Foreign credit use to rise for financing budget deficit

A top official in Dhaka has said that the government wants to increase the use of foreign credit in offsetting the budget deficit.

Economic Relations Division (ERD) Secretary Kazi Shafiqul Azam on Sunday said there is 05 per cent deficit in the current budget and the government meets up this deficit by taking 3.5 per cent credit from domestic sources and 1.5 per cent from foreign sources.

"But we want to increase the foreign part from 2 to 2.5 per cent because of lower interest rate," said the ERD Secretary while speaking at a press conference to inform journalists about Bangladesh's participation in the South-South and Triangular Cooperation held recently in Brazil.

He said the government paid interest worth Taka 420,000 million.

A BSS report said state minister for finance and planning MA Mannan also attended the press conference. MA Mannan led the Bangladesh delegation at the conference held from November 20-21.

ERD secretary said foreign credit and assistance will decline when Bangladesh will become a middle income country and it is natural.

Now the World Bank charges 0.75 per cent interest for its loans but it will be 20 per cent afterward, he said and added that if the interest rate goes up, investments will also increase.

When Bangladesh becomes a middle income country in 2018, interest rate of foreign loans goes up by three times, he said, adding that even then, it will be beneficial for Bangladesh to take loans from foreign sources.

State minister for finance and planning MA Mannan said countries participated in the South-South and Triangular Cooperation highly appreciated Bangladesh Prime Minister Sheikh Hasina for sheltering forcibly displaced Myanmar nationals in Bangladesh.