Dhaka, Bangladesh (BBN) – The government borrowing from banking system swelled by more than 23 times in the first 70 days of this fiscal year (FY) compared to the corresponding period of the previous fiscal.

Its net borrowing from banking system shot up to BDT 69.32 billion till September 8 this year as against BDT 2.99 billion in the same period of FY11, according to the central bank statistics.

“The government’s bank borrowing has mounted during the period under review due mainly to meet the growing subsidy requirements particularly in energy, power, food and agriculture sectors,” a senior government official was quoted by the Financial Express (FE), a local newspaper, as saying.

The government has borrowed BDT 32.22 billion from all scheduled banks through issuing treasury bills (T-bills) and bonds during the period while BDT 37.09 billion from the Bangladesh Bank (BB) to finance the budget deficit for the ongoing FY12.

The official also said higher import of petroleum products has pushed the pressures on subsidy in recent months.

Petroleum products’ import increased by 162.26 per cent to $364.58 million in July, the first month of FY12 from $139.02 million of the previous fiscal year, the BB data showed.

Declining trend of net sale of national savings certificates has forced the government to borrow more from the banking system to meet its budgetary expenditure, another official said.

The selling target of the savings schemes was nearly BDT 5.0 billion in July last but the Directorate of National Savings sold certificates worth BDT 3.11 billion, according to official figures.

It also showed that the sale of savings certificates witnessed a negative growth during December, April, May and June of FY11 as the government lowered rates of return and imposed 10 per cent tax at source.

“We expect that the net sale of NSD will rise gradually in coming months as the government has introduced social safety net premium and reduced tax at source for alluring the investors towards the savings tools,” a BB official said.

He also said the government has introduced social safety-net premium as well as increased the rate of return on some such savings tools in the on-going fiscal year to attract more savers to the public savings schemes.

BBN/SSR/AD-22Sept11-11:05 am (BST)