Govt borrowing jumps 12.20% in first 2 months of FY22

Government borrowing from the banking sector has gone up by 12.20% during the first two months of Fiscal Year 2021-22 compared to the same period last FY, following the gradual improvement of Covid-19 situation across the country.

According to the Bangladesh Bank, government borrowing stood at Tk1,83,865 crore at the end of August in FY2020-21, which  reached Tk2,09,436 crore during the same two months this FY.

Besides, the government borrowed Tk15,710 crore from banks in the first two months of current FY, and repaid loans amounting to Tk8,191 crore to the central bank. The net loan for this FY now stands at Tk7,519 crore, which is around 10% of the government's target.

The budget for FY2021-22 has a deficit of Tk2,14,681 crore, which is 6.2% of the total GDP. The government mostly relies on the banking sector to cover its deficits. This fiscal year, the government has planned to borrow Tk76,452 crore from the banking sector for this purpose.

On the issue, Bangladesh Bank Spokesperson and Executive Director Sirajul Islam said, "The fact that the government has increased its borrowing from the banking sector to cover its deficit is a positive development.

"The government will use those loans for implementing development projects, which in turn will boost employment opportunities in the country and grow our GDP."

In the last fiscal year, the government borrowing of Tk26,000 crore was far below the target. It had set Tk84,980 crore as target in the initial budget for that FY, but later dropped to Tk79,749 crore in the revised budget as the sale of saving certificates had exceeded expectations.

Moreover, the government had borrowed Tk66,907 crore in the FY2019-20, and Tk18,269 crore in the FY2018-19. The government's target for borrowing from bank and non-bank sectors has been inconsistent with meeting their targets in the last few years due to fluctuations in the investments centring savings certificates.

The government had initially planned to take out a net loan of Tk20,000 crore from savings certificates in the FY2020-21. But after witnessing increased sales of these certificates, the government increased this target to Tk30,302 crore in the revised budget.

At the end of June this year, the government's net loan form savings certificates exceeded Tk41,959 crore, which an increase of 38.47% compared to the target set in that revised budget.