ERD plea for involving local banks in USDA credit scheme
Wednesday, 17 October 2007
Shakhawat Hossain
The economic relations division (ERD) has urged the ministry of finance (MoF) to take initiative for obtaining the United States Department of Agriculture (USDA) sponsored credit scheme in favour of the local commercial banks, sources said.
The ERD has urged the MoF to take necessary measures in consultation with the central bank so that local commercial banks can have access to the long-term credits and ease the pressure on the country's foreign exchange reserve.
"Receiving such credits by the local commercial banks will facilitate the country to import food item from the USA without spending its own foreign currencies," a source said quoting the ERD letter to the MoF.
This will help, according to the ERD letter, ease the pressure on country's foreign exchange reserve as the country spends substantial amount of foreign currencies on the import of food items annually, the source added.
The USDA is sponsoring the export credit guarantee and the commodity credit corporation (CCC) under which a qualifying country can import wheat, rice, soybean, cotton and other commodity items from the US market.
The country's dependency on import of the items like wheat, rice soybean and cotton is growing consistently but these items are seldom imported from the US.
The import bills of these items are increasing, according to the business community, following price hike of such items in the international market during the last one year.
However, in order to obtain the USDA sponsored credit scheme, the ERD letter said, local commercial banks have to fulfill a number of criteria.
Besides, the Government of Bangladesh has to provide guarantee in favour of the banks that, according to the source, is the main obstacle to obtain such credit.
The ERD letter noted that previous initiative on the same issue failed due to negative response from the MoF.
According to an MoF official, the USDA credit scheme is similar to suppliers' credit which is often seen as contradictory to the country's economic policies.
But in the backdrop of price hike of commodity products, the MoF may discuss the issue, the official said, adding that half of the country's annual fuel oil import bills worth more than US$ 2.0 billion are settled in a way similar to suppliers' credit system.
The Islamic Development Bank (IDB) lends nearly $1.0 billion to Bangladesh annually for the import of petroleum products from IDB member countries.
The economic relations division (ERD) has urged the ministry of finance (MoF) to take initiative for obtaining the United States Department of Agriculture (USDA) sponsored credit scheme in favour of the local commercial banks, sources said.
The ERD has urged the MoF to take necessary measures in consultation with the central bank so that local commercial banks can have access to the long-term credits and ease the pressure on the country's foreign exchange reserve.
"Receiving such credits by the local commercial banks will facilitate the country to import food item from the USA without spending its own foreign currencies," a source said quoting the ERD letter to the MoF.
This will help, according to the ERD letter, ease the pressure on country's foreign exchange reserve as the country spends substantial amount of foreign currencies on the import of food items annually, the source added.
The USDA is sponsoring the export credit guarantee and the commodity credit corporation (CCC) under which a qualifying country can import wheat, rice, soybean, cotton and other commodity items from the US market.
The country's dependency on import of the items like wheat, rice soybean and cotton is growing consistently but these items are seldom imported from the US.
The import bills of these items are increasing, according to the business community, following price hike of such items in the international market during the last one year.
However, in order to obtain the USDA sponsored credit scheme, the ERD letter said, local commercial banks have to fulfill a number of criteria.
Besides, the Government of Bangladesh has to provide guarantee in favour of the banks that, according to the source, is the main obstacle to obtain such credit.
The ERD letter noted that previous initiative on the same issue failed due to negative response from the MoF.
According to an MoF official, the USDA credit scheme is similar to suppliers' credit which is often seen as contradictory to the country's economic policies.
But in the backdrop of price hike of commodity products, the MoF may discuss the issue, the official said, adding that half of the country's annual fuel oil import bills worth more than US$ 2.0 billion are settled in a way similar to suppliers' credit system.
The Islamic Development Bank (IDB) lends nearly $1.0 billion to Bangladesh annually for the import of petroleum products from IDB member countries.