DHAKA, June 05, 2022 (BSS) - In the new national budget (FY 23), fiscal measures pertaining to the external sector should focus on addressing the adverse impacts of imported inflation, recommended Centre for Policy Dialogue (CPD).

The think tank observed that inflationary pressure will hamper a sustainable and inclusive pandemic recovery, since the real purchasing power of many people will decline, causing further inequality.

They also recommended the use of strategic food stocks, an open market system, and strengthening of social safety net programmes - particularly programmes for food distribution and cash transfer.

CPD made the observation at its Independent Review of Bangladesh's Development (IRBD) report, titled "State of the Bangladesh Economy in FY21-22".

CPD Executive Director Dr Fahmida Khatun presented the paper at a press briefing in the city.

In her speech, Fahmida said Bangladesh's economy is under pressure in view of the emergent challenges caused due to both external and domestic factors and proactive measures by the policymakers both in the immediate and medium terms are needed to overcome those.

Coordination between the monetary policy and fiscal policy is needed, particularly in view of the upcoming FY 2022-23 budget to keep the commodity prices under control, she added.

She said policymakers will have to come out of growth obsession and focus on the quality of growth in terms of distribution of the benefits of growth more equally.

The CPD also recommended that the National Board of Revenue (NBR) should immediately consider removing the advance income tax (AIT), advance tax (AT), and regulatory duty (RD) on all imported essential food items and that the role of the Bangladesh Competition Commission needs to be strengthened, particularly in the case of the essential consumer goods market.

"Private sector corporations should consider a higher salary increment in 2022, given that a 5 percent increment of salary in the face of double-digit price hikes is compelling workers to seriously compromise their standard of living," the think tank said while recommending increasing the minimum wages in all industries so that workers earning minimum wages may at least afford basic food.

The volume of sale of essential commodities through the OMS should be increased and the distribution of these commodities must be managed effectively without any corruption, it further said.

"The government should prepare for maintaining adequate food stock not only through better agricultural production, but also through importing food," the report said, adding that there is a need for actual demand estimation of rice and other food items in the country.