The government’s borrowing from the banking system increased by 1,956.60 per cent in the first 15 days of this financial year compared with that in the same period of the FY14 as it took huge amount of loans from the banking source to pay salaries and festival bonus to its employees.
The borrowing from the banks by the government stood at Tk 3,384.56 crore until July 15 against only Tk 116.57 crore the government borrowed in the same period of the FY14, according to the latest BB data, reports the New Age.
The government borrowing from the banking sector declined by 67.64 per cent in the recently concluded FY14 compared with that of a rise by 14.50 per cent in the FY13 due to a slower pace in implementation of the government’s development works amid political unrest.
A BB official told New Age on Sunday that the government borrowing would increase significantly this financial year as it would start the implementation process of its committed mega public projects including the Padma Multipurpose Bridge in the shortest possible time.
The government has been compelled to borrow from the banking source in the first half of this month as it had to provide a significant amount of money as salary and festival bonus ahead of Eid-ul-Fitr to its employees, he said.
Besides, the revenue collection and selling of the savings instruments are yet to get momentum resulting that the government met its instant needs by taking loans from the banking sector, he said.
The BB data showed that the government borrowing from the scheduled banks stood at Tk 912.15 crore in the first 15 days of the FY15 while its borrowing from the central bank was Tk 2,472.41 crore.
The official said that the government should borrow from the scheduled banks to meet its instant needs as the banks are now enjoying surplus liquidity due to sluggish business amid political uncertainty.
But the government took a large amount of money from the BB which would fuel the consumer inflation, he said.
The central bank has to provide fresh money against the requirement of the government borrowing, he said.
The fresh money circulated by the BB will increase the overall money outstanding in the market and it will ultimately put an adverse impact on the inflation situation, the central banker said.
In the 2014-15 fiscal budget, the government aimed to borrow Tk 31,221 crore from the banking source against Tk 29,982 crore in the FY14.
According to the latest central monetary policy for July-December 2014, the BB set the public sector credit growth at 12.9 per cent by December 2014 and 24.8 per cent by June 2015 in line with the government requirement.
BB chief economist Hasan Zaman told reporters at the monetary policy unveiling session that the government borrowing from the banking source might increase more in the second half of FY15.