The government’s net borrowing from the banking system in the first 51 days of the current fiscal year (2019-2020) almost touched its net borrowing from the source in the entire last fiscal year (2018-2019). In the period from July 1 to August 20 of the current fiscal year, the government’s borrowing from the banking system reached Tk 26,248.52 crore against Tk 26,886 crore it borrowed in the entire last fiscal year. Officials of the finance ministry said that persistent slow rate of tax collection observed in the last fiscal year might be the main reason for the high volume of the government’s bank borrowing. Besides the slow revenue collection, financing need to run mega development projects and the Tk 5,23,190-crore fiscal budget also contributed to the surge in the government’s bank borrowing. In the budget for FY20, the revenue collection target was set at Tk 3,77,810 crore, leaving deficit at Tk 1,45,380 crore. For deficit financing, the government has planned to borrow Tk 63,848 crore from overseas sources and the rest Tk 77,363 crore from domestic sources mainly from banks and saving certificates. Of Tk 26,248.52 crore borrowed by the government in 51 days of FY20, Bangladesh Bank provided Tk 6,592.39 crore as advances and treasury bills. Besides, the government received Tk 19,656.13 crore from the scheduled banks against government securities and treasury bills, among others. Although the government’s borrowing at the end of June 30 this year was Tk 26,886 crore, the borrowing in the first 51 days of FY19 was Tk 35,872.59 crore, up Tk 9,624.07 crore on the borrowing in the same period of the current fiscal year. However, repayments of bank loans by the government in later part of the year helped reduce its overall borrowing from the banking system at the end of the fiscal year. Policy Research Institute executive director Ahsan H Mansur told New Age that the government’s dependency on the banking sector increased due mainly to dismal collection of revenue by the National Board of Revenue. In the early months of last fiscal year, the government heavily relied on the banking system due to a slower rate of savings certificate sales. In the current fiscal, so far the government relied on both the banking system and the sale proceeds of national savings certificates. As the government continued depending on the banking system, the outstanding borrowing by the government from the system stood at Tk 1,34,352.82 crore on August 20 this year from Tk 1,08,104.30 crore at the end of June this year.
Source – New Age.
