A sluggish growth in tax collection pushed the government to borrow from the country’s banking system in March and April this year as half of the annual development programme is yet to be implemented with one and a half months of the current fiscal year (2018-19) remaining, officials said.
The government’s outstanding borrowing from the country’s banks including Bangladesh Bank increased to Tk 88,823.82 crore in April this year from Tk 86,275.87 crore in February this year. The government’s outstanding borrowing from the banking sector was Tk 88,257.67 crore at the end of June, 2018. As per the BB statistics, Tk 2,547.95 crore was borrowed from the banking sector in March and April with the net government borrowing from the banking sector reaching Tk 566.15 crore in FY19. The net government borrowing from the banking sector in July-April of FY18 was negative Tk 24,481.74 crore.
As the government required funds for the implementation of around 50 per cent of the annual development programme of FY19, its borrowing from the banks increased, BB officials said. They said that the government’s borrowing would increase in the coming days to meet the budgetary requirement with only one and a half months of FY19 remaining.
Immediate past finance minister AMA Muhith announced the Tk 4,64,573-crore fiscal budget for 2018-2019, setting Tk 2,96,201 crore as revenue collection target and 4.9 per cent as deficit.
The pace of revenue collection in July-March of FY19 was sluggish considering the government’s budget projection. Income tax, value-added tax and customs wings of National Board of Revenue in the first nine months (July-March) of FY19 managed to collect Tk 1,53,419.89 crore, which is only 51.79 per cent of the annual revenue collection target.
On May 11, NBR chairman Md Mosharraf Hossain said that revenue collection grew by 7.50 per cent in July-March of the current fiscal year against 20 per cent in the same period of last fiscal year, meaning that the implementation of budget would largely depend on borrowing from banks and sales of national savings certificates. Besides, non-NBR tax revenue collection target was set at Tk 9,727 crore, non-tax revenue at Tk 33,352 crore and foreign loans and grants at Tk 4,051 crore.
In the budget, the government projected that Tk 54,067 crore of the Tk 1,25,293-crore deficit would come from external sources and the rest Tk 71,226 crore would come from internal sources.
As per the budget, Tk 42,030.0 crore has to be borrowed from the banking sector and the rest Tk 29,197 crore would be collected from national savings scheme sales and non-banking sources.
The government’s budgetary target of collecting fund from the sales of NSCs has already exceeded.
The government’s net sales of savings certificates stood at Tk 39,733 crore in July-March of FY19, up Tk 13,536 crore on the government’s Tk 26,197 crore budgetary target for the entire fiscal year. In the first nine months of FY18, the net sales of savings certificate were Tk 36,709 crore.
In the budget, it was projected that domestic interest payment would cost Tk 48,377 crore in FY19 while the figure was Tk 35,404 crore in FY18.
BB officials cautioned that the governments net NSC sales might reach Tk 55,000 crore at the end of June this year.
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