Some Tk 351.09b goes for payment of interest on enhanced govt borrowings

An enhanced amount of Tk 351.09 billion has been allocated in the next fiscal budget for interest payments on government borrowings. The debt- servicing amount accounts for 11.9 per cent of the total budgetary allocations.
 The allocation is Tk 52.44 billion higher than the amount of Tk 298.65 billion in the revised national budget for the outgoing fiscal year 2014-15.
Out of the total Tk 351.09 billion allocated under this head in the next budget, Tk 333.96 billion will be paid as interest for the domestic outstanding loans and Tk17.13 billion for the foreign loans.
Both the interests for the domestic and foreign loans will be provided from the government revenue income.
Usually, the government borrows from the domestic sources like banks, non-banking financial institutions and sale of savings certificates and from the external sources such as multilateral and bilateral lenders to finance the income-expenditure deficit left in the budget.
The government has also targeted billions of takas in loans from the domestic and foreign sources for financing the Tk866.57-billion budget deficit amid nearly US$18 billion worth of confirmed foreign assistance in the pipeline for disbursement for years.
The overall budget deficit in the upcoming FY2016 has been projected at Tk 866.57 billion, 5.0 per cent of the projected Tk 17.17 trillion gross domestic product (GDP) of Bangladesh.
Of this deficit financing, Tk 301.34 billion (1.8 percent of GDP) will come from external sources and Tk 565.23 billion (3.3 percent of GDP) from the domestic sources.
A total of Tk 312.21 billion (2.3 percent of GDP) out of the domestic financing will come from the banking system, Tk90.56 billion (0.67 percent of GDP) from the sale of savings certificates and Tk 30 billion from the other non-bank sources.
Finance Minister AMA Muhith in his budget speech said they had taken some measures to release the billions of dollars of confirmed foreign aid, stagnant in the pipeline for disbursement.
 "If we can increase disbursement from the huge pipeline of foreign assistance, we will be able to reduce our dependence on domestic borrowing. We will continue our efforts to this end so that foreign aid-utilization rate increases in the next year," he told the House while unveiling the Tk 2.95- trillion budget.
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