Bangladesh, South Asia’s second-largest economy and one of the world’s fastest-growing garment exporters, has spent much of the past two years trying to tame inflation after a prolonged cost-of-living squeeze. Now it risks undoing some of that work the old-fashioned way — by printing money.

Fresh concern has followed reports that the stock of “high-powered money” — reserve money created by the central bank — has risen sharply, with year-on-year growth reaching 13.35% in February, more than double the 6.16% recorded a year earlier.

Economists cited by The Financial Express newspaper say Bangladesh Bank recently injected around 200 billion takas (US$1.65 billion) into the economy to meet government expenditure needs. That may sound technical. It is not.

Reserve money is the raw material from which commercial banks create broader credit. When it expands quickly, inflation often follows.

The timing is awkward. Bangladesh’s inflation has eased only slowly after a bruising spell of price rises that eroded household incomes and weakened confidence.

Food inflation remains politically sensitive in a country where millions still spend a large share of earnings on staples such as rice, lentils and edible oil.

Fuel-price adjustments linked to the Iran war, exchange-rate pressures and supply bottlenecks have already made disinflation harder than officials hoped. Into that mix comes a burst of liquidity.

Why print in the first place? The likely answer is politics as much as arithmetic.

The new BNP-led government under Prime Minister Tarique Rahman has inherited a squeezed fiscal position that includes weak revenue mobilization, subsidy demands, state-enterprise liabilities and public expectations for relief. Bangladesh’s tax-to-GDP ratio remains among the lowest in Asia, leaving the state chronically short of resources.

New administrations rarely arrive promising austerity. They arrive promising action. Among the early priorities are reported welfare-style initiatives such as expanded family-card support, social transfers and broader cost-of-living assistance for lower-income households.

Such programs may be politically popular and socially defensible. They are not free.

If tax receipts lag and foreign budget support is slow, governments face an unpleasant menu: cut spending, borrow expensively from banks, or finance deficits indirectly through the central bank.

Printing money is the least visible option in the short run. No new tax is announced. No dramatic spending cut is televised. Cash simply appears in the system. But the bill often arrives later through prices.

That is why economists worry. As M Masrur Reaz of the think tank Policy Exchange said, the 200 billion taka injection could be amplified through the banking system’s money multiplier, adding to persistent price pressures.

Another economist, Md Ezazul Islam, argued the situation remained manageable, especially if private-sector imports rise and absorb some liquidity. Both views can be true: the danger is not immediate hyperinflation, but renewed inflation persistence.

Bangladesh’s policymakers may reply that reserve money also rose because Bangladesh Bank purchased more than $5.5bn from the market this fiscal year, boosting foreign assets and reserves.

That is plausible. When a central bank buys dollars, it releases taka unless it sterilizes the effect by withdrawing liquidity elsewhere. Inflows from multilateral lenders such as the World Bank and Asian Development Bank may also have lifted foreign assets.

Yet for households, the source of money creation matters less than the consequence. If more taka chase constrained supplies of rice, transport, rent and services, then prices rise. Inflation is especially punishing in Bangladesh because poorer households spend a larger share of their income on essentials.

A few percentage points on paper can mean fewer meals, delayed medicine or canceled school expenses.

There is also a credibility issue. Bangladesh Bank has spent months defending a tighter monetary stance. If markets conclude that fiscal needs will repeatedly override monetary discipline, expectations can shift quickly.

Businesses raise prices in anticipation. Workers demand higher wages. Savers flee into land, dollars or gold. Once inflation psychology hardens, bringing it down becomes costlier.

The government’s dilemma is real. Welfare expansion after years of strain has merit. Family-card schemes and targeted transfers can cushion the vulnerable and stabilize politics.

But financing them with the printing press is a blunt instrument. It taxes everyone through inflation while directly helping selected groups. That is poor targeting disguised as generosity.

A better route would be more mundane but more durable: widen the tax base, trim wasteful spending, reform loss-making state entities, improve subsidy targeting and secure concessional external financing. If temporary liquidity support is unavoidable, it should be transparent, limited and offset elsewhere.

Bangladesh does not face a monetary crisis. But it does face a familiar temptation. Governments everywhere prefer benefits now and costs later. High-powered money offers exactly that bargain—until prices expose the trick.

For a government eager to prove it can govern better than its predecessors, there is a simple test. If it wants to help families, it should do so honestly through budgets and reform, not quietly through the central bank’s balance sheet. Inflation, after all, is the most regressive tax of all.

Faisal Mahmud is a Dhaka-based journalist