Govt considers adjustment in energy prices

Dhaka, Jan 19 (bdprem.com) -- The government and economists have agreed in principle that an adjustment in prices of energy products is vital to reducing the widening budget deficit for the current fiscal year. Your Ad Here "We'll think and analyse further how an adjustment can be made without affecting the poor or adding to the soaring inflation," finance adviser AB Mirza Azizul Islam said Saturday after a meeting of the consultative committee on financial management and reforms. "Everybody has agreed that an adjustment in prices of oil, gas and fertiliser is urgent, otherwise the budget deficit will be huge at the end of the year," Azizul said briefing reporters after the meeting at the planning ministry. Noted economist Wahiduddin Mahmud said that the continuous increase in prices of imported goods, including energy products, will certainly affect the economy. "Without an adjustment in energy prices, the budget deficit will only widen further," said Wahiduddin, who was adviser to a previous caretaker government. But the government has to devise a mechanism by which an upper adjustment could leave the poor unaffected, he added. Adviser Azizul Islam told reporters the finance ministry had formed the committee to discuss the economic situation and will take measures accordingly in consultation with public and private sector experts. The meeting discussed mainly two issues: domestic inflation and the rising cost of imported goods—including essentials—and its further consequences on the economy. "The government's (monetary) policy stance on inflation is more or less in the right direction," Azizul said. "Inflation is rising due to supply-side constraints rather than demand-driven." But the government, he added, has to be careful in taking measures—such as utilising the excess liquidity in banks—to avert further escalation in prices. Wahiduddin Mahmud said: "We agreed in principle that an adjustment in prices of oil and fertiliser is needed otherwise the budget deficit will rise and development expenditure will fall." He said it is more important to ensure availability of fertiliser than thinking about subsidy. The economist suggested the government build a strong buffer stock of food grains so that traders and consumers receive the right signal. Economists Rehman Sobhan, MA Taslim and Atiur Rahman, finance secretary Mohammad Tareq, commerce secretary Feroz Ahmed, National Board of Revenue chairman Abdul Majid and FBCCI administrator Manzur Elahi attended the meeting.