the large and medium ones.

"Employment-related growth in Bangladesh is not possible without growth in SMEs (small and medium enterprises)," said the CPD executive director.

Rahman identified deteriorating trade balance, weak implementation of public investment programmes, stagnating food grains production and a fall in agricultural credit disbursement as some of the disturbing signs of FY 2007.

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