The amount of overall outstanding debt is likely to jump to Tk 8,80,690 crore in the budget for the upcoming fiscal year (2019-20) from Tk 7,40,470 crore in the current fiscal year due to a high growth in domestic loans.
Finance Division officials said the overall outstanding debts had increased by Tk 50,000 crore on average since FY 2015-16, but the increase almost doubled in the current fiscal and would nearly treble in the upcoming fiscal.
The officials and experts attributed the sharp rise in the overall debt to high domestic borrowing against paltry growth in loans from foreign sources.
According to officials, the government relies on borrowings from local and foreign sources to make up the budget deficit that grew largely because of revenue shortfall, a usual phenomenon for the last one decade.
The amount of overall domestic debt is likely to be projected in the new fiscal at Tk 5,52,310 crore. The figure was Tk 3,21,630 crore in FY 2015-16.
The amount of overall foreign loan is likely to be projected at Tk 3,28,380 crore in the new fiscal. The figure was Tk 2,23,890 crore in FY 2015-16.
Policy Research Institute executive director Ahsan H Mansur said the sharp rise in overall debt meant an increase in per capita debt.
He said that a shortfall in revenue was the main reason for the sharp rise in overall debt.
Data showed that the National Board of Revenue attained only seven per cent growth in revenue collection in the first seven months of the current fiscal against 40 per cent growth target for the entire fiscal.
Mansur also noted that the amount of domestic loan was increasing higher than that of foreign loan and the domestic loan was costly compared with that from foreign sources.
He said taking higher loan from domestic sources by the government caused crowding out effect over the private sector credit.
Private sector credit growth remained at 13.2 per cent in January, far below the Bangladesh Bank’s target to achieve 16.5 per cent growth in the second half (January-June) of the fiscal year of 2018-2019.
Besides affecting the private sector credit growth, the rising debt also creates pressure on budget management, according to former BB deputy governor Khandoker Ibrahim Khaled.
He said that the government had to keep aside a big amount of the budget for debt obligation.
Finance Division officials said the high growth in overall loan was superseding the projection for interest payment every year.
According to a Finance Division document, the government had to pay interest worth Tk 55,472 crore against the projection of Tk 41,457 crore in the 2017-18 fiscal, amounting to 2.5 per cent of the county’s gross domestic product in that year.
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