No decision yet on lending to private sector from reserves
The government is yet to decide about lending money from the foreign exchange reserves to the private sector, Finance Minister AHM Mustafa Kamal said yesterday.
There would be a policy guideline on lending from the forex reserves, and everything would be done following the policy, he said.
"So far, no such policy has been made."
The minister spoke while addressing a press briefing following the meetings of the cabinet committees on purchase and economic affairs through a virtual platform.
Last week, the government, for the first time, took a move to lend money from the reserves for a development project.
When asked about sanctioning money from the reserves before formulating the guideline, the minister said the move would be incorporated in the guideline whenever it is formulated.
"Some more works are needed to be done on it since this is a new area," Kamal said.
It is decided that fund from the forex reserves can be spent on government projects, he said.
"As we are spending on a government project, it is good for us to utilise our own money instead of taking loans from abroad."
The government has formed the Bangladesh Infrastructure Development Fund to lend money from the reserves for the dredging of Rabnabad Channel for Payra Port, a seaport in Kolapara, Patuakhali.
On March 15, it sanctioned a loan of €524.56 million (Tk 5,417 crore) from the reserves for the dredging project.
The two main conditions for lending money from the fund include: the annual investment target can't be more than $2 billion, and the fund equivalent to clear at least six months' import bills should be there before lending any money from it.
However, the rising trend of the country's monthly import expenditure suggests that there is little opportunity left for the government to lend any more money from the reserves to infrastructure projects in this fiscal year.
If the monthly import expenditure of January is taken into consideration, the country currently has foreign exchange reserves of only 5.94 months.
According to Bangladesh Bank, the country's import payment was $7.23 billion in January, up 35.64 per cent year-on-year.
The forex reserves stood at $42.98 billion on March 10.
The cabinet committee on economic affairs in the meeting yesterday approved a proposal of Payra Port Authority to implement capital and maintenance dredging of Rabnabad Channel from the port's own fund.
The port authority will go for direct procurement in place of public-private partnership (PPP).
The finance minister said the committee approved, in principle, the implementation of the dredging project of Payra port from the government fund.
Earlier, the government had planned to execute the project through PPP under a joint venture with a foreign firm, the minister said.
"But a project's cost increases if a foreign firm gets involved. That is why we have decided to implement the project on our own since we have money. And a particular amount will be spent from the forex reserves."
The country had been on an extraordinary growth trajectory in the last 10 years before the Covid-19 outbreak, the minister said.
Bangladesh was the 80th largest economy in the world in 2009. It ranks 41st now, he said.
The gross domestic product of the Four Asian Tigers -- Hong Kong, Singapore, South Korea, and Taiwan -- increased at 6, 7 and 8 per cent in the 30 years to 1990, and Bangladesh has also achieved a similar growth, he said.
If there had been no pandemic and Bangladesh had got five more years, it would have become the Fifth Asian Tiger, he said.
Almost every country has been hit by the pandemic, he said. "We have been hit but not as much as we had assumed."
The minister said he firmly believed that the country would get back to its growth trajectory and become the Fifth Asian Tiger.
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