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High-interest loans may drive inflation: Wahiduddin PDF Print E-mail
Wednesday, 02 April 2008

Agency

Former caretaker government adviser Wahiduddin Mahmud said Tuesday the government decision to take short-term loans at a high interest rate might fuel inflation.

At a seminar on 'Food Security in Bangladesh: Present and the Future' at Palli Karma Sahayak Foundation auditorium, Prof Wahiduddin said subsidies, loans to private companies and loan repayment at a high interest rate might drive the inflation rate.

His comment came a day after finance adviser AB Mirza Azizul Islam said the government would take a $300 million loan from Standard Chartered to mobilise money for Bangladesh Petroleum Corporation to finance oil import. The loans must be repaid in nine months. Prof Wahiduddin said: "The Boro season is almost over.

Demand for diesel is not so high. So, there was no need to take short-term loans at a high rate of interest to import oil." "We shouldn't panic by speculating about food stocks.

Not only businessmen, but consumers and farmers have stocks of food too," he added. The government does not have statistics of food stocks adding that its information was contradictory, he claimed.

"According to the Bangladesh Bank website, food stocks for the first nine months of the current year should be higher than in the same period of the previous year," he said.

In his keynote paper, Mahbub Hossain, executive director of BRAC, said: "Population growth by almost two million every year means that we must increase production by 0.35 million tonnes of rice every year." He stressed domestic production to narrow the food deficit.

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