The government’s borrowing target from the country’s banking sector is being reduced by taking a large amount of foreign loans. The government is changing its borrowing policy to control rising inflation and protect banks from liquidity crisis and to spend money economically. Recently, this decision was taken at the Economic Coordination Council meeting chaired by Financial Advisor Dr. Salehuddin Ahmed. It was decided to take about 39 thousand crore taka less in loans from banks in the current fiscal year than the target and 14 thousand crore taka more in foreign loans. This information has been obtained from the Finance Department.
According to those concerned in the Budget Branch of the Finance Department, the supply of dollars will increase if more loans can be taken from abroad. Because, the dollar crisis has not yet ended. This is also a reason behind the emphasis on foreign loans.
Usually, the government announces a budget at the beginning of the fiscal year. Although the expenditure target is set high, the income is set low. That is why the government borrows from within the country and abroad to meet the deficit. The target for domestic and foreign debt to cover the deficit this year is Tk 2,56,000 crore. An analysis of the budget document shows that the government expects to collect Tk 95,000 crore in net foreign debt and Tk 1,37,500 crore in bank debt in the 2024-25 fiscal year. It was revised in the Economic Coordination Council meeting. In this, the revised target for foreign debt has been increased to Tk 1,09,000 crore. At the same time, the revised target for bank debt has been reduced by Tk 38,500 crore to Tk 99,000 crore. In this regard, former Senior Secretary of the Ministry of Finance Mahbub Ahmed told media that the interim government is avoiding unnecessary expenditure. It is not taking unnecessary projects. After taking various initiatives, a large amount of money is being saved. As a result, the need for bank debt, which was initially targeted, is decreasing. This is one reason for reducing the target for bank debt. And if this is done, the supply of credit to the private sector will increase, which will have a positive impact on investment. He further said that the interest rate on the country’s domestic debt is high, the cost of debt is increasing. In comparison, the interest rate on foreign debt is low. That is why the target for foreign debt has been increased.
senior official of the Finance Department said that the government is giving the highest priority to controlling inflation. According to the BBS, the average inflation in November was 11.38 percent and food inflation was 13.80 percent. The government is on the path of reducing overall expenditure, including bank loans, as a regulator of control.
In the four months of July-October, the interim government borrowed 19,296 crore taka from banks, savings certificates, and bonds to run the state. Of this, it took 15,651 crore taka from the banking sector. But last year, only 5,911 crore taka was taken during the same period. According to those concerned, it was not possible to collect much revenue after the July coup. Due to the political context, business and trade had come to a standstill. The ports were almost idle. Due to this slow pace of the economy, there has been a deficit of about 30 thousand crore taka in customs and tax collection. Due to the decrease in income, the government’s bank debt has increased this year. Although last year, 3 thousand 415 crore taka was repaid instead of borrowing. As a result, the current government reduced borrowing from within the country in the middle of the fiscal year. Data analysis shows that in addition to the banking sector, 14 thousand 678 crore taka was borrowed from savings certificates at the same time this year. In order to comply with the IMF loan conditions, 2 thousand 327 crore taka was repaid instead of borrowing from savings certificates at the same time last fiscal year. Considering the overall situation, the bank sector and the internal debt have planned to borrow about 24 thousand crore taka less than the target for the current fiscal year.
Meanwhile, emphasis is being placed on foreign debt. In the meantime, the Asian Development Bank (ADB) has approved a loan of 600 million dollars as budget support. The International Monetary Fund (IMF) has started the process of providing a loan of 500 million US dollars. Secretary of the Economic Relations Department, Md. Shahriar Quader Siddiqui said that the World Bank provides loans of 3 billion US dollars every year. This time, it will provide another 720 million dollars more after revising it. The World Bank has expressed interest in investing in the country’s gas sector.
