The caretaker government’s decision to borrow money on ‘hard’ terms from a private bank and the International Monetary Fund to  import oil and meet the galloping budget deficit has met with severe criticism from eminent economists of the country. Their argument: with foreign exchange reserves at a healthy five and half billion dollars, the decision to borrow instead of using the reserve is irresponsible and may eventually prove a terrible burden. Although the Bangladesh Bank Governor has come up with some unconvincing excuses, we are convinced that our economists are right. The amount to be borrowed—- 520 million US dollars—-could easily be taken from the reserves without jeopardizing the balance of payment. Some of them even attributed motive behind borrowing at high rate while the reserves are kept in low-yield deposits. Nine months on, they say, the government shall have to dig into the reserves for repayment. However, we do not think the government’s decision has been influenced by the fact that nine months hence the burden of repayment will fall on the next government if everything goes according to the plan. The CG’s spectacular failure to keep inflation within reasonable limits has created a situation where one can foresee a huge budgetary deficit in the next fiscal. First, the government will be morally obligated to raise the tax-free income limit substantially thereby parting with substantial revenue. Second, the pressure of high prices will create pressure on the government to either reduce or abolish duty on certain items and  increase some subsidies. The total impact of the three will be tremendous. The CG itself is responsible for this. From Day One fiscal policies and financial management have not only been poor but also divorced from the ground realities. If there is a ‘silent’ famine now, it is because none in the CG thought it fit to follow the global food production and supply trends. Now when the prices are going through the roof, we suddenly find that key staples like rice and wheat have been sold in advance up to 2010. The advice to eat potato is in fact an attempt to hide this failure. The pressure on budget will continue to mount. A situation is possibly just round the corner where buying luxury sedans for the temporary Advisers would look like cruel jokes. Taking loans is the easy way that goes well with irresponsible governments. But this adds to the miseries of the people.

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