The New Nation - Internet Edition

Staff Reporter

The fuel price needs to be adjusted with the international market to reduce the pressure on the budget for the next fiscal said Prof Mustafizur Rahman, Executive Director of Centre for Policy Dialogue (CPD) at press briefing in the city yesterday.

He was revealing a report on "Independent Review of Bangladesh's Development (IRBD)" on macroeconomic performance during the current fiscal at its office.

The subsidy on diesel, octane and petrol need to be readjusted in line with the international market price. However, farmers and poor people should be provided subsidised diesel and kerosene, he added.

He said the next fiscal would be a challenging year, as a large part of the money would have to be spent by the elected Government to ensure development management in line with Poverty Reduction Strategy objectives. Maintaining macroeconomic stability and economic growth, containing inflation and narrowing fiscal deficit and addressing acute power and energy shortages and poverty will be a big challenge for the Government in FY 2008-09.

"The Government might have to go for a higher deficit budget in the next fiscal. The total budget deficit during July-February of FY08 was Tk 16,678.6 crore against

the deficit of Tk 7,479.5 crore during the corresponding FY-07," he added.

"The estimated 8.0 trillion cubic feet (tcf) of current gas reserve will not be able to meet the national demand after the year of 2015," CPD Executive Director noted and suggested to finalise the National Coal Policy and develop the country's power sector for ensuring the uninterrupted economic growth of the country.

Prof Mustafizur Rahman said without the growth of Small and Medium Enterprises (SME's) more employment could not be created.

He also said higher revenue collection, excellent exports performance, higher remittance inflow, comfortable foreign reserve, bumper Boro production and efficient handling of post flood and Sidr management are the positive developments in the present fiscal.

On the issue of inflation the reports said the annual average rate of inflation increased to 10 per cent from March 2007 to March 2008.

The point-to-point inflation in rural areas in March was 10.08 per cent and in urban areas 10.02 per cent. Food inflation increased from 8 per cent in March 2007 to 11.79 per cent in March 2008. Non-food inflation rate increased from 5.42 per cent to 7.33 per cent during the same period.

The reports also mentioned of producing at least 32 million tons of rice for the next fiscal as food security. Increased budgetary support and input supply required for higher food production in FY2008-09. Reinvestment of profit and income from Foreign Direct Investment (FDI) by foreign companies need to be encouraged.

Revenue collection posted a rise of 26.8 per cent during the July-March of the FY-08 and targeted growth was 22.3 per cent. Declaring of undisclosed money also contributed to high income tax and revenue earnings.

The total earnings of the country during the first three quarters (July-March) of FY-2008 stood at $ 10,159.78 million. Total foreign aid inflow stood at US $ 1127.41 million, which is more than twice the amount, received during July- February of FY 2007.

The reports suggested raising the efficiency of implementation of Annual Development Programme (ADP) rather than reducing the size and lauded Bangladesh Bank (BB) for taking accommodative monetary policy rather than the International Monetary Fund (IMF's) suggested contractionary policy.