Dhaka, Bangladesh (BBN) – The government is going to increase bank borrowings substantially to finance the budget deficit of the current fiscal year ending June, officials said.
The Ministry of Finance (MoF) had earlier set the target of borrowing around BDT 279 billion from the country’s commercial banks and financial institutions against the original budgetary target of BDT 189.57 billion.
Now the MoF is planning to borrow BDT 294 billion from the banking system instead of Tk 279 billion to meet the government expenditure.
“The figure of revised government borrowing from the banking system for FY’12 will be finalized at a meeting of the cash and debt management committee (CDMC) scheduled for Wednesday afternoon,” a senior official told BBN in Dhaka.
A high-power committee on cash and debt management headed by the finance secretary is now working on mobilizing fund at minimum cost with minimum risk.
The budgetary target for government borrowing from the banking system was originally set at an aggregate level of Tk 189.57 billion through issuing treasury bills (T-bills) and bonds.
Higher subsidy requirements particularly in energy, power and agriculture sectors and lower inflow of fund from the overseas sources have forced the government to borrow more from the country’s banking system, said another government official while explaining the main reason of higher government borrowing.
BBN/SSR/AD-28Mar12-2:55 pm (BST)