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The government’s borrowing from the banking sector dropped by Tk 13,627 crore in the July-April period of the current fiscal year 2020-21 amid heavy sales of national savings certificates and low spending on the implementation of the annual development programme amid the COVID outbreak.
For FY21, the government’s budgetary projection was to borrow Tk 84,980 crore from the banking sector for deficit financing.
The government’s record Tk 80,238 crore borrowing in the FY 2019-20 was the reason for setting the high bank borrowing target, officials said.
The government also anticipated that NSC sales, another source for the government to borrow fund, would remain low, they said.
In FY20, the net sales of NSCs dropped to Tk 14,428 crore from Tk 49,939 crore in FY19.
National Savings Directorate showed that the net sales of NSCs reached Tk 29,311 crore in July-February of the current fiscal year as investors found no other high-yielding investment product than the NSCs.
NSC sales in the first seven months of FY21 were higher by Tk 9,311 crore than the government’s budgetary target of Tk 20,000 crore.
With the government’s repayment in July-April of FY21, the government’s outstanding bank borrowing dropped to Tk 1,64,195.78 crore at the end of April 2021 from Tk 1,77,823.01 crore at the end of June 2020.
In the July-April of FY21, the government repaid Tk 82,776 crore in loans to the Bangladesh Bank against its Tk 29,149 crore in fresh loans from the scheduled banks.
Even after the payment, the government’s deposit was Tk 27,000 crore in its accounts at the end of February 2021 while its deposit was only Tk 33.2 crore at the end of February 2020.
Banks are also suffering from excess liquidity due mainly to poor credit growth.
As of February 2020, banks were having Tk 2 lakh crore in excess liquidity.
A senior BB official said recently that the government bank borrowing dropped due mainly to heavy buying of national savings certificates by people in the current fiscal year. As the government is holding excess liquidity in its hands, the government repaid its bank loans, he said.
The implementation of the annual development programme also hit an 11-year low in July-March of FY21 as the government agencies managed to execute only 42 per cent of the revised ADP allocation.
The government has a significant amount of deposits in its accounts even though the revenue collection situation still remains dissatisfying.
The National Board of Revenue has recently downsized the revenue collection target to Tk 3.01 lakh crore for FY21 from the original target of Tk 3.30 lakh crore.
