Kazi Zahidul Hasan :
The net borrowing by the government increased by 15 per cent in the fiscal year 2016-17, thanks to upward development and non-development spending.
The borrowing stood at Tk 62,795 crore. Of the total, Tk 52,013 crore was internal borrowing and Tk 10,782 crore external borrowing, according to an official figure.
Officials said the government had to borrow the amount to meet the country’s hefty budget deficit.
“The government’s net borrowing witnessed an increase by 15 per cent during the period driven by upward spending on various sectors, including infrastructure, power and energy, human resource development and health care,” an official of Cash and Debt Management Committee, told The New Nation yesterday.
He added the government’s development and non-development spending increased to meet from internal and external sources.
“More loans lead to more interest payment and more debt servicing liability for the government,” noted the official.
The government’s cumulative debt servicing bill stood at Tk 22,489 crore in the financial year, show the Finance Ministry figure.
The official also said despite increase, the borrowing was lower than the budgetary forecast.
The budget forecast that public sector net borrowing would be Tk 93,980 crore during the financial year ending June 30, 2017.
The net borrowing by the government stood at Tk 53,375 crore in the fiscal year 2015-16.
“Reckless spending pushed up the government’s net borrowing in the recent years leading to an adverse impact on the economy,” Dr Mirza Azizul Islam, former finance adviser of the caretaker government, told The New Nation yesyterday.
He pointed out that when borrowing is high, government has to impose unpleasant taxes to fund spending on interest payments. These taxes are hurting the economy.
“The government needs to do its best to cut it to maintain fiscal substantiality,” he added.
Mirza Aziz, further said Bangladesh experiences persistent budget deficits. It needs to bridge the gap by borrowing from domestic and external sources.
“But the government is facing with a high debt load as a result of swelling budget deficit. It is better to maintain austerity the reckless to control spending. Otherwise, the economy will bear the brunt of it,” he cautioned.
