DESPITE acknowledging this, the government’s high borrowing target from the banking system to finance budget deficit for the fiscal year 2020-2021 will sternly affect the private sector investment. The banking sector is already facing a liquidity crisis and further borrowing will cause a serious risk to the macroeconomic stability, resulting in disruptions of production, transport and supply chains. Moreover, heavy borrowing from the banking system would squeeze further the banks’ scope for lending to the private sector
As reported in a national daily, the government started the new fiscal year with higher bank borrowing of around Tk 11,000 crore in only one and a half months. The amount, borrowed in the month of July, was almost doubled in the corresponding period of the last fiscal as revenue collection fell drastically. However, the government did not take any loan from Bangladesh Bank during the period. Rather, it repaid an earlier loan amounting to about Tk 2,500 crore to the government exchequer. A very poor state of revenue collection and a drastic fall in the sales of national savings certificates due to automation of its selling process amid Covid-19 and prolonged flood have forced the government to borrow from the banks.
It said in the current fiscal, the government has targeted borrowing of about Tk 84,980 crore from the banking channel and Tk 20,000 crore from national savings instruments. It further added, in the wake of the countrywide shutdown, tens of thousands of people have lost their jobs and fell under the poverty line, posing a threat to the government’s poverty alleviation success.
Meanwhile, leading experts are looking at a bleak future if the industrial and business houses lose their easy excess to banking loans due the government’s hefty borrowing. Unless this trend is reversed, the businesses may have trouble financing from the banking sector.
We are now living through an extraordinary time that requires extraordinary efforts to face the huge budget deficit. But right now, experts do not seem to expect a rapid rebound from this recession. Therefore, at this critical point in time, Bangladesh government must re-think how to bounce-back from this crisis to help strengthen the country’s fiscal position.
As reported in a national daily, the government started the new fiscal year with higher bank borrowing of around Tk 11,000 crore in only one and a half months. The amount, borrowed in the month of July, was almost doubled in the corresponding period of the last fiscal as revenue collection fell drastically. However, the government did not take any loan from Bangladesh Bank during the period. Rather, it repaid an earlier loan amounting to about Tk 2,500 crore to the government exchequer. A very poor state of revenue collection and a drastic fall in the sales of national savings certificates due to automation of its selling process amid Covid-19 and prolonged flood have forced the government to borrow from the banks.
It said in the current fiscal, the government has targeted borrowing of about Tk 84,980 crore from the banking channel and Tk 20,000 crore from national savings instruments. It further added, in the wake of the countrywide shutdown, tens of thousands of people have lost their jobs and fell under the poverty line, posing a threat to the government’s poverty alleviation success.
Meanwhile, leading experts are looking at a bleak future if the industrial and business houses lose their easy excess to banking loans due the government’s hefty borrowing. Unless this trend is reversed, the businesses may have trouble financing from the banking sector.
We are now living through an extraordinary time that requires extraordinary efforts to face the huge budget deficit. But right now, experts do not seem to expect a rapid rebound from this recession. Therefore, at this critical point in time, Bangladesh government must re-think how to bounce-back from this crisis to help strengthen the country’s fiscal position.
