According to the Major Economic Indicators: Monthly Update September '06, prepared by the Bangladesh Bank, the government borrowed Tk 2,737 crore from domestic sources in July against Tk 1,850 crore in the corresponding period in 2005.

Of the total loans, borrowing from banking sector rose by 42 percent standing at Tk 2,224 crore. While borrowing from the public through savings instruments totaled Tk 513 crore, a rise by 76 percent.

The government's expenditure has risen significantly at the fag end of its tenure, but there has not been a consistent rise in its income, resulting in the government's dependence on borrowing, finance ministry sources said

Since the end of the last fiscal, the government has been witnessing a huge increase in development expenditures in some sectors ahead of the next elections, sources said.

The sources added that the current budget lacked in adequate measures to achieve the target despite fixing an ambitious target of revenue earning against huge expenditure in the development programme.

In the first month of the current fiscal year, higher sales of savings instruments coupled with decline in repayment of principal amount pushed up the government borrowing from the public.

The government set an ambitious target of 21 percent revenue growth to coup with the high expenditure budget in the current fiscal year. But the first month of the year experienced only 12.8 percent growth in revenue.

In August, the performance was much disappointing with only 8.32 percent revenue growth.

National Board of Revenue sources said during the first two months, the amount of revenue was Tk 2,000 crore, which fell short of target set in the budget.

On the other hand, low cost foreign aid, a major source of deficit financing, also declined by 72 percent.

In July, the foreign aid was Tk 94.73 crore while it was Tk 343.50 crore during the same period last year.