Govt repays more than it borrowed
Abdur Rahim Harmachi
Chief Economics Correspondent
In a rare instance, the government has repaid more loan than that it borrowed from the banking system in the first two months of the current financial year.
According to the data collected from the Bangladesh Bank's research wing, the government's borrowing from banks dropped to Tk 918.4051 billion on Sep 2 from Tk 923.1596 billion on Jun 30, the last day of the previous fiscal.
The data shows the government repaid Tk 4.7545 billion more than that it borrowed in the two months.
Economists said drop in fuel prices in the global market and implementation of fewer number of development projects eased the pressure on the government to borrow from the banks.
Finance Minister Abul Maal Abdul Muhith attributed government's less dependence on the bank borrowing to better revenue collection situation.
Before leaving for China to join the World Economic Forum meeting, he said on Saturday: "The revenue collection situation is very good. That's why the government does not need to borrow from banks to foot the bill."
He hoped borrowing from the banks in the 2012-13 financial year would not exceed the Tk 230-billion target made in the national budget.
The data suggests the government took Tk 3.3845 billion in the first two months (July 1 to Aug 29) of the current FY.
At the end of the previous 2011-12 FY, the borrowing had reached Tk 291.15 billion though that year's budget had pegged the borrowing at Tk 189.57 billion.
Bangladesh Institute of Development Studies (BIDS) Research Director Zaid Bakht said the government's lesser dependence on the bank borrowing would have positive impact on the economy.
He said: "Credit flow to the private sector will increase as the government is taking less quantity of loan from the banking sector. It will have positive impact on the industrial sector and the Gross Domestic Product (GDP)."
Bakht put the drop in the borrowing on the fall in fuel prices in the international market, which has dropped to $100 a barrel this time from $110 a year before.
"Last year the Bangladesh Petroleum Corporation had to spend a lot. But this year, their expenditure has decreased. That's why the government needs to borrow less."
Bakht further said the better rate of revenue collection and implementation of fewer number of development projects at the beginning of the FY had kept the borrowing pressure on the government low.