DHAKA, June 7: Bangladesh’s emergency government on Thursday announced a slew of subsidy and welfare measures in a $12.6 billion anti-inflation budget. The budget came amid government fears that failure to keep the soaring cost of essential items under control could undermine the popularity it won after coming to power following a political crisis in January.

Impoverished Bangladesh’s 144 million population, 40 per cent of whom live on less than a dollar a day, has been facing the highest inflation in nine years.

Among the measures announced by the interim government’s finance minister, A.B. Mirza Azizul Islam, were a 15 billion taka ($217m) fertiliser subsidy and a 7.5 billion taka diesel subsidy for poor farmers.“Fifty-seven per cent of the budget spending is targeted towards poverty reduction,” said Islam as he delivered the 2007-2008 budget in a pre-recorded speech broadcast by radio and television stations.

He also announced a 300 taka ($4.20) allowance for every pregnant woman and raised the monthly stipend for widows, destitute women and the disabled.

Three months’ employment would also be given to 9.5 million people, he said, without specifying what sort of work would be offered.

In addition, there would be a doubling of wheat and rice imports, in a bid to keep prices down.

“In order to keep the price of food grains within the tolerable limits the government will go for open market (sale) if necessary. I believe these programmes will usher in a positive change,” he said.

Mr Islam said the military-backed government was “endeavouring to rein in inflation,” adding that it was hoped the budget measures would bring the rate down from 8.28 per cent in April to 6.5 per cent.

Customs duties were also withdrawn on edible oil and lentils while a policy of zero per cent customs duty on items including rice and wheat would continue.

He said he expected the economy to grow at 6.5 per cent in the current fiscal year ending in June and by seven per cent in 2007-08.

The budget also saw a 30 per cent increase in expenditure with the deficit kept at 5.6 per cent of gross domestic product.

Record inflation and two per cent agricultural growth coupled with rising global commodity prices have recently taken their toll on millions of poor Bangladeshis.

Analysts have said the emergency government must tackle inflation head-on, or risk losing the popularity it created with its corruption crackdown on the nation’s elite.—AFP