Bangladesh Bank Governor Abdur Rouf Talukder has dismissed the possibility of inflation arising from the government’s borrowing targets set in the proposed budget for the fiscal year 2024. 

During a post-budget press conference held in Dhaka, Talukder stated that the current inflation in the country is primarily due to imported inflation rather than supply-side factors. 

The budget for FY24 outlines a total outlay of Tk 7.61785 trillion, with a projected budget deficit of Tk 2.61785 trillion. Of this deficit, Tk 1.32395 trillion will come from the banking sector. Talukder assured that the central bank would not resort to printing cash notes to control inflation, adding that there were no plans to do so.

The governor also revealed that the central bank would release the monetary policy statement on June 18, providing details on measures to contain inflation. 

He emphasized that the budget would incorporate supply-side interventions to keep inflation under control. The governor clarified that these factors would not impact inflation control despite significant expenditure on interest payments and subsidies. He further assured that there would be no austerity measures regarding utilizing the Annual Development Program (ADP).

Regarding the country’s foreign currency reserves, Talukder stated that they were sufficient to cover import bills for five months. He expressed optimism about making the financial account positive and gradually increasing foreign currency reserves in the coming months.

The draft of the Secured Transactions Act is also slated for presentation in parliament, while the Insolvency Act is in its final stages.

Efforts are underway to reduce the non-performing loan (NPL) trend to 5% in private banks and 10% in public banks, Talukder added. Corrective measures have already been implemented for problematic banks, and any erosion will be addressed in stages.

Regarding the stock market, several major policy issues have been resolved in the past year, and the central bank has provided necessary policy support. Talukder stressed the need to develop the bond market and stated that the central bank has been supporting the Bangladesh Securities and Exchange Commission (BSEC).

Pointing out the government’s goal of achieving a 75% cashless society by 2027, Talukder mentioned ongoing pilot schemes and the development of an interoperable platform alongside introducing a unique QR code and national debit card. 

He stated that establishing a digital bank would contribute to realizing this target, as a significant portion of the population already utilizes smartphones.

The Central Bank governor presented an optimistic outlook for the country’s economy and financial sector, highlighting various initiatives and measures for sustainable growth and stability.