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GOVERNMENT REDUCES BORROWING FROM BANKS, BUT STOCKS UP ON SAVINGS CERTIFICATES

After the government's record borrowing from the banking sector in FY2019-20, it had reduced to a third of the target level in the just-concluded FY2020-21. But another avenue for borrowing, savings certificates, was used more, exceeding the savings certificates' borrowing target. The government had borrowed Tk26,078 crore from banks in FY21, much lower than Tk72,246 crore in FY20. Its borrowing target (proposed) for FY21 was Tk84,980 crore, so with Tk26,078 crore, they could have been in a highly comfortable position. But they borrowed Tk37,386 crore just from savings certificates in the first 11 months of FY21, an avenue whose target was Tk20,000 crore. In FY20, the government borrowed Tk11,011 crore, while all in all, the total borrowing of the government from savings certificates until May this year is Tk3,39,520 crore. For 2021-22, the borrowing target from savings certificates is Tk32,000 crore. A.B. Mirza Azizul Islam, economist and financial adviser to the former caretaker government, told Dhaka Tribune that the way the huge amount which the government borrowed from banks in FY20 was a cause for concern. But this time it has come down to a normal level. This is a good thing for the economy, as the government's budget revenue and expenditure targets do not match the reality, he also said. However, one of the reasons for this is the slow implementation of the government's development budget or ADP, due to the Covid-19 pandemic and the increase in the sale of savings certificates. Due to these reasons, the savings certificate target has been less than the bank borrowing target, he added. Analysis of the central bank's updated data shows that the government borrowed from the banking system even though it did not meet the target, but borrowed from highinterest savings certificates. Up to the first 10 months of the last financial year, the government repaid more than it borrowed from the banking system. Due to which, till April, the debt decreased by Tk13,627 crore as compared to FY19, dropping the debt to Tk1,64,196 crore. However, due to the increase in demand in the last time, net borrowing has also increased in the banking system along with savings certificates. As a result, the government's debt to Bangladesh Bank has decreased by Tk19,939 crore in FY21, compared to FY20. However, as a result of the increase of Tk46,017 crore borrowed from commercial banks, the total net debt of the government has increased only by Tk26,078 crore. According to the Department of Implementation, Monitoring and Evaluation (IMED) of the Ministry of Planning, the Annual Development Program (ADP) has been implemented 58.36% in the 11 months of the fiscal year 2020-21, amounting to Tk1,22,131 crore

 




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