The government's overall domestic borrowing stood at Tk 150 billion during the July-January period of this fiscal year (FY), 2017-18, mainly due to lower demand for funds to meet its budget spending. The government borrowed only about 25 per cent of the total target, set for the FY.
This borrowing mainly took place from the non-banking sources, especially through sales of the national saving certificates (NSCs).
The government had set a target of borrowing Tk 603.52 billion from two key domestic sources -- banking and non-banking -- to meet its budget financing, according to the budget documents.
The government's net borrowing from the banking system stood negative at Tk 150.30 billion, as its repayment exceeded borrowing during the first seven months of the current FY, according to the central bank's statistics.
The statistics also show that the government's borrowing from the non-banking sources stood at Tk 301.46 billion during the July-January period, which is higher compared to the corresponding period of FY 17.
The Finance Division officials told the FE that there was lower demand for money for fiscal management (in the first seven months of this FY), leading to the poor borrowing from domestic sources.
"We are rather repaying to the banking system," said an official.
He said there was much higher flow of funds from the non-banking sources during the period, especially due to sales of NSCs.
The official also noted that there are some big ministries, which spend the major portion of the government's funds for their different development projects. But a number of such ministries failed to spend funds in line with their respective targets until this December.
He said spending by the ten big ministries during the July-December period dropped nearly 6.0 per cent. These ministries spent a total of Tk 513.64 in the first seven months of this FY, whereas they spent Tk 544.26 billion in the same period of the previous FY.
Meanwhile, economists told the FE that the borrowing may rise in the coming months. But the target of borrowing over Tk 603 billion is illogical, considering the present pace of spending.
Dr Zahid Hussain, lead economist at Dhaka office of World Bank, told the FE: "Poor demand for money to meet budget funding is the key reason behind the low borrowing."
He said the borrowing may rise amid slow growth of revenue mobilisation in this FY.
Finance Division shows some 16.5 per cent overall growth in resource mobilisation from the National Board of Revenue (NBR) sources during the July-December period.
However, Dr Ahsan H Mansur, Executive Director of Policy Research Institute of Bangladesh (PRI), told the FE that the poor borrowing took place due to negative borrowing from banking system.
The government's budgetary target to borrow from banking system was Tk 282.03 billion. But it paid back over Tk 150 billion to the system during July-January period of this FY.
He was also critical of the government's target setting. "We don't understand why a target is set that we cannot reach. The target setting should be justified."
Finance Minister A M A Muhith placed a report containing detailed information of budget implementation in parliament last week.
According to the report, the development and non-development expenditure grew by 7.8 per cent to Tk 1.0296 trillion during the July-December period, which should be at least double to keep pace with the target.
