Govt goes for hefty borrowing from banks
The government's borrowing from banks increased substantially at the beginning of the current fiscal year.
In the first two and a half months of the current fiscal year, the government's borrowing from the banking sector surged by a whooping 2,086 percent over the same period last year.
Till September 15, the government borrowed Tk 7,893 crore from banks -- of the amount Tk 4,203 crore was from the central bank, which is more dangerous for inflation.
During the same period last year, the government borrowed Tk 362 crore from banks.
However, the government's borrowing through savings instruments fell further this year.
Statistics of the government's borrowing through savings instrument was available only for the month of July.
According to central bank statistics, net borrowing from the savings instruments fell by about 100 percent in July, compared to the same month last year.
The government's net borrowing from the savings instrument was Tk 311 crore in July this year, down from Tk 624 crore in July last year.
In the last fiscal year also, the government's borrowing from the savings instruments dropped significantly as these are less profitable than other savings tools.
At a dialogue at The Daily Star office yesterday, noted economists, including a former governor of the central bank, said the government must refrain from hefty borrowing from the central bank.
An Internal Resources Division official said interest on savings instruments was hiked slightly in the current fiscal year, but the rate of interest on bank deposit rose more than that.
As a result, the official said, people are more interested in keeping their money with the banks, instead of going for savings instruments.
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