By IANS
Dhaka : Bangladesh is experiencing an inflation rate of 9.2 percent, the highest in a decade, and the government has been warned that the current drive against crime and corruption could worsen the economic situation.
Economists fear that in reality the inflation may have already crossed the ten percent mark. They suggest that the government maintain usual trading in the markets instead of trying to improve the price situation by deploying law enforcers, The Daily Star said Wednesday.
Floods and the forthcoming holy month of Ramadan are being cited as the reason for the inflation – which usually affect the economy of the Muslim nation located in a riverine delta.
Sajjad Zahir, executive director of Economic Research Group, said the traditional market chain has broken down due to intervention by the "law enforcers" (police and paramilitary forces) deployed for market monitoring.
He said the recent government measures to reduce duties on imports and ease L/C opening are good moves. But to keep the supply side under control, it "should withdraw the law enforcers from the markets immediately".
Zahir said that in the face of the ongoing anti-graft drive, some people might opt to send their ill-gained money abroad through hundi and after some time get it back under cover of remittances.
He believes the practice could contribute to increasing the remittance inflow adding to the inflation. The government should act immediately to examine if it is happening or not.
Meanwhile, the Asian Development Bank (ADB) in its economic update for June observed that the huge remittance inflow might be one of the reasons for rising inflation.
"Letting markets for necessities function normally without administrative actions that cause disruption to the supply chain will also be important," the Bank said in the update released Tuesday.
The country's central bank at a coordination council meeting last week blamed the high inflation on spiralling food prices in both domestic and international markets.
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