Tk 6bn ADP cut likely to keep budget deficit within 5pc

Tk 6bn ADP cut likely to keep budget deficit within 5pcEnsure disbursement of WB fund, Muhith tells coordination council? Asif ShowkatThe fiscal coordination council on Monday asked the Economic Relation Division and other authorities to ensure disbursement of World Bank and other donors? funds with timely implementation of schemes, apart from the Padma Bridge project.

The decision was taken at the coordination council meeting at the Secretariat with Finance Minister AMA Muhith in the chair.

Besides, the officials of Planning Commission were informed that the government might slash the Annual Development Programme (ADP) to Tk 40 billion from existing Tk 46 billion to maintain five percent budget deficit as well as to reduce pressure on the budget.

Meeting sources informed that the finance minister had requested the Prime Minister?s Economic Affairs Adviser Dr Moshiur Rahman to coordinate the matter to ensure timely disbursement of funds for WB-aided projects.

The minister also said that due to suspension of fund for the Padma Bridge by WB, disbursement of funding for other development schemes aided by international lender will be hampered.

Meeting sources said Mashiur Rahman mentioned that the Ministry of Planning has already been informed that the ADP might be reduced by Tk 6 billion due to fall in disbursement of foreign assistance.

The finance minister also asked the authority of the Bangladesh Institution of Development Studies (BIDS) to conduct a study on the impact of recent inflation on common people?s life.

On a point-to-point basis, the overall inflation increased to 11.97 percent in September, 2011 from 11.29 percent a month ago, according to Bangladesh Bureau of Statistics.

Muhith also asked the Bangladesh Bank representative to prepare recommendations on an alternative to bank borrowing as the government has borrowed a large sum of money from the country?s internal sources. The central bank has warned of a ?crowding-out effect? on the private sector as the government borrowing from the banking system is on the rise.

The government borrowed Tk 9.5 billion fresh money from the central bank till 10 October and it will have an inflationary effect as soon as it lands in the market.

The meeting also urged the authorities concerned to concentrate on setting up coal-based power plants instead of furnace oil-based rental power plants as the second one is very expensive compared to the first one.

According to the central bank?s letter of credit (LC) settlement statistics, import of petroleum surged by 151 percent in the July-August period of the current fiscal year compared to that of the same period of last year.

The government will import 940,000 tonnes of petroleum products at a cost of Tk 66.07 billion mainly to meet the rising demand of diesel and furnace oil-based power plants.

The cost of per barrel furnace stands at US$650 on an average in the international market at present.

The finance minister further asked the Bangladesh Bank to conduct a thorough study on the shortfall of the country?s exports in September.

Export Promotion Bureau (EPB) will also prepare a paper on exporters? incentive and quest for new export markets, meeting sources said.

Exports grew 2.29 percent in September ? the lowest in nine months this year ? due to a financial crisis in Europe and its impact on the local business.

Forex earnings in the month were $1.44 billion, according to the latest data provided by the EPB last week.

Moshiur Rahman, Bangladesh Bank Governor Atiur Rahman and Finance Secretary Mohammad Tareq attended the meeting.

Source: daily-sun.com

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