The size of the ADP for the new fiscal year is a good 20 percent bigger than that of the last year's, and contain as it does 516 new projects in the unapproved category, the new ADP has given rise to a concern that these might have been earmarked to accommodate the wish-lists of ruling party ministers, MPs and probable candidates for the next election. As it is, the difference between the original and the revised allocations for the ADP, 2004-05 speaks for itself. In the revised version there is an increase in spending on projects that have election appeal at the expense of projects earlier envisaged for social development.

The new pay scales, which though thoughtfully have staggered payment schedules, would nonetheless create some inflationary pressure largely because of a speculative orientation to trading. Even if we set the pay-raise aside, one thing is for sure which is that the latest increase in the fuel prices will create cost-push inflation.

The Bangladesh Bank governor has cited some counter-vailing factors likely to enable a degree of positive management of deficit financing which is considered vital for containing inflation. The central bank has given us to understand that of the projected budget deficit of 4.3 percent of the GDP as much as 2.4 percent is expected to be financed from foreign sources such as the World Bank and the IMF, to mention the larger ones.

To look inward, the boro crop and other rabi harvests have come good. But the must-do-list for reduced deficit financing and inflation is pretty long. The unproductive expenditures which are raring to be made in the penultimate year to election with a high corruption premium will have to be guarded against. Expenditure control is key to safe deficit financing. Revenue collection will have to be radically improved in a context where taxes cannot be increased without having to pay a political price for it. Finally, the government's borrowing from the banks should be kept within safe limits.