THE bank borrowing by the government rose sharply this fiscal amid economic downturn caused by coronavirus outbreak. Earlier, the government set Tk 47,363 crore borrowing target from banks for FY 2019-20 in order to finance the budget deficit that has been projected at 5.0 per cent of the GDP.
But it took Tk 64,294 crore from banks in between July 19 and May 20 of the current fiscal and the amount was 37.30 per cent higher than the last fiscal’s bank borrowing, according to Bangladesh Bank (BB) officials. Government’s net borrowing from the banking system exceeded the target in just six months (July-December) mainly for the dismal revenue collection, sharp fall in sales of National Savings Certificates. The borrowing peaked up later amid a major hit to the economy and public finances from the coronavirus pandemic, taking it to record high.
According to the National Board of Revenue (NBR), tax collection fell short of the target of Tk 45,000 crore in the first eight months of the current fiscal year. Until February of this fiscal, the NBR earned Tk 1.45 lakh crore of taxes against the target of Tk 1.90 lakh crore, the board data showed.
Experts doubts, the government’s bank borrowing is expected to increase further to cover the revenue shortfall, finance its stimulus package announced to support the coronavirus ravaged economy and releases any new stimulus. Referring to the World Bank’s recent forecast, they opined, deficit might swell to 7.7 per cent of the GDP in the current fiscal, highest in the last one and a half decades.
However, the recovery of the economy would depend on the extent of coronavirus prevention and controls. Government should focus on mobilising more revenue and soft term external loan to finance the budget deficit as well as maintain fiscal discipline. Otherwise, it will fuel public debt and create a long term curse on socio-economic development and overall economy of Bangladesh.
