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Slow ADP rate causes less public borrowing in August

  • Published at 06:08 pm September 10th, 2013
Slow ADP rate causes less public borrowing in August

The government repaid Tk14.94bn more than it borrowed from the scheduled banks in August due to slower rate of ADP implementation in the beginning of the fiscal, said Bangladesh Bank officials.

According to the central bank data, the government’s repayment to banks from August 1 to August 27 totalled Tk67.23bn against the borrowing of Tk52.29bn.

“In the beginning of the fiscal, the ADP implementation rate usually marks slow, resulting in more repayment than borrowing. It’s not unusual, as the same thing had happened before” said Hassan Zaman, the chief economist in Bangladesh Bank.

The government’s bank borrowing was Tk60.22bn in August last year, the data showed. The July data this year showed government borrowing from the banking system soared substantially in the first month of the fiscal.

In July, the government’s bank borrowing stood at Tk30.5bn; around 12% of fiscal’s total target of nearly Tk260bn.

The government borrowed around Tk250bn from the banking sector in last fiscal year, exceeding the target of Tk230bn but falling short of the revised figure of Tk285bn.

In the fiscal 2011-12, the government 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.

An executive of Bangladesh Bank 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.

According to the BB data, in June 2013 domestic credit increased by nearly Tk700bn or 13.49% over June 2012 as compared to an increase of Tk854bn or 19.56% in June 2012 over June 2011.

The growth of domestic credit in June 13 was mainly due to an increase of credit to the private sector by Tk450bn or 11.04% compared to an increase of Tk671bn or 19.72% during the same period of the last year.