The New Nation - Internet Edition

Staff Reporter

The Government of Bangladesh has requested the Islamic Development Bank (IDB) to raise its annual loan by 50 percent to US$1.5 billion to help cover fuel import bills, a senior official said.

"The cost of fuel imports during the current fiscal year to June 2008 may rise by 32 percent to US$3.3 billion," the official said.

Bangladesh bought 3.8 million tons of oil including 2.1 million tons of diesels with a cost of US$2.5 billion for the fiscal year to June 2007, he said.

The state-run Bangladesh Petroleum Corporation, the sole importer and distributor of oil, estimated that the import bill for the current fiscal year would be US$3.36 billion. "If we receive only US$1 billion from the IDB, then it will be difficult for the central bank alone to meet the rest of the bills," the official said. Bangladesh has also requested the IDB to lower the rate of interest on its loans. The IDB at present charged 1.75 percent interest plus LIBOR (London Interbank Offered Rate).

Earlier, Bangladesh was termed the second most inflation-hit country in South Asian region. According to the second quarterly report of the central bank, the country stood next to the top hit country, Sri Lanka, with an inflation rate over 11.2 per cent recorded during the second quarter of current fiscal year.

According to the report, inflation rate increased by 1.6 per cent within a quarter. The report shows the year 2006-07 was the most notorious for inflation growth in Bangladesh. Despite its soft beginning the rate jumped at 9.2 per cent in the fourth quarter of FY-06-07. After that, rapid growth was reported at 11.2 per cent in the second quarter of 2007-08 fiscal year.