The inflation rate however is going up almost every month and it stood at 7.68 percent last July. Besides, the price spike of petroleum by around 15 percent last month that triggered a rise in transportation cost as well as price hike of essentials especially in the run up to the Ramadan has made economists doubtful about the government's attaining the projected target.

The PRSP has already been finalised and is likely to be approved by the National Economic Council towards the end of this month.

In the revised three-year medium term macro-economic framework (MTMF) under the PRSP, the government has projected 6.8 percent and 7 percent GDP growth and inflation rates of 5 percent and 4.5 percent for the fiscal year (FY) '07 and FY '08.

The projection in the revised MTMF has seen a rise in the GDP growth over that shown in the draft PRSP in January.

Last year, the government set a GDP growth target of 6 percent but due to floods the target was revised at 5.5 percent while the estimated GDP growth stands at 5.38 percent.

Zaid Bakht, research director of Bangladesh Institute of Development Studies (BIDS) thinks the projected GDP growth is achievable but in the given scenario bringing down the inflation rate might prove very difficult.

Although the economy is under pressure, Zaid says, growth has been achieved in industry and export. Last fiscal year also saw a rise in the private sector credit and import of capital machinery. Besides, in spite of the central bank's tight monetary policy, import is rising. So, if the investments can be translated into production, a growth of 6 percent, if not 6.5, can be achieved, he pointed out.

He however mentioned a few risk factors. The situation in the political arena and the government's fiscal management will determine if this target will be achieved or not.

In the prevailing situation -- depreciation of taka, price rise of different things including oil both in the global market and local market -- Bakht believes scaling down inflation will be very difficult. Though these troubling factors were absent in the last few years, inflation rate still went up consistently. So, Bakht doubts if the projected rate of inflation can be ensured in the present context.

He also observed if inflation cannot be contained, it is also going to hurt the growth rate.

The PRSP identified the continued high prices of commodities in the world market, high oil prices, domestic supply bottlenecks and market rigidities as the factors that pushed up last year's inflation rate. Easing of domestic supply bottlenecks and market rigidities, and reduction of monetary growth will bring down the inflation rate, it said.

While the price increases will have to be accommodated in the monetary growth in the very short-run, monetary policy of the central bank and a prudent fiscal policy that includes limiting government borrowing from banks will certainly help contain the ever-rising inflation rate.

The PRSP also marked out seven reasons which would help achieve the projected GDP growth rate. These include buoyancy in the agriculture sector especially in fishery and livestock, macro-economic stability, reforms in the state owned enterprises (SOE) and nationalised commercial banks (NCBs) as well increasing investments,

"The programme of NCB reform will be fully implemented, leading to marked improvement in the efficiency of financial sector which in turn will help reduce real interest rates and facilitate expansion of credit to the private sector," it said.

The MTMF also projects foreign exchange reserve of $3.7 billion for the current fiscal year although the reserve yesterday was $2.77 billion.