Govt’s bank borrowing surges in June

HM Murtuza | Published at 12:05am on July 14, 2018

Government’s borrowing from the banking sector increased sharply by Tk 13,946 crore in June, the last month of just concluded fiscal year of 2017-2018, because of hasty expenditure by the government to attain annual development programme implementation target set for the fiscal year.
As per the central bank data, the government’s net borrowing from the banking sector increased to Tk 90,642 crore at the end of June, while the figure was Tk 76,696.70 crore a month ago.
The net borrowing from the banking sector had declined to Tk 76,696.70 crore in the first 11 months of FY18 from Tk 89,716.5 crore at the end of the previous fiscal year.
In the first 10 months of FY18, the government’s spending for the implementation of ADP was slow and that’s why government refrained from borrowing from the banking sector, instead it paid back banks loans, BB officials said.
In the first 10-11 months in the fiscal year, earnings of National Board of Revenue and proceeds from national savings certificates’ sales were well above the government’s requirement to fulfil the need for money, they said.
The government’s ADP spending jumped sharply in last couple of months, so did the fund requirement and that’s why government’s borrowing increased sharply in June, the officials said.
As per the planning ministry data, the government’s ADP implementation was 52.42 per cent, or Tk 82,603 crore, in the first 10 months of FY18.
ADP implementation, however, at the end of FY18 increased to 93.1 per cent of the government’s revised target of Tk 1,57,591 crore for the fiscal year.
In the fiscal budget for FY19, the government initially planned to collect Tk 28,203 crore from the banking system, which was later revised at Tk 19,917 crore as it managed to meet deficit financing from other sources including sales of NSCs.
Of the Tk 90,642 crore net borrowing from the banking system by the government , Tk 23,677 crore was taken in loans from the central bank, while the rest Tk 65,964 crore was collected from the commercial banks.
Central bank officials said that the government’s borrowing from the banking sector might increase significantly in the first half of this fiscal year (2018-2019) as the Awami League-led government would try its best to implement a significant portion of the ADP for FY19 ahead of the national polls which are expected to be held at the end of this year.
The government has set the ADP target at Tk 1,73,000 crore for FY19 and Tk 71,226 crore would be taken from the domestic sources for deficit financing to implement the ADP.
Of the fund to be taken from the domestic sources, Tk 42,029 crore will be borrowed from the banking system, while Tk 29,197 crore from NSCs and other non-bank sources.