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Bangladesh: Prices

Volume 471: debated on Tuesday 29 January 2008

To ask the Secretary of State for International Development what assessment he has made of the impact of rising commodity prices on living standards in Bangladesh. (182105)

Economic growth in Bangladesh has been positive since 1976, increasing from 2.2 per cent. in the turbulent 1970s to 5.7 per cent. between 2000 and 2006. This is a major achievement for a country frequently suffering from natural and political shocks. However, the rising prices of commodities are a real concern for the people and government of Bangladesh. Government spending is high on subsidies for fuel, fertiliser, utilities and basic foods to ensure people can still purchase these products. However, this puts further pressure on Bangladesh's fiscal deficit. The dramatically rising rice prices are having a negative impact on the living standards of the poor in particular. These price rises are not only due to international price increases, but have also been exacerbated by other factors such as rising overall inflation, and reduced domestic agricultural production due to the floods in August and the cyclone in November 2007.

The UK Government are monitoring the situation closely. During my right hon. Friend the Secretary of State's visit to Bangladesh in December, he personally met with the Bangladesh Finance Adviser where he discussed the issue of rising prices and the immense challenge this is for Bangladesh. While our development programme is providing some assistance to counteract the impact of rising food prices through our ongoing programmes and some additional short-term measures in response to cyclone SIDR, it remains the government of Bangladesh's responsibility to tackle this challenge, beginning with the issue of rising inflation.