Govt set to turn to WB for fixing budget deficit
Saturday, 6 November 2010
FHM Humayan Kabir
The government will seek budgetary support from the World Bank (WB) to deal with the fiscal deficit as the country is heading towards huge financial burden due to expensive power purchase from private companies, officials said.
Finance ministry officials said apprehending higher budget deficit in the current fiscal due to subsidised power supply to the consumers and spending on some other reform programmes, the government is trying to mobilise more foreign aid to bankroll the budget.
"We will seek budgetary support from the World Bank. We will send a request letter to the big donor next week, which is in addition to their assured development assistance," economic relations division (ERD) secretary M Musharraf Hossain Bhuiyan told the FE.
At a meeting with the World Bank president in Washington DC in early October this year, the Bangladesh finance minister requested him to provide more assistances and the budgetary support.
An ERD official said they are expecting US$ 300 million in budgetary support credit from the Washington-based lender in the current financial year 2011, which would be injected directly into the budget.
Unlike project aid, budgetary support can be used for any expenditure in the budget and usually it is tagged with a few or no conditions.
The government has targets of Tk 35.00 billion ($500 million) budgetary support credit from the foreign lenders to offset projected Tk 393.23 billion, or 5 percent of the total gross domestic product (GDP), in deficit in the current fiscal 2011.
State-owned Power Development Board (PDB) officials said the government would have to give nearly Tk 80 billion subsidy for power purchase due to higher buying price than cheaper selling rate of the upcoming rental power plants.
The PDB would purchase electricity from the private rental power plant operators at the rate that varies from Tk 7.0 to Tk 14 per kilowatt hour.
Bangladesh has planned to install more than 1400mw capacity rental power plants under its first-track power generation programme to cut the ongoing supply crisis, that eats away two per cent of GDP growth every year.
The ERD official said over the last few years the World Bank and the ADB have been providing us with budgetary support credit to finance the national budget.
In the last FY 2010, the Asian Development Bank (ADB) provided $745 million budgetary support mainly for eliminating impact of the global financial meltdown.
Bangladesh received $300 million as budgetary support from the multilateral donors -- the World Bank and the Asian Development Bank (ADB), in FY2009.
In FY2008, the Washington-based lender provided $320 million budgetary support credit.
The government will seek budgetary support from the World Bank (WB) to deal with the fiscal deficit as the country is heading towards huge financial burden due to expensive power purchase from private companies, officials said.
Finance ministry officials said apprehending higher budget deficit in the current fiscal due to subsidised power supply to the consumers and spending on some other reform programmes, the government is trying to mobilise more foreign aid to bankroll the budget.
"We will seek budgetary support from the World Bank. We will send a request letter to the big donor next week, which is in addition to their assured development assistance," economic relations division (ERD) secretary M Musharraf Hossain Bhuiyan told the FE.
At a meeting with the World Bank president in Washington DC in early October this year, the Bangladesh finance minister requested him to provide more assistances and the budgetary support.
An ERD official said they are expecting US$ 300 million in budgetary support credit from the Washington-based lender in the current financial year 2011, which would be injected directly into the budget.
Unlike project aid, budgetary support can be used for any expenditure in the budget and usually it is tagged with a few or no conditions.
The government has targets of Tk 35.00 billion ($500 million) budgetary support credit from the foreign lenders to offset projected Tk 393.23 billion, or 5 percent of the total gross domestic product (GDP), in deficit in the current fiscal 2011.
State-owned Power Development Board (PDB) officials said the government would have to give nearly Tk 80 billion subsidy for power purchase due to higher buying price than cheaper selling rate of the upcoming rental power plants.
The PDB would purchase electricity from the private rental power plant operators at the rate that varies from Tk 7.0 to Tk 14 per kilowatt hour.
Bangladesh has planned to install more than 1400mw capacity rental power plants under its first-track power generation programme to cut the ongoing supply crisis, that eats away two per cent of GDP growth every year.
The ERD official said over the last few years the World Bank and the ADB have been providing us with budgetary support credit to finance the national budget.
In the last FY 2010, the Asian Development Bank (ADB) provided $745 million budgetary support mainly for eliminating impact of the global financial meltdown.
Bangladesh received $300 million as budgetary support from the multilateral donors -- the World Bank and the Asian Development Bank (ADB), in FY2009.
In FY2008, the Washington-based lender provided $320 million budgetary support credit.