However, the amount of domestic borrowing will be reduced at the year-end as some donors have already assured the government of increasing their assistance, financer ministry sources said.

During the July-January period of the current fiscal year, the government's domestic borrowing stood at Tk7720crore. Domestic borrowing was Tk3343crore during same time of the previous year.

Of the total domestic borrowing, government borrowing from banking system increased by 208 percent to Tk5503crore, which was Tk1784crore during the same time of the corresponding year.

On the other hand, non-bank borrowing especially through savings instruments increased by 42 percent to Tk2216crore in the first seven months of the current fiscal. Borrowing from the same system was Tk1558crore during the corresponding period of last year.

Foreign aid dropped by 69 percent in the seven months of the fiscal 2006-07, contributing to a huge surge in domestic borrowing. The government received only Tk1003crore in foreign aid during the period against Tk3326crore during the same time of the last fiscal year.

Explaining the reasons behind reduction in foreign aid, Economic Relations Division (ERD) sources said the immediate past 4-party alliance government relied heavily on local financial sources to implement annual development programme (ADP). On the other hand, the political impasse the last year also stood in the way of foreign aid inflow.

However, the present caretaker government has started negotiations with donors in full swing, the sources said adding that a significant assistance will come from both multilateral and bilateral development partners.

The sources said a total of $200 million will come from World Bank's development support credit (DSC) programme by May and government will spend the money on implementing ADP.

The government yesterday increased fuel prices significantly, which may also increase the DSC amount from $200million to $300million, according to the sources.

According to National Board of Revenue (NBR), target of revenue collection growth of the current fiscal year was set at 21percent in the national budget. However, so far the growth in revenue collection is only 9.16 percent, which is also another reason for high domestic borrowing.

The sources said NBR initiated some drives to increase its revenue collection, which may result in 15 percent growth at the end of the current fiscal year.