Dhaka, Bangladesh (BBN) – Bangladesh government's borrowing from the banking system started rising from May because of increased funding for implementation of Annual Development Programme (ADP) projects, officials said.
"The government's bank borrowing started increasing from May. It is expected to continue until June 30," a senior official said, adding that the government functionaries are trying to implement the ADP projects at maximum level in the current fiscal year (FY) 2012-13 ahead of the scheduled general election.
The government's net borrowing from the banking system rose to BDT 116.51 billion on May 8, from BDT 101.24 billion on May 2, according to the central bank statistics, released on Wednesday.
The bank borrowing, however, is still lower, compared to the same period of the previous fiscal (BDT 155.82 billion as on May 8, 2012), the BB data showed.
Meanwhile, the government spent 49% of BDT 550 billion ADP in the first nine months of the FY 13, according to the Implementation Monitoring and Evaluation Division (IMED) data.
All the government ministries and divisions spent BDT 272.19 billion in the July-March period of the FY 13 compared to 45% of BDT 460 billion ADP outlay in the corresponding period of the previous fiscal.
On the other hand, decelerating trend in overall revenue collection has also forced the government to borrow more from the banking system recently to meet its budgetary expenditure.
The National Board of Revenue (NBR) incurred nearly BDT 50 billion deficit against its target in the first ten months of the FY 13, a senior tax official said.
Until April, the NBR collected BDT 821.14 billion tax out of its target for BDT 870.28 billion. Both the customs and value added tax (VAT) wings of the NBR failed to achieve their respective targets, while only the income tax wing surpassed its target.
Higher sale of the National Savings Directorate (NSD) certificates have also helped the government ease borrowing pressures from the banking sector, the officials said.
The net sale of the NSD certificates rose to BDT 6.92 billion in the July-March period in the FY 13 from BDT 209.6 million in the same period of the previous fiscal, according to official figures.
"We expect that the government's borrowing from the banking system will remain within the budgetary limit at the end of FY 13, earlier set by the Ministry of Finance," the official noted.
The government is set to borrow BDT 230 billion in the current fiscal against BDT 291.15 billion in the revised target of the previous fiscal, according to the budget document.
Under the arrangement, BDT 184 billion will be borrowed by issuing long-term Bangladesh Government Treasury Bonds (BGTBs), while the remaining BDT 46 billion through Treasury bills (T-bills).
BBN/SSR/AD-16May13-1:12 pm (BST)