Print Edition
The last national budget of the 8th Five-Year Plan, which happens to be the budget for FY2024–25 amounting to BDT 797,000 crore, was passed by the parliament on June 30, 2024. The size of the budget in comparison to the same of the previous fiscal year demonstrates the lack of appetite of the government for aggressive growth. Rather, focus has been put on stabilising macroeconomic indicators such as inflation, exchange rates, foreign reserves, and so on.
It is often said that fiscal policy alone cannot make an economy reach where it wants to reach. A well-thought-out monetary policy statement in synchronisation with fiscal policy is required to achieve the broader macroeconomic goals. The recently published monetary policy statement by the central bank for the period July 2024–December 2024 is in line with the national budget for FY2024–25, as it plans to engage the tools that may be useful, such as employing a crawling peg system to determine the exchange rate or tweaking the policy rate.
When it comes to the challenges, the sluggishness in the global economy may make it difficult for the country to achieve the targets it has set. The private sector may face a lack of availability of credit due to the borrowing of the government from the banking system. Also, the cost of borrowing may go beyond the reach of small borrowers due to the planned gradual increase in the policy rate. Furthermore, the banking sector as a whole may face declining profitability due to the new policy to be implemented to classify loans. However, it can be hoped that the economy may reach close to the targets if not achieved, provided the policy tools work as planned.
Md. Shah Jalal
Editor
IDLC Monthly Business Review
More Print Editions Subscribe