The government’s borrowing from the banking system increased substantially in July due to enhanced expenditure of projects under the Annual Development Programme (ADP).
The expenditure for the first month of the current fiscal year stood at Tk30.5bn, about 12% of the fiscal’s total target of Tk260bn.
“The government targets to implement as many projects as possible in the election year, resulting in increased expenditure from the very beginning of the fiscal year, said a senior executive of eBangladesh Bank.
Government borrowed around Tk250bn from banking sector in the last fiscal year which exceeded the target of Tk230bn set in the budget for 2012-13 but less from the revised target of Tk285bn.
The executive said the government has become dependent more on bank borrowing to meet the budget deficit in recent years due to a sluggish trend in sales of savings certificates and inflow of foreign aid.
In fiscal 2011-12, the government had set a bank borrowing target of around Tk190bn, but had to extend it to Tk290bn due to demand pressure.
The government borrowed Tk204bn from the banks in the fiscal year 2010-11.