'Only bank borrowing can help manage budget deficit'

The government has nothing to do other than taking loan from the banking sector now to manage its budget deficit, Planning Minister MA Mannan said today.

The minister made the comment at a seminar on "Budget 2023-24: education and employment" where questions were raised whether government borrowing from the banking sector will dry up loans for the private sector in Bangladesh.

"Many countries, including the United States, Saudi Arabia and Japan, take loans from the banking sector when they need. Bangladesh will do the same."

He spoke at the event organised by the Centre on Budget and Policy, a research institute affiliated to Dhaka University, at Professor Muzaffar Ahmed Chowdhury Auditorium of the Faculty of Social Sciences under the university.

The government will depend heavily on borrowing from Bangladesh Bank to manage its budget deficit in the next fiscal year amid the tax authority's continuous failure to generate adequate revenues, a reliance that may stoke inflationary pressures and worsen the current economic volatility.

The government has already taken up a large volume of loans from the central bank this fiscal year and the borrowing trend is expected to continue in 2023-24 as well, as it will look to implement development projects leading up to the national election to be held early next year.

The government has set a deficit financing target of Tk 261,785 crore for 2023-24. Of the amount, Tk 132,395 crore will come from the banking system.