Bangladesh News

The government borrowing from banks rose 180 per cent in the first 25 days of the current fiscal year (FY) and stood at Tk 2,061 crore, compared to Tk 736 crore borrowed in the same period (July 1 to 25) of the last FY.

The gap between the government’s earning from the revenue collection and spending is responsible for the increased borrowing, finance ministry officials said.

Besides, the World Bank and the International Monetary Fund (IMF) did not release about $300 million as budgetary support in time, which also contributed to the government’s higher borrowing from the banks.

The government’s expenditure has risen significantly at the fag end of its tenure, but there has not been a consistent rise in its income, resulting in the government’s dependency upon borrowing, finance ministry sources said.

There was only nine per cent growth in revenue earning in the first month of the current FY against the target of 21 per cent, said a source at the National Board of Revenue (NBR).

The revenue earning growth was 14 per cent in the same period of the last FY.

In the first month of the current FY, there was Tk 2,400 crore revenue earning against the target of Tk 3,400 crore, marking a shortfall of Tk 1,000 crore, NBR sources said.

Despite an ambitious target of revenue earning against huge expenditure in the development programme, the current budget did not have adequate measures to achieve the target.

The IMF also raised question about the mechanism to collect the revenue under the budget when the government neither increased the existing taxes nor fixed any new tax.

Expenditure in the Annual Development Programme increased a lot at the end of the last FY and in some cases the government issued cheques for projects, sources said.

The government has to borrow about Tk 1,400 crore in the first month of the current FY against the cheques, which were issued at the end of the last FY.

“The government had a plan to adjust such expenses with the donor agencies’ (World Bank and IMF) development support credit,” a finance ministry official said, adding, “But we are yet to get the money and it forced us to borrow from the banks.”

The government will have to continue taking huge loans from the banking sector if its fails to get the World Bank and IMF support and it will affect the overall monetary situation, said another high official.

Finance Minister M Saifur Rahman recently visited Washington to convince the donors to release the money immediately, the official said, adding that following Saifur’s request, the donors agreed to send a mission to Bangladesh again in September although they did not make any commitment to release the money.

On his return from Washington, Saifur had said the money would be released in time while other sources said there was no categorical commitment from the donors’ side and the money release might be delayed further.

Meanwhile, the cabinet in its last meeting sent back a draft proposal for turning three nationalised commercial banks — Sonali, Janata and Agrani — into public limited companies, said a source.

“It’s a wrong signal to the donors against the finance minister’s strong commitment to top brass of the World Bank and IMF to bring reforms in the public sector institutions,” the source said.

Since the end of the last fiscal, the government has been witnessing huge increase in development expenditures in some sectors ahead of the next elections.

Planning ministry sources said implementation of some visible development projects like construction of roads, bridges and culverts has increased in recent days and these are aimed for the next election.

Several ministries are now busy signing contracts for development projects for which funds have already been released, sources said, adding that it has led to increase in bank deposits of different autonomous and semi-autonomous bodies of the government.

It rose to Tk 10,793 crore at the end of the last month, they said.