United News of Bangladesh

Planning Adviser Dr Wahiduddin Mahmud on Sunday said the government is moving away from financing large-scale development projects through foreign loans and stressed the need for avoiding a ‘debt trap’. “We do not want to take loans for big projects unnecessarily. Institutions like the World Bank often come with many project proposals. If some are genuinely high priority, we may consider them. But these issues are now being discussed and assessed very carefully,” he told reporters after an ECNEC meeting. The adviser said the government will accept loan-funded projects only if they are of critical national priority and cannot be financed or implemented with domestic resources or expertise. Poor project planning, inflated costs behind massive wastage: Wahiduddin He noted that some initiatives such as pollution monitoring do not justify large loans or foreign consultants. “Measuring pollution is not that difficult. The instruments involved are not extraordinarily complex. There is no need to take large foreign loans for such purposes,” he said. He added that as Bangladesh prepares for LDC graduation, interest rates on foreign loans are rising, making them more expensive and underscored the importance of relying on domestic capacity. The adviser also warned against attractive but unnecessary projects offered by multilateral lenders like the World Bank and the Asian Development Bank (ADB). “We will take only those loan projects that are truly necessarywhere foreign support is genuinely required. Everything else should be done with our own resources, even if on a smaller scale,” he said. Benapole Port on high alert after import of 125 tonnes of MGMCL He also highlighted the government’s intention to reduce long-standing dependence on loans in social sectors, including education. “There is no point in becoming trapped in a vicious cycle of debt. We want to move away from heavy reliance on loans in  all sectors,” he added.

Finance Minister AHM Mustafa Kamal has said that Bangladesh is in the safe zone in terms of receiving the foreign loans. He made the remarks while briefing reporters after the two consecutive meetings of the Cabinet Committee on Economic Affairs (CCEA) and Cabinet Committee on Public Purchase (CCPP) on Thursday. Also read:Govt to consult with all on proposed universal pension scheme: Finance Minister Defending his remarks, he said Bangladesh’s debt-GDP ratio is 34 percent which is lowest in the world. Our foreign exchange reserves are much higher than requirement, remittance is increasing, export is growing, and inflation is under control. We’re in the safe zone”, he said. Kamal said the whole world is appreciating Bangladesh for its economic performances. He said the countries having debt higher than their GDP (gross domestic products) are currently in danger. “But we are not at that level. Rather, our debt is much lower than GDP,” he asserted. Responding to another question, the finance minister said the toll rates of the Padma Bridge have not been fixed yet. But a joint venture of South Korea and China has been awarded a contract to collect the tolls from the Padma Bridge project. Also read:NBR works for win-win tax in upcoming budget: Finance Minister “We didn’t do any detailed work on it. But we have a plan to make some profits by collecting revenue from the Padma Bridge project in order to implement more similar projects”, he said. He said both the government and the users of the Padma Bridge will benefit from the project. “We hope we could collect more revenue than the requirements to meet its expenditures”, he added.

The proposed budget deficit is above 6% of GDP amounting to Tk 2.11 trillion, which may reach to 8% as the revenue collection has been showing slow trend in pandemic period, according to BUILD, a business development platform, in its budget reaction. The Business Initiative Leading Development (BUILD) thinks the deficit will mainly be filled taking loan from the banking sector and foreign loan. Also read: New budget unveiled with focus on protecting lives and livelihoods The dependence on foreign financing has been increased 162% than previous fiscal which is 'alarming', it said. The social safety net will be expanded, higher than the current fiscal. Government has given enough emphasis on health safety issues, which need proper implementation. Also read: New budget: Tracking prices going up and down In terms of export diversification in Medical and Personal Protective Equipment(MPPE), extension of tax exemption benefits up to June 2022 may encourage export diversification in this sector, BUILD said. On the other hand, it seems, sluggish investment will continue as COVID uncertainty remains, and private sector credit growth is still at a lower level(8.7%), according to BUILD.