Bangladesh News

Rice import expenditure increased by 761 percent in the first six months of the current fiscal compared to the expenditure in the same period of the last fiscal, creating a pressure on the Balance of Payment (BoP), says a Bangladesh Bank (BB) statistics.

According to the BB statistics $310 million was spent for importing rice during July-December 2007 period of the current fiscal compared to the spending of $36 million in the corresponding period of the last fiscal.

The amount of rice imported during the fist six months of the current fiscal also increased by 470 percent compared to the import during the same period of the last fiscal, according to the BB data.

Bangladesh imported 9.98 lakh tons of rice during the July-December period of the current fiscal compared to the 1.75 lakh tons of rice import during the same period of the last fiscal.

Besides, importers opened letters of credit (LC) for importing another 16 lakh tons of rice spending $538 million in the first six months of the current fiscal compared to the opening of LCs worth $47.54 million to buy 2.32 lakh tons of rice during the corresponding period of the last fiscal.

The BB data also show wheat import expenditure rose to $310 million in the first six months of the current fiscal marking a 57 percent rise from the spending for the purpose during the same period of the last fiscal.

LCs worth $456 million were opened to import another 12.62 lakh tons of wheat in the first six months of the current fiscal, while during the corresponding period of the last fiscal 11.19 lakh tons of wheat had been imported with LCs of $238 million.

An official of the central bank said the huge increase in import cost has a negative impact on the BoP. “We had $220 million surplus in the overall BoP till October 2007, but we are sensing a deficit in it in December of the same year,” he said adding that the deficit might be as high as $25 million.

But the central bank is not concerned about the deficit in the BoP, he said adding that BB has been encouraging commercial banks to allow more food grains import to ensure food security in the country.

“We are also asking the banks to disburse more agricultural loans in the rural areas for smooth production of food grains,” the official said.

Shortage in domestic production and price increase on the international market are the main reasons of increased spending in food grain import, another BB official said.

The overall inflation rate in November last year was 11.21 percent on a point to point basis. The countrywide inflation rate in food items was 13.83 percent in November while in the urban areas it was 15.50 percent.

BB Deputy Governor Nazrul Huda yesterday told reporters that the government and the central bank are working together for a bumper yield of Boro crops. “We suffered loss in aman production due to natural calamities last year and now we are focusing on boro crops for a better yield,” he said.

In the first six months of the current fiscal commercial banks disbursed Tk 3099 crore as agro loans, which is 61 percent higher than the loans disbursed during the corresponding period of the last fiscal, he said adding that the target is to disburse Tk 8399 crore in agro loans in the current fiscal.

Nazrul Huda said interest rates on agro loans from government owned commercial banks are 8 to 9 percent while the rates are 12 to 13 percent in private commercial banks.

“We have urged the private commercial banks to lower the interest rates on agro loans even if it hampers their profit,” he said.