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Government borrowing from banking sources has gone up significantly this month as it is now on a spending spree to materialise different development and non-development programmes by the time this fiscal year ends.
The government had borrowed Tk 26,741 crore from banks from July 1 to May 26 of fiscal year 2021-22 against its fiscal target of Tk 76,452 crore.
But by June 14, the figure had gone up to Tk 41,444 crore, meaning it had borrowed Tk 14,703 in a span of just 19 days.
A BB official said the government’s borrowing from the banking sources might further increase in the remaining days of this fiscal year due to its lacklustre performance in revenue collection and falling investment in savings certificates.
The National Board of Revenue (NBR) has still a long way to go to fulfil its fiscal target, which will force the government to avail a hefty amount of loans from banks, they said.
Tax collection stood at Tk 227,756 crore until April against this fiscal year’s target of Tk 330,000 crore, showed data from the NBR.
In addition, investment in national savings certificates has declined to a large extent as the government introduced investment slabs and slashed the interest rate anywhere from 1 percentage point to 3 percentage points on different savings tools last year.
Between July and April this fiscal year, net investment in the tools stood at Tk 17,519 crore, down 50 per cent year-on-year.
Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, said government borrowing from banking sources usually goes up in June as it has to settle several kinds of unsettled bills.
Declining credit flow to the private sector will not create any problem at this moment given the ongoing macroeconomic situation, he said.
The instability in the macroeconomy stemming from high import payments will not continue forever, he said.
However, if the government embarks on the borrowing spree next year, the private sector will face troubles, he said.
The government in its proposed budget set a borrowing target of Tk 106,334 from the banking system for the next fiscal year, up 39 per cent year-on-year.
This has given an indication that the government will borrow more funds from the banking sources next year.
(TDS)
