In the final months of the fiscal year, the government’s reliance on bank loans is increasing to cover budget deficits. With a liquidity crisis in commercial banks, the government initially borrowed from the Bangladesh Bank by printing money, which led to inflation. This practice was halted in August due to criticism. As savings bonds are not yielding sufficient funds, the government now depends on commercial banks despite their liquidity issues.
For the 2024-25 fiscal year, the government plans to borrow more from banks, with a target of 1,37,500 crore taka. In the first 11 months of the current fiscal year, the government borrowed 78,200 crore taka from commercial banks, resulting in a net bank loan of 61,300 crore taka. Economists warn that increased government borrowing from commercial banks could limit private sector loans, affecting investment and employment. They advise increasing revenue without raising tax rates to reduce long-term dependency on loans.
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