"Boosting Economic Growth: Government's Plan to Increase Bank Loans by Tk 1,32,395 Crore in the Next Fiscal Year"

 The government has planned to borrow 1 lakh 32 thousand 395 crore taka from the banking system in the next fiscal year. Economists say that the government's increased bank borrowing raises concerns about inflation.

To meet the financial requirements of the budget, the government is becoming more dependent on the banking sector. In the upcoming fiscal year, the government will borrow more than 26 thousand crore taka from banks compared to the current fiscal year. This information has been revealed by the Finance Division of the Ministry of Finance.

In the fiscal year 2023-24, the government will borrow 1 lakh 32 thousand 395 crore taka from the banking system, which is more than the target of 1 lakh 6 thousand 334 crore taka in the current fiscal year. Accordingly, the government's borrowing from the banking system will increase by 24 percent compared to the previous fiscal year.

The general understanding in economics is that increased government borrowing from the banking system leads to inflationary pressure. When the government borrows a significant portion of the money from the banking system, it creates money by printing currency, which increases the money supply in the market and leads to inflation.

When contacted about the target for bank borrowing in the upcoming fiscal year, Planning Minister M. A. Mannan told the reporters that if the target for borrowing from the banking system is achieved throughout the fiscal year, it will not have any impact on inflation. Because the intention of the government is to use the funds for productive purposes.

The budget size for the upcoming fiscal year is estimated at 7 lakh 61 thousand 785 crore taka. Without grants, the deficit is estimated at 2 lakh 61 thousand 785 crore taka, which is 2.2 percent of GDP. To meet the deficit, both domestic and foreign sources are used. Within the country, the banking system and savings certificates are the main sources of borrowing. And in the case of foreign borrowing, various development partners are the sources. In the upcoming fiscal year, the government is considering borrowing a net amount of 1 lakh 2000 crore taka from foreign sources, while the target for the current fiscal year was 95 thousand 458 crore taka.

Every year, towards the end of the fiscal year, the government's bank borrowing increases, especially in the month of June. The sources say that this trend will continue in the current fiscal year as well. According to the information from the Bangladesh Bank, in the previous fiscal year of 2021-22, the government borrowed 13,724 crore taka from the banking system in 9 months (July-March). In the same period of the current fiscal year, it increased to 39,145 crore taka.

According to the information from the central bank, from July 1 of the current fiscal year to May 10, the government has borrowed 78,559 crore taka from the banking system, out of which 67,905 crore taka has been borrowed from the central bank itself. Although the borrowing from domestic sources has increased, the borrowing from foreign sources has decreased. According to the information from the Bangladesh Bank, in the 9 months of the current fiscal year, 40,167 crore taka has been borrowed from foreign sources, which was 48,399 crore taka in the previous fiscal year.

Written by: Robiul Hossain Forhad