Govt’s bank borrowing soars for mega projects

In the wake of low revenue mobilisation last fiscal year, the government has now turned to bank borrowing to meet its financing needs, Bangladesh Bank data shows.

In the first 35 days of this fiscal year, the government has borrowed Tk 23,761 crore from the banking system, which is almost the same as last year’s total bank borrowing and half of this year’s target.

The government borrowed Tk 26,446 crore last fiscal year, according to data from the central bank. This fiscal year, the government has set a borrowing target of Tk 47,364 crore from the banking sources.

The government’s borrowing from banking sources usually shoot up at the beginning of a fiscal year to adjust its higher expenditure in the last few months of the previous fiscal year.

But this time the government’s bank borrowing has increased significantly due to its implementation of mega infrastructural projects such as those of the Padma bridge and Dhaka metro rail, a central bank official   said.

The government also failed to mobilise revenue as expected in the last few months, which compelled it to borrow more from the banking sector.

Total revenue mobilisation last fiscal year was Tk 223,892 crore against the target of Tk 280,000   crore.

Besides, a decreasing trend in sales of national savings certificates in recent months has pushed up the government’s bank borrowing, he added.

Net sales of national savings tools stood at Tk 3,208 crore in June, down from Tk 3,258 crore a month earlier.

He also predicted that the government’s borrowing from the banking system might continue in the days ahead, which will have an adverse impact on cash-strapped banks.