ME conflict may further hurt our economy

Prime Minister Sheikh Hasina told parliament yesterday that along with the whole world, the ongoing conflict in the Middle East may affect Bangladesh socially, politically, and economically.

She said this in reply to a query of Awami League MP Samil Uddin Ahmed Shimul from Chapainawabganj-1.

Hasina said, “If the ongoing crisis in the Middle East is more intense and prolonged, it may have an economic impact on Bangladesh. So, the government will take necessary measures in this regard.”

The PM also said especially due to the instability in the world market, inconsistencies in market management and the rise in global fuel prices, the country’s inflation is likely to increase slightly.

The premier added that when the supply-chain of goods is hampered due to conflict, export-related transportation costs to Iran or neighbouring regions may go up.

As a result, exporters may face tougher competition as costs of manufacturing and supplying of products increase, she said.

In such a situation, Hasina, also leader of the House, directed all ministries and departments to keep an eye on the ongoing events in the Middle East and determine their own course of action.

“I have given instructions to make necessary preparations considering which sectors may be affected if this conflict is prolonged. It is true that there is uncertainty about the intensity of this conflict and what its economic impact might be.

To deal with this situation, some sectors may need support.

Hasina said her government has taken various measures in advance to mitigate the possible negative impact on the economy.

The measures include maintaining demand and supply balance, continuing cash incentive to encourage people to send remittance, and continuing the Export Facilitation Pre-finance Fund.

The PM said the government and Bangladesh Bank are closely monitoring the impact of conflict in the Middle East on the country’s economy.

“If its impact is felt in any sector, including industry and business, necessary policy support will be provided as before.”

Hasina also said this situation could have some negative impact on LNG supply if shipping via the Strait of Hormuz adjacent to Iran is disrupted. Besides, fuel prices and LNG prices are likely to rise.

“In this context, if it is not possible to import the desired amount of LNG from Qatari companies under the long-term contract, there is an opportunity to import additional LNG from the Omani companies … .”

Responding to a query of independent MP Abul Kalam from Natore-1, the PM said that due to the price hike of some products in the world market such as edible oil, wheat and fertilisers, the pressure of import-related inflation is being felt in our country.

“In addition, there is an apprehension that this crisis will intensify because of the fresh conflict in the Middle East. However, even in this situation, we are making all-out efforts to control inflation and mitigate its impact on the people.”

‘PRICES OF ESSENTIALS INCREASED’

In reply to the query from lawmaker Shimul, the PM admitted that prices of essentials have increased, but said that rural people who can produce their own food do not face much hardship.

“Yes, prices have gone up, which has effects. Especially, the people with limited income are suffering. However, there is not much hardship for those who can produce food for themselves. Still, we are making our best efforts to keep commodity prices under control.

“We are taking steps keeping in mind that ordinary people don’t suffer.”

Hasina said the recent fall in the exchange rate of taka is having a negative effect on domestic inflation.

“In this case, the crawling peg-based currency exchange policy will soon be adopted to bring stability to the foreign currency exchange rate.”

She hoped that this corridor-based system would help prevent abnormal fluctuations in the foreign exchange rate, which would also help control inflation.