Economic Reporter :
The government has borrowed more than Tk7,000 crore from the banking sector in the first quarter (July to September) of the current fiscal 2015-16 to clear a backlog of development projects cheques, according to the sources of the Finance Division said.
The government plans to borrow Tk 38,300 crore from the banking sector with a view to narrowing the budget deficit for the ongoing fiscal, a senior Bangladesh Bank Official said.
The government will reduce the budget deficit by utilizing internal resources including the sale of saving certificates, bank loan and foreign aid, said the BB official.
As traditionally happens, the cheques pile up unpaid during last two months of a fiscal year and are carried over to the following year, which is known as May-June syndrome. An official said there was a rise in misuse of development funds last year.
In the first quarter of last fiscal year, the government had repaid Tk2,471 crore loans to banks.
According to the Finance Division, during the July-September period, the budget surplus amounted to Tk1,153 crore though there was supposed to be a deficit in the three months. During the period of last fiscal year, there was a budget deficit of Tk1,737 crore.
In the first quarter, only 6.7 per cent of the total Annual Development Project (ADP) allocation was spent, which is the lowest in four years.
This fiscal year, the budget deficit is estimated to be Tk86,657 crore, which is 5per cent of the country’s gross domestic product. The deficit is to be met by borrowing from foreign and local sources.
But in the first three months, the government spent only Tk37,105 crore, which is 12.58 per cent of the total budget allocation of Tk2,95,100 crore. The government was, however, supposed to spend Tk38,258 crore in the period.
During the same period last year, it spent Tk36,523 crore, which was 14.6 per cent of total allocation.
In the first quarter this fiscal, the total revenue collection was Tk38,278 crore, which is 18.4 per cent of the target. A year earlier, it was Tk34,785 crore.
“The government should have to look into the matter how the loans from the banking system would be used,” said AB Mirza Azizul Islam, Finance Adviser to the Caretaker Government.
He said if the May-June syndrome hits the implementation of development projects, it will cast a negative impact on the progress of works.
Mirza Azizul Islam sees the government borrowing from the country’s banking sector “a good thing” as the banks have huge amounts of idle money.
Experts opined that the banking sector is now holding a huge number of idle money. The idle money in the banking sector is now more that 1,15,000 crore.
Banks failed to invest in the private sector due to the adequate gas and electricity connections in the new companies. As a result, the investment flow in the private sector declined in the recent months.
The government borrowing from the banking sector is a positive thing to reduce the excess liquidity from the banking sector.
The government has borrowed more than Tk7,000 crore from the banking sector in the first quarter (July to September) of the current fiscal 2015-16 to clear a backlog of development projects cheques, according to the sources of the Finance Division said.
The government plans to borrow Tk 38,300 crore from the banking sector with a view to narrowing the budget deficit for the ongoing fiscal, a senior Bangladesh Bank Official said.
The government will reduce the budget deficit by utilizing internal resources including the sale of saving certificates, bank loan and foreign aid, said the BB official.
As traditionally happens, the cheques pile up unpaid during last two months of a fiscal year and are carried over to the following year, which is known as May-June syndrome. An official said there was a rise in misuse of development funds last year.
In the first quarter of last fiscal year, the government had repaid Tk2,471 crore loans to banks.
According to the Finance Division, during the July-September period, the budget surplus amounted to Tk1,153 crore though there was supposed to be a deficit in the three months. During the period of last fiscal year, there was a budget deficit of Tk1,737 crore.
In the first quarter, only 6.7 per cent of the total Annual Development Project (ADP) allocation was spent, which is the lowest in four years.
This fiscal year, the budget deficit is estimated to be Tk86,657 crore, which is 5per cent of the country’s gross domestic product. The deficit is to be met by borrowing from foreign and local sources.
But in the first three months, the government spent only Tk37,105 crore, which is 12.58 per cent of the total budget allocation of Tk2,95,100 crore. The government was, however, supposed to spend Tk38,258 crore in the period.
During the same period last year, it spent Tk36,523 crore, which was 14.6 per cent of total allocation.
In the first quarter this fiscal, the total revenue collection was Tk38,278 crore, which is 18.4 per cent of the target. A year earlier, it was Tk34,785 crore.
“The government should have to look into the matter how the loans from the banking system would be used,” said AB Mirza Azizul Islam, Finance Adviser to the Caretaker Government.
He said if the May-June syndrome hits the implementation of development projects, it will cast a negative impact on the progress of works.
Mirza Azizul Islam sees the government borrowing from the country’s banking sector “a good thing” as the banks have huge amounts of idle money.
Experts opined that the banking sector is now holding a huge number of idle money. The idle money in the banking sector is now more that 1,15,000 crore.
Banks failed to invest in the private sector due to the adequate gas and electricity connections in the new companies. As a result, the investment flow in the private sector declined in the recent months.
The government borrowing from the banking sector is a positive thing to reduce the excess liquidity from the banking sector.
