Govt bank borrowing declines

The government’s dependence on bank borrowing has reduced substantially largely because of the fact that it could not utilise much of the projected allocation for implementing the annual development programme.
On the other hand, the government has paid back a large part of the bank borrowings it had taken previously due to unutilised money.
On top of that, there has been an increased inflow of foreign assistance, coupled with resources mobilisation through a huge sale of national savings instruments, official sources said.
According to Bangladesh Bank statistics, the government did not borrow from the banking system during the June-January period, rather it repaid Tk 9,021.50 crore. The government had borrowed Tk 7,172.85 crore in the same period last year.
The government’s outstanding borrowing was Tk 52,938.49 crore on January 18, 2009, which came down to Tk 47,708.89 crore on January 18.
In the budget for the current fiscal year, a target was set to borrow Tk 16,775 crore from the banking system.
Foreign aid increased by 446 per cent and the sale of saving instruments by 313 per cent in the first six months of the current fiscal year.
The target of net borrowing through sales of national saving instruments was Tk 3,800 crore, but the net sales increased by around 313 per cent in the first six months of the current fiscal year and stood at Tk 5,034 crore. During the same period last year, the amount was Tk 1,218 crore only.
The government received foreign aid of Tk 6,073 crore in the first six months of the current fiscal year, which was Tk 1,112 crore during the same period last year.
The government could spend only 34.8 percent or Tk 39,560 crore of the full-year budget of Tk 1, 13,819 crore in the first six month.
Director general of Bangladesh Institute of Development Studies Mustafa Kamal Mujeri told New Age that the government felt more secure by mobilising funds through sales of national savings instruments instead of borrowing from the banking sector.
He also said that people have invested more on savings instrument instead of banking sector due to reduction of interest rate of the commercial banks.

Courtesy of NewAgebd