In the first four months of the current financial year, the government's year-on-year bank borrowing grew around 20%, thanks to an increase in investments in various sectors to reduce the Covid blues.
The government is increasing the flow of credit from the banking system to meet the budget deficit and implement development projects.
According to the Bangladesh Bank data, the total loans till October last year stood at over Tk1.77 lakh crore, and at the end of October this year, the government's total borrowing from the banking system rose to more than Tk2.11 lakh crore.
In the first three months of this fiscal year, the government implemented 8.26% of the Annual Development Programme (ADP).
Of this, the government spending on development projects almost doubled in September compared to the first two months owing to a decline in Covid infections from July.
In the first three months of this fiscal year, the government spent Tk19,559 crore on implementing the ADP, and of the amount, Tk10,000 crore was spent in September alone.
"It is not a matter of concern if the government loan is spent on development work and returns come from it. But, with the increase in debt, the burden of repayment will also go up,"
Professor Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD), told The Business Standard.
"If the government loans are used properly, they will help the economy grow. However, if it is not used properly, it may be a burden."
The government borrowed Tk19,640 crore from the banking system and repaid Tk9,944 crore to the central bank in the first four months to October. That means the government has taken a net loan of Tk9,696 crore this fiscal year.
Sirajul Islam, executive director and spokesperson for the Bangladesh Bank, said the government increased the repayment rather than taking loans, which is a good thing for the economy.
The deficit in the budget of the current fiscal year was estimated at Tk2,14,681 crore, which amounts to 6.2% of the GDP.
The banking sector is the main source for the government in meeting the budget deficit. The government planned to borrow Tk76,452 crore from the banking system this fiscal year.
Sales of national savings certificates dropped in September, thanks to the recent capping on profits of the savings tolls by the government.
The net sales of the savings tools declined by more than 22% in September to Tk2,825 crore compared to Tk3,629 crore in August.
The August sales saw a 72% rise compared to July, the first month of the 2021-22 fiscal year.
For the current year, the government has set a Tk32,000 crore target for the savings certificates sales.
Of the amount, the government has already sold Tk8,556 crore savings tools in the first three months – which is around 26% of the annual target.