Govt borrowings won't exceed limit: Muhith

Dhaka, Oct 23— The finance minister has said that the government's loans from the banking sector will not exceed the target set in the budget.

"We've targeted a Tk 430 billion loan from foreign and internal sources to finance the budget deficit," A M A Muthih told reporters at the Secretariat on Sunday.

"The loans did not cross the target last time and it won't this time either."

The target for loans from internal sector for the 2011-12 fiscal is Tk 189.57 billion. A mere 100 days into the fiscal, the government has taken out Tk 95 billion in bank loans, more than half of the target, according to the central bank.

Experts spelt fear that investment in industries would be disrupted and inflationary pressure would increase if the government continued the trend. Speaking to journalists on Oct 17, Muhith called it an uncalled-for hubbub.

"I am not worried about inflation at all. I am worried about investment. We (government) can't feed the need for investment," he said.

INFLATION FROM GLOBAL PRESSURE

Inflationary pressure in the economy is caused by the food and oil-price hike in the international market, Muhith said.

"Our rice supply is good, so good we won't have to import rice. But the price is rising, chiefly because of international pressure. Rice prices are going up in the international markets," he said.

"But the good news is oil prices are going down. And as peace returns to Libya it will fall even further. That will help ease the inflation," Muhith said.

BoP UPSET WITH HIGH IMPORT

The nation's balance of payment (BoP) has been upset by an increased import spending, the finance minister said.

"This pressure has brought the taka down against dollar," he added.

"Last year we imported $ 31 billion worth of goods, while exports were $ 22 billion. The fiscal before that imports were $ 22 billion and exports $ 16 billion. This huge gap is pressuring the balance of payments," he said.

The price of dollar has been steadily rising, Following the urging of the central bank, Bangladesh's foreign exchange dealing banks on Oct 10 decided to cap the Dollar-Taka exchange rate at 76 for imports and at 75 for remittance and exports.
From;www.bdnews24.com