The government's borrowing from the banking sector in four months till October of the current fiscal year decreased by 42 percent compared to the same period last year.

The amount fell as the government refrained from taking abnormally huge loans from banks seen in the period last year.

However, such borrowing has started to go up again after mid-September.

In the first four months and six days (till November 6) of the current fiscal year, the government's total borrowing from the banking system was Tk 7,591 crore, down from Tk 13,042 crore in the same period last year.

Of the total amount, the government borrowed Tk 1,807 crore from the central bank.

But in mid-October the scenario was different when no amount was borrowed from the central bank rather the government repaid Tk 141 crore to Bangladesh Bank.

But the government borrowed Tk 4,640 crore from commercial banks on October 18.

The recent borrowing pattern also shows that though non-food inflation rose, the government continues to borrow from the central bank, creating more inflationary pressure.

When money from the central bank gets circulated in the market, it increases non-food inflation by increasing the money supply.

According to Bangladesh Bureau of Statistics, non-food inflation again crossed the double-digit mark and reached 10.46 percent in October.

An official of the central bank said the overall inflation came down to single digit and is slightly above 7 percent now.

The official also said they have been maintaining the borrowing pattern in such a way that it does not create any problem for the private sector to get credit.

The trend of borrowing from the central bank changes every month, he said, adding that they will closely monitor the increase in government's borrowing from the BB in line with their monetary policy.

The data of development expenditure till October 30 is not available yet.

However, in the first quarter of the current fiscal year the government's development expenditure was Tk 6,381 crore or 12 percent of the total annual development programme (ADP).

Of the total development expenditure, Tk 4,307 crore was spent from own resources.

However, a finance ministry official said the government had to borrow from the banking system as non-development expenditure marked a rise.

He said statistics of the non-development budget is available now for the first two months of the current fiscal year.

In the first two months of the current fiscal year, the expenditure in non-development budget increased by 11.4 percent over the same period last year.

During the July-August period of the current fiscal year, the total non-development expenditure was Tk 12,852 crore.

Of the total expenditure in the first two months, the expenditure on interest payment went up by 17.7 percent.

As the government's borrowing increases every year, its expenditure is also going up due to higher interest payment.

In the budget this year, the highest allocation was made for interest payment, which is 26.38 percent of the total non-development budget.

News: The Daily Star/Bangladesh/18-Nov-12