Although the government did not put pressure on bank borrowing at the beginning of the last fiscal year, it ended up borrowing Tk32,103 crore in June alone.
According to the provisional data released by Bangladesh Bank, till May the government borrowed Tk32,652crore from the banks, which rose to Tk64,755 crore by the end of June.
The government has taken almost the same amount of loan in one month as it did in the previous 11 months.
On June 27, the government borrowed Tk5,708crore and Tk756 crore through 91-day and 364-day treasury bills, respectively.
The interest rate on the 91-day treasury bill was 5.99% and on the 364-day bill was 6.66%.
On 28 June, the government borrowed Tk4,724crore from banks through 15-year and 20-year treasury bills with an interest rate of 8.55% and 8.65% respectively.
On the next day, the government borrowed another Tk5,650 crore through two treasury bills of 91-day and 182-day.
Meanwhile, the target of implementing the Annual Development Projects (ADP) in FY22 was Tk2.17 lakh crore, but Tk1.42 lakh crore was implemented in the first 11 months, which was only 65.56% of the target.
The borrowing target may disrupt the private sector credit flow
The government is setting a borrowing target of more than Tk1,06,334 crore from the banks to address the deficit in the ongoing FY23.
Economists and businessmen believe that if the government itself borrows such a huge amount, the goal of private investment will not be achieved as credit flow to the private sector will be disrupted and push up inflation.
Ahsan H Mansur, executive director at Policy Research Institute (PRI) said: “Deposit growth is not good at present. It does not look like it is going to be good in the next fiscal year either.
“People's savings are declining owing to rising inflation, which may continue next year. In this situation, if the government borrows so much in the new fiscal year, the private sector's credit flow may be disrupted.”
Md Jashim Uddin, president of the Federation of Bangladesh Chambers of Commerce and Industry, also fears that private investment growth and credit flow to the sector will slow down if government borrowing goes up in the next fiscal year.
He told Dhaka Tribune that the gas rationing has also started in the country, and prices of gas and electricity may go up further in the future. In this situation, no one will be interested in new investments.
If the government's bank borrowing surges to such a great extent at this time, SME entrepreneurs will suffer the most.
The international market is very volatile and there might not be any new investments because of this too, he added.
