The government's borrowing from the banking system to meet the budget deficit has increased to Tk57,929 crore till April 29 this year since July 1 last year amid dismal revenue collection.
In the budget for the fiscal year 2019-2020, the government projected it would borrow Tk47,364 crore from the banking system.
However, the latest figure shows that the government's bank borrowing has already exceeded the projected amount by Tk10,565.3 crore – with another critical two months of the fiscal year to spare.
"The government's bank borrowing could increase further in the coming days due to the sorry state of revenue collection," Policy Research Institute Executive Director Ahsan H Mansur told The Business Standard on Wednesday.
The novel coronavirus crisis has brought the country's economic activities almost to a halt, leading the National Board of Revenue (NBR) to a hefty revenue shortfall in the current fiscal year.
Mansur predicted that the revenue shortfall in the current fiscal year could be up to Tk1,15,000 crore against the revised target of Tk3,00,000 crore.
The initial target was to collect Tk3,25,000 crore revenue in the fiscal year 2019-2020.
In the July-March period of FY20, the NBR collected Tk1,66,007 crore in revenue, leaving another 45 percent of its annual target for collection in just three months.
"The revenue collection deficit was not only caused by the novel coronavirus pandemic but also by the NBR's lack of capacity and the government's ambitious target," Mansur said.
Mansur predicted that Covid-19 fallout might affect the NBR's revenue collection by around Tk15,000 crore.
The noted economist also said the government's borrowing from the banking system could have been higher, or close to Tk1,00,000 crore, if the implementation of annual development programs (ADP) was in full swing.
He also mentioned that the ADP implementation in the current fiscal year may fall short of up to Tk80,000 crore.
The government has curtailed the ADP implementation target from ADP Tk2,02,721 crore to Tk1,91,921 crore.
In the July-February period the government has implemented only 37.09 percent of ADP, the lowest since the FY17 when the implementation in eight months was 36.91 percent.
Replying to a question about how the government has been sourcing money for the stimulus package announced to fight Covid-19, Mansur said most of the government's announced packages are dependent on bank-loans.
Some of the stimulus package will be implemented using the government's budgetary allocation for the social safety net, said Mansur, who is also the chairman of the Brac Bank, adding that around Tk2,500 crore of the stimulus package would be provided by the government.
Commenting on the private sector credit growth, that posted 9.13 percent growth in February this year, he said there was no scope of an increase in private sector credit growth.
According to Bangladesh Bank data, the government's outstanding bank borrowing stands at Tk1,66,025 crore as of April 29 this year increasing from Tk1,08,095.7 crore on June 30, 2019.
In the budget for FY20, the government planned to borrow Tk63,848 crore from overseas sources and Tk77,363 crore from domestic ones to meet Tk1,45,380 crore deficit financing.
The government's net borrowing from the banking system was Tk19,800.9 crore in the 2018-2019 fiscal year.