The government’s borrowing from the banking sector has increased significantly ahead of the end of the current financial year with a just two-day borrowing
recorded at Tk 2,019.95 crore between June 2 and June 3.
According to the latest Bangladesh Bank data, the overall government borrowing from the banking sources has increased by 2.65 per cent on June 3, 2013 compared with that of the same date in the last financial year.
The government borrowing from the banking source stood at Tk14,632.60 crore as on June 3 of this financial year against Tk 14,253.87 crore as on June 3,
2012 of the previous financial year.
A BB official told New Age on Tuesday that the government had successfully contained the bank borrowing in the first 10 months of this financial year, but it had to borrow a significant amount of loan between May and June.
The government borrowing from the scheduled banks stood at Tk 22,639.30 crore as of June 3, 2013, but the overall government borrowing from the banking source stood at Tk 14,632.60 crore in the period.
The government repaid the central bank Tk 8,006.70 crore as of June 3, pushing down its overall bank borrowing to Tk 14,632.60 crore in the period.
As of June 3, the overall government debt stood at Tk 1,06,298.39 crore from banking sources, showed the BB data.
The BB official said that the government borrowing might increase further in this June — the last month of this fiscal year.
The government is now trying to complete its budgetary pledges by taking loan from the banks, he said.
Moreover, 2013 is the final year of the current government’s tenure, so it will try to fulfil its election commitments at any cost to attract the voters, he said.
Under the circumstances, the government borrowing from the banking source will increase significantly in remaining period of the government’s tenure; so the trend might continue in the next financial year also, he said.
The current 2012-13 fiscal budget aimed to borrow Tk 23,000 crore from banking source, but that was later raised to Tk 28,500 crore in the revised budget.
The revised target of the bank borrowing indicates that the government may take a large amount of loan in remaining period of the government’s tenure, the official said.
Finance minister AMA Muhith last week in his budgetary speech at the parliament proposed to borrow Tk 26,000 crore from the banking sector to cover the deficit financing of Tk 55,000 crore for the FY 2013-14.
Another BB official said the commercial banks would face difficulties in the coming days due to the huge government borrowing.
The country’s banking sector is now enjoying a balanced liquidity situation due to a lower credit demand from the private sector, he said.
The businesspeople has recently adopted a ‘wait and see’ approach due to the recent spates of political violence, he said.
The banks will face a liquidity crisis when the political situation eases, he said.
The BB data showed that the scheduled banks invested Tk 23,816.48 crore in the government securities from July 1, 2012 to June 3, 2013 of which Tk 12,799.42 crore was invested in Treasury bills and Tk 11,062.06 crore in Treasury bonds.
-With New Age input
