Desperate borrowing from banks can’t be a way to deal with disaster

THE government’s borrowing from the banks to meet budget deficit increased to Tk 57,929.3 crore as of April 29 this fiscal year due to a dismal revenue collection amid the global coronavirus outbreak. According to the Bangladesh Bank data, the government’s outstanding bank borrowing stood at Tk 1,66,025 crore as of April 29 this year from Tk 1,08,095.7 crore on June 30, 2019. Experts cautioned that the government’s bank borrowing would increase further in the coming months as the coronavirus outbreak had brought the country’s economic activities almost to a halt, leaving the National Board of Revenue to witness a hefty revenue shortfall in the current fiscal year. In the budget for the fiscal year 2019-2020, the government projected to borrow Tk 47,364 crore from the banking sector.
The funds thus procured will have to be paid back from the government coffers. We know how these coffers are filled up with the hard earned money of taxpayers. So it means that the NBR will further breathe down even more heavily on taxpayers to gather the revenue shortfalls which have occurred this year. Even with perfect social distancing the COVID-19 virus is expected to return in upto six more cycles in the next two years, but the decision to open some factories has turned the lockdown into a shambolic affair. RMG workers, frantic in their need to work are already coming back to Dhaka in droves. Are their lives less important than the opening of factories, not to mention the havoc they would create if they create another wave of the epidemic? One can only wonder at the colossal ineptitude of the decision to allow these factories to re-open. The entire nation has been put at risk.
About the only good thing about borrowing from banks is the fact that the interest rates are lower than for funds procured from savings bonds. But the good ends there–almost anything associated with higher borrowing is negative.