The Bangladesh Bank (BB) predicted Tuesday that the country's macroeconomic outlook for the current fiscal would remain favourable mainly on account of anticipated bumper aman paddy harvest.
Besides, the country's central bank said, money supply is expected to shrink causing a decline in the price level by the end of the current calendar year.
The predictions were made in a research paper of the central bank, presented by BB Executive Director KM Jamsheduzzaman at a discussion on Monetary Policy Stance of the Bangladesh Bank held the National Press Club in Dhaka Tuesday.
"The near-term macroeconomic outlook for fiscal FY06 remains favourable mainly on account of anticipated robust harvest of the aman crop, enhanced remittances from abroad, strong performance of the readymade garments (RMG) industry, particularly the knitwear segment, and overall growth in industrial and services sectors," the BB said in its paper.
"However, as always a number of downside risks remain. The risks are: the threat of accelerating inflation and continuing pressure on the balance of payments resulting from continuous growth in import payments," the research paper said.
According to the paper, the Bangladesh Bank pursues a monetary policy that will keep inflation under control.
"The macroeconomic fundaments are not bad compared to the many other countries in the world," said the BB Governor Salehuddin Ahmed while speaking at the meeting, organised by the Economic Reporters' Forum (ERF).
He also said the central bank is now trying to adjust the fiscal and monetary policies to ensure better management of the economy.
On the other hand, former Secretary of the Economic Relations Division (ERD) Moshiur Rahman felt that the country will face difficulty in maintaining the macroeconomic balance in the future.
He said the rate of national savings has declined, as a result, the dependency on external resources is gradually increasing.
He also said the government borrowing is still at an unpredictable state and that the recurrent expenditure of the government should be controlled.
Stressing the need for adopting a sensible policy, he said that the non-performing loans should be reduced in the near future.
Describing the inflation situation, BB Executive Director KM Jamseduzzaman said inflation is a consequence of the money supply.
"The inflation rate is going down and it will further fall in the near future," he observed.
The ERF President Monwar Hossain gave the address of welcome while General Secretary Nurul Hasan Khan offered the vote of thanks.