Govt borrowing needful for boosting economy: Kibria
Finance Minister Shah AMS Kibria yesterday defended the government's borrowing, saying that it would neither hurt the private sector lending nor lead to inflationary pressure.
He said that inflation rate was very low now, and the banks had enough liquidity to meet the private sector demand.
"So, we find no adverse impact and, in fact, this would help stimulate the economy," Kibria said while briefing newsmen on the current economic trends at the state guest house Padma.
He said the point-to-point inflation rate in November, 1999 was 3.42 per cent.
The government's borrowings amounted to Tk 2231 crore in last six months of the current fiscal year, almost three times higher than that in the last fiscal year.
"Public borrowing is not good if it crowds out private sector and leads to inflation," the minister said. " But no one of these two happened this time."
The government borrowed the amount to meet both revenue and development expenditures, he said. A total of Tk 1727 crore has been spent in July-September, 1999 under ADP, which was Tk 1156 crore during the same period last fiscal year.
He, however, admitted that the private sector's demand for credit has declined.
Kibria said credit expansion during July to December period was 13.30 per cent. Credit to the private sector increased by 10.63 per cent while it was 20.33 per cent for the public sector.
The finance minister pointed out that the food indices had fallen because of the bumper boro and aman production.
Kibria said revenue collection during July-December period was Tk 6594.13 crore against the target of Tk 7527.37 crore.
He said the customs duty suffered a setback due to low volume of imports and it fell short of the target by Tk 825 crore.
"Reduction of duty on a number of items to support industrialisation also resulted in the slump in customs duty. At the same time, importers are following a wait-and-see policy for the preshipment inspection (PSI) to be in place before opening letters of credit," said Kibria.
He said PSI will be implemented from February 1.
The finance minister said the income tax reforms has yielded positive results as the direct tax realisation has increased by 4.81 per cent.
'This was possible as corruption has declined and tax supervision has improved."
Dwelling on the balance of payment situation, he said exports during July-November period of the current financial year showed a seven per cent growth from the last year's corresponding period.
However, imports during July-October period was almost stagnant at $ 2281 million against last year's $2280 million for the same period.
The central bank governor Dr M Farashuddin said foreign remittances grew by 22 per cent in November this fiscal year compared to November last year.
The flow of remittance during July-November period of this fiscal year stood US$ 732.19 million from US$ 662.13 million last fiscal year.
Economic Relations Division Secretary Dr Mashiur Rahman told reporters that foreign aid flow marked a 30 per cent rise in July-October, 1999, when $486.4 million was disbursed against US$ 295.3 million for the same period last year.
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