The government plans to heavily rely on the banking system to finance the budget deficit for the upcoming fiscal year, which could potentially hinder private sector access to loans and slow down investment growth. Finance Minister AHM Mustafa Kamal will present the Tk7.60 lakh crore budget for FY24 on 1 June. The budget deficit is estimated to be Tk2.60 lakh crore, with Tk1.36 lakh crore targeted to be sourced from the banking system. The government’s borrowing from banks is expected to increase by 28% compared to the current fiscal year’s target. Lower revenue collection and the need for funds for project implementation and public procurements are driving the increased bank borrowing. Economists raise concerns about reduced incentives for small savers and suggest emphasizing low-interest financing from foreign sources to minimize domestic borrowing.
Govt’s Increasing Reliance on Banks to Finance Budget Deficit
Source for more details: