The government’s dependence on bank borrowing has decreased due to slower progress in development projects and steady growth in revenue income. In the first four months (July–October) of the current fiscal year, the government’s borrowing from the banking system fell by about Tk 503 crore. During this period, borrowing declined not only from the central bank but also from commercial banks. In other words, as government spending remained lower relative to income, the need for bank loans diminished. However, borrowing from non-banking sources increased over the same period.
Economists and related experts say that while reduced borrowing is positive in the short term, if the pace of development spending—particularly on large infrastructure projects—does not accelerate, the economy may not achieve its expected growth. Slower activity in sectors such as infrastructure, energy, and transport could also affect private investment.
Each year, the government presents a budget with a significant deficit, which is financed mainly from two sources: domestic and foreign. When sufficient external assistance is unavailable, the government relies more heavily on domestic sources. These include the banking system, non-bank financial institutions and insurance companies, and the national savings certificate sector.
In the current fiscal year’s budget, the government set a target of borrowing Tk 1.04 trillion (1,04,000 crore) net from the banking system—around 46% of the total projected deficit, and roughly Tk 5,000 crore more than the revised target for the previous year. All of this borrowing is planned from commercial banks, as the interim government has suspended borrowing from the central bank since August of the last fiscal year to help control inflation.
Sources indicate that following recent political changes, the pace of government development work has slowed. Many ministries and divisions have reported very low project implementation rates. Currently, 1,198 projects are underway, including 1,015 investment projects. According to the Implementation Monitoring and Evaluation Division (IMED) of the Planning Ministry, only Tk 12,158 crore, or 5.09% of the total allocation, was spent in the first quarter (July–September) of this fiscal year. Of that amount, Tk 6,307 crore came from government funding, Tk 5,074 crore from foreign loans, and Tk 777 crore from ministries’ own funds.
On the other hand, government revenue income has shown positive growth. According to the National Board of Revenue (NBR), tax collection in the first quarter of the current fiscal year increased by 20.45% compared to the same period last year.
A senior official at Bangladesh Bank told The People, “The government’s budget deficit is currently under control. With a healthy revenue flow and limited expenditure pressure, the government’s borrowing from banks has decreased, which is having a positive impact on overall monetary policy.”
According to the latest report from the central bank, as of June 30 of the last fiscal year, the government’s total outstanding borrowing from commercial banks was Tk 517,986 crore, which declined to Tk 515,445 crore by October 30 of the current fiscal year—meaning a reduction of about Tk 2,540 crore in four months. In the same period last year, government borrowing from commercial banks amounted to Tk 55,210 crore.
Similarly, government borrowing from Bangladesh Bank fell from Tk 98,423 crore on June 30 to Tk 97,524 crore on October 30, marking a decline of Tk 899 crore in four months. In contrast, during the same period last year, borrowing from the central bank fell by Tk 40,683 crore.
The report shows that, as of October 30, the government’s total net bank borrowing stood at Tk 550,401 crore, compared to Tk 550,904 crore on June 30, meaning a decrease of Tk 503 crore in the first four months. In contrast, during the same period last year, the government’s net bank borrowing increased by Tk 15,450 crore.
However, while borrowing from the banking system has declined, borrowing from non-bank sources has increased. As of June 30 of the last fiscal year, government borrowing from non-banking sources totaled Tk 140,612 crore, which rose to Tk 150,178 crore by October 30, showing an increase of Tk 9,565 crore in four months. During the same period last year, this figure had increased by Tk 16,916 crore.
Overall, excluding savings certificates, the government’s net domestic borrowing from all internal sources increased by Tk 9,062 crore in the first four months of the current fiscal year.