Bangladesh government ::Borrowed Tk 164-billion loan from banks

The government has borrowed Tk 164-billion loan from banks in the first nine months of the current fiscal starting in July last year. The figure is three times higher than that in the same period of last fiscal, when it stood at Tk 40.23 billion. Finance minister Abul Maal Abdul Muhith admitted that the government’s dependence on bank loan was increasing but hoped it would not exceed the budget estimates at the close of the current financial year (2011-2012). Budget of the current fiscal year has estimated a loan of Tk 189.57 billion from banking system. “The government has to take loan from banks to meet its increasing expenditure and provide money as subsidies since loan sources other than banks have shrunk along with a relative reduction in the flow of foreign loan and donations,” said Muhith. He, however, said steps have been taken to practise restraint in borrowing from banks. Government loan from banks exceeded Tk 220 billion on December 5 last year. On December 1 last year, opposition leader Khaleda Zia said it is unprecedented that the government has borrowed “so much in such a short time, creating famine for the time being in the private sector”. But the loan figure came down to Tk 160 billion after the government received Tk 40 billion from mobile phone operators and used the money for paying back the money borrowed from banks. Since then the government loan from banking system has been ranging from Tk 150 billion to Tk 160 billion. 

According to Bangladesh Bank, Tk 54.82 billion was borrowed from the central bank and Tk 109.15 billion from other commercial banks until March 21 this year. In the last financial year, the government had taken Tk 204 billion loan, which was Tk 20 billion higher than the budget estimates. Analysts hold rental power plants mainly responsible for the increasing bank loan. “The government expenditure has increased due to rental power plants. It is one of the major reasons behind the increasing bank loan,” said former finance adviser to the caretaker government AB Mirza Azizul Islam. “Increasing oil price is causing a rise in import expenditure and creating trade deficit. As a result, pressure is increasing on foreign exchange, making the government dependent on bank loan,” he added.