Government borrowing from internal and external sources climbed to Tk 1.84 trillion in the past fiscal, in a 13-percent year-on-year rise, with the domestic debt dominating the account.
Bangladesh Bank statistics show borrowing from domestic sources - banking and non-banking-surged 23 per cent to Tk 1.09 trillion in the financial year 2022-23.
Foreign or external borrowings increased nearly 2.0 per cent to Tk 746.5 billion in the period under review.
The total deficit financing as percentage of GDP at current market price stood at 4.15 per cent in the FY2023. It was 4.08 in the year before.
Outstanding domestic debts as percentage of the GDP at current market price stood at 18.03 in the year, up by 0.63 percentage point from FY2022.
The central bank data, however, slightly mismatch finance division's calculations. It needs at least two months more for preparation. It uses ibas++.
The net borrowing by the government from the banking system increased 64.39 per cent (y-o-y) to Tk 1.01 trillion, slightly higher than the original target but much less than the revised target for the fiscal year. The revised target from the banking system was Tk 1.16 trillion.
Non-bank borrowing from the public decreased 71.59 per cent to Tk 76.51 billion (y-o-y) in FY23.
As per revised budget for FY23, the targets for net government borrowing from the banking system, non-banking system and foreign sources for FY23 were set at Tk 1154.25 billion, Tk 250.00 billion and Tk 838.19 billion respectively.
Total sales of National Savings Certificates (NSCs) in FY23 amounted to Tk 808.6 billion, 25.18-percent lower compared to that of the previous fiscal year.
But the net sales of NSCs in FY23 decreased 116.55 per cent (y-o-y), falling acutely short from the revised target set for the entire fiscal year.
Economists say the main reason for the rise in borrowing in the fiscal year under review is less resource mobilisation by the revenue authority.
During 11 months of the last fiscal year, the total resource mobilisation was recorded at Tk Tk 2.82 trillion. The annual target was Tk 3.7 trillion for FY 2023.
They note that the government borrowing mainly came from printing money instead of the banking system.
The ideal practice is government borrowing should come from banking system. Commercial banks invest in bills and bonds where the government issues such securities. The last fiscal year was exceptional in the sense that the government borrowing mostly came from the central bank. The central bank calls it 'devolvement'.
Dr Ahsan H. Mansur, executive director of the Policy Research Institute of Bangladesh, told the FE that another big reason is less-than-expected grants from foreign sources. The government received huge foreign aid as budgetary support from external sources on grounds of the covid-19 pandemic.
"Although in terms of local currency it grew by nearly 2.0 per cent in FY 2023, in terms of dollar-taka exchange rate the inflow will be lower by around 20 per cent."
He meant the exchange rate between the local currency and the US dollar. In FY 2022, the exchange rate was Tk 84 which in FY 2023 swelled to around Tk 105.
jasimharoon@yahoo.com
