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Budget FY21: Bangladesh aims to keep inflation under 5.4%

  • Published at 04:32 pm June 11th, 2020

The finance minister has proposed a national budget of Tk568,000 crore for the FY2020-21, biggest in the country's history

The government aims to keep inflation limited to 5.4% in the coming 2020-21 financial year, amid a global economy that is badly shaken because of the Covid-19 pandemic.

“Our GDP grew consistently at an increasing rate in the last decade. We achieved a GDP growth of 8.15% in the FY2018-19, the highest among the countries in Asia,” Finance Minister AHM Mustafa Kamal said while presenting the proposed budget for the next fiscal in parliament on Thursday.

“Strong domestic demand has been the main driver of our growth. However, due to the fall in exports and lower than expected growth in remittances as a result of long and sustained worldwide lockdowns arising from the impact of Covid-19, the GDP growth rate of the current fiscal year has been revised downward at 5.2%.

“However, in view of the post-Covid-19 recovery, the growth rate is projected at 8.2% for FY 2020-21 in line with the long-term plans. We expect that inflation will be 5.4% during the period,” he said.

The minister made the remarks while tabling a national budget of Tk568,000 crore for the FY2020-21, biggest in the country's history, in a bid to drive the government's efforts to salvage the economy battered by the Covid-19 epidemic and safeguard public health.

The proposed plan is 13% higher over the revised outlay for the outgoing fiscal year and is 8.56% higher than the main budget for FY2020.

Without foreign grants, the budget deficit will widen to a record Tk190,000 crore or 6% of the gross domestic product (GDP).

According to the Bangladesh Bureau of Statistics (BBS), the monthly inflation rate, calculated on the basis of a consumer price index (CPD), dropped to 5.35% in May 2020 from 5.96% in the prior month. It was the lowest inflation rate since December 2018.

The food inflation rates declined in the last month to 5.09% in May from 5.91% in April.

Non-food inflation stood at 5.75% in the past month which was 6.04% in April.

The inflation rates for rural and urban areas were 5.65% and 4.81%, below April's figures of 6.08% and 5.73%, respectively, according to BBS.

In January 2020, the inflation rate was 5.75%, which was 5.46% in February and 5.48% in March.