Govt borrows heavily from banks as pandemic hits revenue

The government is borrowing heavily from the banking sector as the coronavirus pandemic has hit revenue collection, while expenses have gone up, a researcher has said, reports bdnews24.com.

It borrowed Tk 109.58 billion from the commercial banks in the first 43 days of the new fiscal year to Aug 12. It has also repaid the Bangladesh Bank Tk 25.36 billion.

The government has set a target to borrow a total of Tk 849.8 billion from the sector in the fiscal year 2020-21.

Researcher Ahsan H Mansur says the aggressive borrowing will affect the private-sector lending and thus investment.

The government had to go to the banks to pay salaries and allowances to officials and workers, and expenses related to tackling the pandemic because revenue collection dropped sharply, Mansur told the news agency.

The National Board of Revenue raised Tk 123.34 billion in the first month of the new fiscal year with a 22.7 per cent year-on-year drop, missing the target by 36.35 per cent.

Mansur, executive director of the Policy Research Institute of Bangladesh (PRI), said it was no surprise when the government borrowed heavily from banks due to the low revenue collection.

He said a good flow of foreign loans saved the government from borrowing excessively in the fourth quarter (May-July) of the last fiscal year.