Central bank's steps caused liquidity crisis: Finance minister
Finance Minister AHM Mustafa Kamal has said the Bangladesh Bank's initial attempt to stabilise the foreign exchange rate by increasing the supply of dollars in the market caused a temporary liquidity crisis.
The crisis led to a hike in the government's interest expenditure on deficit financing from bank sources, said the finance minister on Thursday while presenting the budget FY2023-2024.
To deal with the situation, the finance minister said, the government is implementing some austerity measures in other areas in the current fiscal year while continuing to prioritise spending on projects related to public welfare and supply sectors.
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He said the government has taken quick and effective steps to ensure the supply of fertilisers at affordable prices to keep production in the agricultural sector uninterrupted.
Besides, allocation on subsidies for electricity and gas has been increased, he added.
He said the Bangladesh Bank has raised the policy interest rate, including the repo rate several times, to control inflation.
Moreover, customs duty on rice prices has been withdrawn and regulatory duty has been reduced from 25% to 18%.
The advance tax exemption has been allowed and duty on diesel has been reduced from 18% to 5% to decrease the price of diesel.
To control inflation and to mitigate its impact on low-income people, the finance minister said the government has been carrying out initiatives such as food-friendly programmes, open market sale of rice, distribution of 1 crore family cards, among others.
