The government’s bank borrowing last week came down significantly from its peak as a big amount of fund was added to the national exchequer from the telecom sector.

Public borrowing from banks, especially from the central bank, declined to nearly Tk 168.48 billion on Monday, from its peak of Tk 198.05 billion at the end of November this year, a recent BB data showed.

The telecom sector added Tk 32 billion to the state coffer on December 8, from which public expenditure and bank dues repayments were made.

The situation may improve further when some donor-pledged funds, including that of the World Bank, are disbursed, officials say.

In the first five months of the current fiscal year, the government surpassed its yearly borrowing target of Tk 189.57 billion because of a major mismatch between its income and huge expenditure.

The huge public borrowing left the banking sector in a huge liquidity crunch, also shooting up inter-bank call money rate.

In the same period a year earlier, the government borrowed Tk 21.72 billion only.

Public expenditure skyrocketed in the recent months because of increased import of capital machinery and fuel oil for supplying to rental power plants. The government’s revenue decreased due to sluggish remittance inflow, delay in fund disbursement from donors and lower sale of saving certificates, officials said.

However, in the first week of this month, the government did not borrow any money from banks.

Earlier, economic analysts feared that the government might not be able to keep its bank borrowing limit within the 5 percent of GDP as projected in this year’s budget. They also warned of an inflationary pressure due to heavy bank borrowing.

Source: The Daily Sun/ Bangladesh/ 15th Dec 2011