The finance adviser (minister) to Bangladesh's army-backed interim government said on Tuesday that his 2008-09 fiscal budget would help alleviate poverty, boost farming and create jobs. "The fiscal proposals the July-June budget made were neither out of proportions nor too dependent on local or overseas borrowings," Mirza Azizul Islam told a news conference.
The adviser announced a near-one-trillion taka ($14.6 billion) annual budget on Monday, the biggest in Bangladesh's history, offering higher subsidy to agriculture and credit to farmers, as well as measures to boost local industries. He said the budget was aimed at boosting production of rice and other crops to build "food security" in the backdrop of a global supply crunch, rising demands and rocketing prices.
Azizul said Bangladesh alone cannot do anything to offset the situation but needs to protect its own people against spreading poverty and emergencies caused by natural disasters in a "time sensitive manner." "We will be very careful to borrow loans from the banking sector so that the private sector, the engine of growth for the economy, in no way feels the pinch of it," Azizul said.
He dismissed suggestions that the budget effective from July 1 could be impossible to implement substantially during the remaining six months of the interim government's tenure and could be curtailed or changed by the next government following election planned for December 2008.
"We saw things in their current perspectives and considered what would be best for the people. What the next government will do is not our concern," Azizul said, responding to a reporter who asked if the government had any "hidden purpose" in offerings unusually bloated budget.
The budget forecast a higher GDP growth at 6.5 percent, lower inflation at 9 percent and a bigger fiscal deficit at 5 percent of the GDP in the new fiscal year. "To meet up the deficit we have to borrow money from different sources including the banking system," Azizul said.
"We will take cautionary measures when we announce monetary policy next month so that interest rate does not rise or credit growth does not shrink," said Salehuddin Ahmed, governor of the central bank. He said that at the end of the current fiscal year in June the loans from the banking sector would rise to more than 111 billion taka, about 31.5 billion taka up from the target.