Unable to collect revenue as expected, the government has increased borrowing from commercial banks to meet operating and development spending. It borrowed Tk 16,601 crore in the first two months of the current fiscal year (July-August), against just Tk 3,256 crore in the same period last year, a rise of 410 percent.
Those in the sector say the private sector was already under pressure, and the gas and power crisis has added to it. Many companies have closed and those still running are struggling, so revenue is not meeting the government’s needs: collection fell 20 percent in the first two months of the fiscal year. With alternative financing limited, the government has had to borrow from banks to meet its spending.
According to Bangladesh Bank, while the government borrowed Tk 16,601 crore from commercial banks in the first two months, it repaid Tk 3,728 crore to the central bank, leaving net borrowing from the banking sector at Tk 12,872 crore. In the same period last year, net borrowing was negative at Tk 7,486 crore.
The government has set a target of borrowing Tk 1.12 lakh crore from the banking system in fiscal 2026-27, so in the first two months it has already borrowed 11.49 percent of the full-year target.
Zahid Hussain, former lead economist at the World Bank’s Dhaka office, said the revenue target of about Tk 7 lakh crore set for the National Board of Revenue (NBR) is unrealistic. The NBR has never come close to such a target, and even without an economic crisis, past records show such large sums have not been collected. The unrealistic target mainly reflects the government’s aspirations, he said.
The government’s debt burden and financial pressure will grow further, he said. Raising pay and allowances for government employees will add at least Tk 1.06 lakh crore to operating costs within two years, with knock-on rises in pay for state-owned enterprise staff and MPO-listed teachers. Large infrastructure projects also involve significant government funds alongside international support, and subsidy costs have risen with new social protection programmes and higher international fuel and power prices. Raising power and fuel prices can ease subsidy pressure somewhat but not fully, he said.
Government spending is rising for various reasons while revenue is unlikely to grow significantly in the near future, and even maintaining past collection levels is now a major challenge, he said. If spending pressure grows without higher revenue, the budget deficit will widen, and government demand for bank borrowing will rise gradually.
The government’s outstanding borrowing from commercial banks stood at Tk 6,08,025 crore at the end of August, up from Tk 5,91,424 crore at the end of June. Its outstanding borrowing from the central bank fell to Tk 90,322 crore from Tk 94,051 crore in June.
বাংলায় মূল প্রতিবেদন পড়ুন · Read the original Bengali report