The government borrowed some Tk 3,429.39 crore from the banking sector in just 19 days between October 2 and October 21 of this fiscal year in a bid to fulfill its election-related agendas ahead of the national polls, said officials of the Bangladesh Bank.
They said that the government is now receiving huge amount of loans from the banking sector to complete its election-related projects to satisfy the voters before the general election.
According to the latest BB data, the overall government borrowing stood at Tk 4,811.39 crore as on October 21 from Tk 1,382.03 crore as on October 2 of the FY 14.
Till October 21, the government borrowed Tk 10,152.91 crore from the commercial banks and repaid the central bank Tk 5,341.52 crore resulting that the overall government borrowing from the banking sector stood at Tk 4,811.39 crore in FY 14.
A BB official said that the government had earlier borrowed heavily from only commercial banks but it now started borrowing from the central bank.
The government repaid the BB Tk 7,969.61 core between July 1 and October 2 of the FY 14, but it took Tk 2,628.09 crore in the 19 days from the central bank.
The government is now taking loans from the BB through overdraft and Ways-Means and Advances along with borrowing auction calendar for the scheduled banks, the BB official said.
The government usually takes short-term loan through the overdraft and the WMS from the BB to meet its instant cash needs, he said.
The rate of inflation will push up if the government continues to borrow from the BB as the central bank has to circulate fresh money against the government borrowing, he said.
The government expenditure on politically motivated projects has increased ahead of the end of its tenure and the next election which pushed up the government borrowing, he said.
He feared that the government borrowing will rapidly increase in the remaining period of the government’s tenure as it would try to complete its election-oriented projects before the general election in a bid to achieve voters’ satisfaction.
Another BB official said that the commercial banks would not face any problem in short-term due to giving loans to the government as they were now holding enough liquidity.
The banks are now enjoying available liquidity as their loan disbursement in the private sector declined massively in the last few months due to the ongoing political unrest, he said.
Under the circumstances, the credit-deposit ratio in the banking sector decreased to 71.65 per cent as on September 26 of 2013 from 76.59 per cent as on December 31, 2012
But the banks will face liquidity crisis in the next few months when the business environment will develop after the general election, the BB official said.
He explained that a significant amount of commercial banks’ loans which the government had taken through long-term treasury bonds would remain stuck for years.
The government has set a target to take loan amounting to Tk 25,993 crore from the banking sector in FY14.
The BB data showed that the government’s outstanding bank borrowing, which had accumulated over the years, stood at Tk 1,17,463.83 crore as of October 2, 2014.
-With New Age input
