Govt to raise use of foreign credit to finance budget deficit

The government wants to increase the use of foreign credit in offsetting the budget deficit, said Economic Relations Division (ERD) secretary Kazi Shafiqul Azam on Sunday.
He said there is 5 percent deficit in the present budget and the government meets up this deficit by taking 3.5 percent credit from domestic sources and 1.5 percent from foreign sources.
"But we want to increase the foreign part from 2 to 2.5 percent 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 42,000 crore, of which only Taka 2000 was paid against foreign loans and the rest of the amount is paid against domestic credit. "Steps have been taken to match up it in future," he added.
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 percent interest for its loans but it will be 20 percent 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.
MA Mannan said countries participated in the South-South and Triangular Cooperation highly appreciated Bangladesh PM Sheikh Hasina.