The New Nation - Internet Edition

Staff Reporter

The government yesterday approved a hard-term borrowing of US$ 300 million from Standard Chartered Bank to meet the increased financing for oil imports by the cash-strapped Bangladesh Petroleum Corporation (BPC).

The loan would be taken for nine months at Libor (London Inter-bank Offer Rate) plus $1.79. This is the second such loan BPC is going to take from a foreign bank at hard-term after 2005-06 when the then BNP government approved a loan of $250 million from the same bank.

"BPC's cash flow has been seriously affected (by the increased price of fuel oil on the international market)," Finance Adviser Mirza Azizul Islam told reporters after approving the borrowing at a high-level Hard-Term Loan Committee at the finance ministry.

Bangladesh Bank Governor Dr Salehuddin Ahmed and senior officials concerned were present at the meting with the finance adviser in the chair.

Aziz said international price of petroleum oil was $62 to $63 per barrel in April last year when the domestic price was last increased, but the price on the international market now reached $100 to $110 a barrel.

He said another foreign bank BNP Paribas also offered the loan, but it was rejected due to tougher terms than that of SCB.

Replying to a question, the finance adviser said different ministries have estimated an overall subsidy requirement of Tk 15,600 crore during the current fiscal year as against the budgetary provision of Tk 6,000 crore.

"The subsidy demands from the ministries need to be examined," he said.

In response to another question, he said the government was planning to borrow $220 million from the International Monetary Fund (IMF) as balance of payment (BoP) support.