BN central bank approves $131.7mn loan

DHAKA: Bangladesh Bank, the country's central bank, has approved foreign loans of $131.7 million to implement projects in the private sector, the bank said on Sunday.

The projects include development of a sea port and services, setting up a power plant and a textile manufacturing firm and upgrading operations of Lafarge Cement.

The highest interest rate of the approved proposals is 6-month LIBOR plus 4.00 percent per annum.

One central bank official said that this type of foreign financing will help keep the exchange between the taka and the U.S dollar stable and ease pressure on the balance of payments.

Inflationary pressure will also ease because of the inflow of foreign direct investment and more jobs will be created.

Bangladesh's trade deficit widened 49 percent to $7.69 billion in the fiscal year that ended in June, 2011, from $5.15 billion in the previous year, fired up by soaring fuel and food import costs, the central bank said.

The inflation rate in the 2010-11 fiscal year was 8.8 percent. The current budget projects inflation at 7.5 percent.

Copyright Reuters, 2011