"In view of higher international food prices and given the large share of food in computing inflation, these measures are unlikely to have any major impact in terms of dampening inflationary pressure," the ADB felt in its quarterly economic update on Bangladesh released in Dhaka.

It said, "Letting markets for necessities function normally without administrative actions that cause disruptions to the supply chain will also be important."

Containing prevailing inflationary trends is more of a demand management exercise, and requires cautious monetary policy, it said.

It is a million-dollar question and at the same time it is also difficult to answer about future inflationary pressure, ADB Country Director Hua Du said adding, "The high trend of international food prices, which is beyond our control, may bring risk to continue high inflation in Bangladesh."

The rising domestic demand pressure aided by higher incomes and continued high monetary and credit growths mainly fuelled inflationary pressures, she viewed.

The quarterly economic update said as domestic prices are increasingly linked to international prices due to globalisation, the increase in international food and commodity prices also aided inflation.

"The administrative measures undertaken by the government have not succeeded in containing inflation," it said.

Hua Du said the government drive against corruption should be target oriented. "Then it will not affect the economic growth," viewed the ADB country director.

She said the ADB supports Bangladesh Bank's (BB) contraction monetary policy. But the BB has to maintain the credit flow to the private sector, Hua Du added.

According to the report, GDP (gross domestic product) growth is estimated at 6.5 percent for the fiscal year 2007, slightly lower than 6.6 percent in 2006, because of moderating growth of agriculture.

The ADB said it is possible to achieve 7 percent economic growth in fiscal year 2008. But the private sector's confidence in investment is important, Hua Du said adding success to reach revenue target is another risk to achieve the growth.

The ADB report appreciated the high remittance inflow but said remittances have some shortcomings. "They often result in rise in consumption and not always in investment."

To make the best use of remittances, most needs to be diverted into productive sector, the ADB in its economic update felt.