‘The government decided to lend from the forex reserve only to public sector entities’

The government has yet to decide on lending funds to the private sector from the country’s foreign currency reserve, Finance Minister AHM Mustafa Kamal has said.

“So far, we have not made any decision to provide loans to the private sector from the forex reserve,” Kamal told reporters on Wednesday, while briefing them on the proceedings of the Cabinet Committee on Public Purchase.

However, he also said the government had decided to lend funds from the forex reserve only to the public sector entities.

“But no policy guideline has been formulated in this regard. The government entities will get the fund once a policy is formulated and the issue is incorporated in the policy,” he added.

The finance minister’s remarks came against the backdrop of a recent decision by the government to finance the Payra port development project from the foreign exchange reserves.

The number of private companies, especially those in the power sector, has been pursuing the government to allow the Bangladesh Bank to lend them from the forex reserve.

Defending the government’s decision, Kamal said it is like transferring a public fund from government’s one hand to another.

“It’s good to finance public sector projects from the government fund as it will be less costly,” he added.

Referring to a decision of the Cabinet Committee on Economic Affairs Committee, the finance minister said the committee approved a proposal by the Ministry of Shipping on the capital and maintenance dredging at Ranadabad Channel of the Payra port project, which will be implemented with government fund by awarding contract to a bidder through direct procurement method (DPM).

Earlier, there was a proposal to implement the project under public-private partnership.

The committee also approved a proposal of the Bangladesh Agriculture Development Corporation (BADC) under the Agriculture Ministry to purchase 800 tons of JR-524 standard jute seeds from National Seed Corporation (NSC) of India through the direct procurement method.

The finance minister said Bangladesh had consistently been doing well in achieving economic growth. 

Bangladesh would have been the 5th Asian Tiger if the Covid-19 situation had not happened, he added.

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