Sharp rise in Govt borrowing from banks

LOCAL news dailies reported that the government plans to increase its borrowing from banks which is quite unusual because of a mismatch between resource inflow and expenditure. The Finance Ministry was forced to go beyond its budget estimation and decided to borrow Tk 8,250 crore for this month and another Tk 11,600 crore for next month from the banking sector this fiscal year. What is more alarming is that according to reports, the amount of bank borrowing for the final two months of the current financial year might increase further if the current dull business situation persists, for exceeding the original budgetary target.
The report further added that projected borrowings for March and April are nearly five times more than the amount borrowed during the first eight and half months of 2014-15 fiscal year and finance officials explained that a mismatch between earnings and expenditure forced them to opt for hefty bank borrowing. Economists fear that if foreign aid disbursement and revenue earnings do not take off in coming months, the borrowing target from banks would overshoot the revised target on domestic borrowing. Reports say that of the total Tk 8,250 crore, Tk 1,850 crore will be borrowed from one-year treasury bill, Tk 2,400 crore from 182-day treasury bill and Tk 4,000 crore from 91-day treasury bill. The Ministry also revised its bank borrowing target from Tk 31,221 crore to Tk 34,000 crore and non-bank borrowing estimate from Tk 12,056 crore to Tk 20,000 crore for the current fiscal year as the revenue earning outlook frustrated the budget officials in the Finance Ministry. Such excessive borrowing from banks by the government will only lower the banks lending capacity to the private sector which will in turn further slow down the economic growth already hit hard by the crisis.
This is a direct consequence of the unstable political crisis as well as the haphazard planning of the government agencies. We can understand (through the current rate of excessive borrowing by the government) that the economy is in huge trouble as government spending is more than the revenue it is collecting through taxes, projects as well as international aid. The government must take responsibility and find an alternative to excessive spending, not to mention make proper efforts in handling this prolonged crisis instead of constantly shifting blame on the opposition. We cannot afford to have the economy crash because of the haphazard behaviour by the government and in the future, they must also make better decisions and plan considering all the negative impacts that may fall on their spending.
Moreover, such hasty public expenditure from borrowed bank money is likely to breed more corruption and misuse of public fund.