The government’s net borrowing from the banking system stood at Tk 49,106.16 crore in the first seven months of the current fiscal year 2019-2020 resulting in a sharp fall in loan disbursement to private sector by the banks.
The government’s heavy bank borrowing would hamper the country’s industrialisation and employment generation, economists said.
Poor tax collection by the National Board of Revenue and sharp fall in net sales of National Savings Certificates were the reasons behind the government’s heavy bank borrowing in the current fiscal year, they said.
As per the latest Bangladesh Bank data, the government’s outstanding borrowing stood at Tk 1,57,201.86 crore on January 28 this year from Tk 1,08,095.7 crore on June 30 last year.
In the budget for the fiscal year 2019-2020, the government had projected a borrowing of Tk 47,364 crore from the banking sector.
The latest borrowing figure shows that the government’s bank borrowing target has already exceeded by Tk 1,742.16 crore with another five months of the fiscal year to spare while more than 70 per cent of the Annual Development Programme remained unimplemented.
Finance minister AHM Mustafa Kamal on Thursday informed parliament that the government between 2009 and 2019 borrowed Tk 13.28 lakh crore from the banking sector and repaid Tk 11.32 lakh crore that made its net bank borrowing Tk 1,95,783.91 crore at the end of December, 2019.
Due to heavy bank borrowing by the government in current fiscal year, the private sector credit growth dropped to 9.83 per cent in December, 2019, the lowest since 2008, after witnessing persistent fall through the year 2019.
Bangladesh Bank’s projection was to attain 14.8 per cent private sector credit growth in FY20.
Revenue collection by the National Board of Revenue fell short of target by Tk 31,508 crore in the first six months of the fiscal year 2019-2020.
The board managed to collect Tk 1,05,161 crore in income tax, VAT and customs duty in July-December of FY20 against the collection target of Tk 1,36,669 crore for the period.
Apart from the dismal revenue collection, the sales of NSC, another source of borrowing money for the government, also dropped significantly.
During July-December of FY20, net sales of NSCs dropped to Tk 5,348.41 crore at the end of 2019 with the net sales of NSCs posting at Tk 408.44 crore in negative growth in December.
To get rid of the money crisis for the implementation of budget, the government, in a hurried move amid heavy opposition from the experts, on Wednesday passed a law to ensure submission of money of different government entities, including autonomous, semi-autonomous and statutory bodies to the government exchequer.
As per a statistics, the agencies have over Tk 2.18 lakh crore deposits on their own accounts and the finance ministry was hopeful to get at least Tk 30,000 crore from the agencies by the current fiscal year.
Asked about the government’s heavy bank borrowing, former interim government adviser AB Mirza Azizul Islam told New Age on Thursday that the government has been borrowing heavily from the banking sector with a view to meeting the expenditures.
Huge shortfall in revenue collection and significant fall in NSC sales were the major reasons behind the government’s significant increase in bank borrowing, he said.
Heavy borrowing from the banking sector by the government would squeeze further the banks’ scope for lending the private sector, Mirza Aziz said, adding that the businesses would not be able to expand their business if they failed to avail required funds.
‘Employment generation by the industrial sector would fall further if the sector fails to utilise their existing capacity by importing raw materials, where banks’ credit is a major factor,’ he said.
A total of 26.77 lakh people were unemployed in the country in the fiscal year of 2016-17, said state minister for labour and employment Begum Munnujan Sufian in parliament in February, quoting a manpower
survey conducted by the Bangladesh Bureau of Statistics.
The rate of unemployment among educated youth is 33.2 per cent in the country with higher concentration of joblessness among the graduates and post-graduates, according to a Bangladesh Institute of Development Studies report published on December 1.
In the budget for FY20, the government has planned to borrow Tk 63,848 crore from overseas sources and the rest Tk 77,363 crore from domestic ones to meet Tk 1,45,380 crore deficit financing.
The government’s net borrowing from the banking sector was Tk 19,800.9 crore in the entire fiscal year of 2018-2019.
The government repaid Tk 18,405 crore and Tk 2,851.2 crore in FY17 and FY18 respectively against its borrowing from the banking sector.
