Published in The Daily Observer on Friday, 6 May 2016
Govt to borrow 43,000cr from banks this fiscal
The government plans to borrow Tk43,000 crore from the banking sector to minimize the budget deficit for the upcoming fiscal 2016-17.
The amount is 38,523 crore for the current fiscal 2015-16. Already the finance division plans to declare a budget amount of Tk 3,40,006 crore for the upcoming fiscal. The budget deficit is 5 per cent.
Out of the amount, the government will borrow Tk 28,000 crore as long term borrowing and Tk15,000 as short term borrowing from the banking sector, according to Finance Division officials.
An official on condition of anonymity said the government service holder will receive the new salary scale from the next year. Actually, government need to take this money to meet its regular expenditure, the official said.
The government plans to borrow Tk 18,000 crore from the National Saving Certificates or Sanchaypatra for the upcoming fiscal, which is Tk 15,000 crore in the current fiscal 2015-16.
Bangladesh Bank data shows the government already borrowed Tk 20,000 crore in the first ten months (July to April) of the ongoing fiscal year.
On the other hand, the government plans to set the revenue collection target through the NBR for Tk2,42,752, which is 12.8 per cent of the total GDP.
On selling of Sanhaypatra sales and the government’s borrowing from it, Mustafizur Rahman ,Centre Policy Dialogue (CPD) Executive Director, told the Daily Observer that the net investment in the savings tools would increase in the coming months if the banks failed to speed up their loan disbursement to the businessmen.
The banks are continuing to show a reluctant stance to collect deposit from the clients that ultimately hit the interest rate of the deposit products due to low loan disbursement, he explained.
The government has set a net borrowing target of savings tools amounting to Tk 18,000 crore for the FY17.The government would be able to achieve the target easily if the existing trend in the net investment continued in the coming months, said the CPD official.
The upward trend in the net investment of the savings tools would play a positive role in managing the deficit financing of fiscal budget as the government had recently started borrowing heavily from the banking sources, Rahman said.
The government is now considering speeding up implementation of various development projects and so it has to take loans from the banking and other sources, mainly from savings tools, sales he also said.
When asked about the revenue collection target of the National Board of Revenue (NBR), Mustafizur Rahman said that the target is higher than the current fiscal. “It is difficult to collect such kind of big revenue, but it is not impossible”, Rahman said. He urged the NBR to undertake more proactive initiative to collect more revenue which would help the government to meet its budget deficit. Commenting on the government borrowing from the banking sector, he said that currently the banking sector has idle money of more than Tk1,15,000 crore.
“So, the borrowing target will not put pressure on the banking sector. But this is not the solution to meet the budget deficit,” he said urging the government to increase collection of fund from the internal resources.
Currently, the credit demand in the private sector is sluggish. Actually, the bank should speed up the private sector investment for the betterment of economy. The central bank already reduces the target of private sector investment in the latest monetary policy. The idle credit growth target should be at least 17 to 18 per cent, he opined.