Borrows Tk 3,400cr in first 8 days
The government’s borrowing from the banking system soared in the first eight days of this fiscal year ahead of the national polls compared with that in the same period a fiscal year before,
said officials of the Bangladesh Bank.
The borrowing from the banks by the government increased by 324.77 per cent to Tk 3,400.46 crore until July 8 against only Tk 800.54 crore the government borrowed in the same period of the FY 2012-13, according to the latest BB data released on Thursday.
A BB official told New Age that the government would have to take large amount of loans from the banking source this fiscal year as it would try to fulfil its election pledges ahead of the next national elections.
Besides, the deficit financing in the annual budget for the FY14 will be increased as the National Board of Revenue earlier said it might fail to collect the revenue up to the target set by the government.
The volume of the deficit financing for the FY14 is Tk 55,032 crore of which Tk 25,993 crore will be collected from the banking sources.
The government set a revenue collection target at Tk 1,36,090 crore for the NBR for the FY14.
The BB official said that the NBR had collected around Tk 1,09,000 crore in taxes in the concluded fiscal year against the target of Tk 1,12,259 crore.
Shortfall in revenue collection against the target in the FY13 has also forced the government to borrow more from the banking system this fiscal year, he said.
In the first eight days of the FY14, the government borrowed Tk 1,950.72 crore from the BB by drawing overdraft and Tk 1,449.74 crore from the scheduled banks, the central bank data showed.
The BB official said the government’s target to contain the inflation within 7 per cent for the FY14 would fail if the government continues to take loans from the central bank.
On the other hand, the private sector will deprive of getting loans from the banks if the government takes loans from the scheduled banks, he said.
The credit growth in the private sector declined to 11.43 per cent in May, the lowest in the five fiscal years.
Under the circumstances, the government
should avoid high bank borrowing to encourage the private sector investment and to check high inflation, the official said.
The government’s borrowing from the banking sector increased by 15.45 per cent in FY13 from that in the previous fiscal year.
The government borrowed from the banking source Tk 24,776.43 crore in the FY13 against Tk 21,459.03 crore borrowed in the FY12.
The government’s borrowing from the scheduled banks stood at Tk 30,027.99 crore in the FY13, but the overall borrowing from the banking source stood at Tk 24,776.43 crore in the period as it repaid the central bank Tk 5,251.56 crore.
The government in the 2012-13 fiscal budget targeted to borrow Tk 23,000 crore from the banking source, but the target later was raised to Tk 28,500 crore in the revised budget.
Another BB official said the government would have to revise the borrowing target of Tk 25,993 crore from the banking source for this fiscal year, if the current borrowing situation continues in the days to come.
-With New Age input
