Once again the caretaker government has reached its "debt ceiling," and once again caretaker administration is poised to authorize an increase in government borrowing. Between its ever-growing bureaucracies, expanding entitlements, and military entanglements, this government is borrowing roughly 10,000 crores Taka to pay its bills. Government debt carries absolutely no stigma for policy makers in Bangladesh. Debt destroys nation's sovereignty, because the Bangladesh economy now depends on the actions of foreign governments and institutions. Ultimately, debt is slavery. Every taka the government borrows makes us less secure as a nation, by making Bangladesh beholden to interests inside the land as well as outside our borders. According to the Bangladesh Bank statistics compiled up to December 4, the government borrowed about Tk 9,016 crore from the banking system in the first five months of the current fiscal year, which is 78 per cent more than the amount in the corresponding period of 2006-07 and overshoots the public borrowing target for 2007-08 by almost Tk 3,000 crore.Also, the increased government borrowing reflects poor revenue management. Not long ago, the government claimed a remarkable surge in the number of people filing their income tax returns. Then again, it also claimed to have realised quite a hefty amount of revenue from people who had evaded tax for years. Clearly, something is amiss so that the government is forced into bank borrowing. On balance, it seems that the government has not only failed to make the economy vibrant but also fared poorly in terms of revenue management. Gopal Sengupta (Taka in Crore) 83.9 41.9 3.
Table-1 Government Borrowing (Net) From The Banking System
Sl. No. Name of the Bills/Bonds/Securities Objective Outstanding as on 30 June 2007 Outstanding as on 31 July 2007 Outstanding as on 31 August 2007 1 2 3 Bangladesh Bank 1. Ways and Means Advances To Increase Government Cash balance 1000.0 286.8 0.0 2. Overdraft 542.9 0.0 0.0 3. Devolvement 1627.2 1733.6 1463.7 a) Treasury Bill 1554.9 1661.3 1391.4 b) Treasury Bond 72.3 72.3 72.3 4. Overdraft Block 22330.0 22205.0 22080.0 5. Government Currency Liabilities 441.5 441.5 441.4 6. Advances to Autonomous and Semi-autonomous Bodies 5.1 5.1 5.1 7. Government Deposits 1/ (-) -15.6 17.1 -2111.3 A. Total : (1 +...+ 7) 25931.1 24654.9 21878.9 Deposit Money Banks (DMBs) 1. Government Treasury Bill 9236.7 10186.0 9927.2 i) Treasury Bills (Less than 1 year) To Increase Government Cash balance 3921.9 5074.3 5502.8 ii) Treasury Bills (1 year and above) To Increase Government Cash balance 5314.8 5111.7 4424.4 2. Government Bonds of Different Maturities (a+b) 10177.7 10979.4 11844.1 a) 1 Year and above but less than 5 years 1939.1 1944.1 1944.1 i) 3 Year (T&T) Treasury Bond-2008,2009 and 2010 bearing 7.0 percent interest To finance the installation of digital telephone lines 208.6 208.6 208.6 ii) 3 Year (T&T) Treasury Bond-2007, 2008, 2009 and 2010 bearing 7.0 percent interest To finance the installation of mobile telephone lines 696.8 696.8 696.8 iii) 3 Year (Sonali Bank) Treasury Bonds-2009 bearing 5.0 percent interest To repay the loan of Bangladesh Petroleum Corporation 1000.0 1000.0 1000.0 iv) 3 Year (Pubali Bank) Treasury Bonds-2009 bearing 5.0 percent interest To repay the loan of Bangladesh Agricultural Development Corporation 33.7 33.7 33.7 v) 3 Year (T&T) Treasury Bonds-2008 bearing 7.0 percent interest 2/ 5.0 5.0 b) 5 Year and above 8238.6 9035.3 9900.0 v) 5-Year Treasury Bond-2006 bearing 6.0 and 7.0 percent interest 3/ To repay the bad loan to Textile Mills 0.6 0.0 0.0 vi) 5-Year Treasury Bond-2007 bearing 6.0 percent interest To repay the default loan of the Deshbandhu Sugar Mills Ltd. 2.8 2.8 2.9 vii) 5-Year Treasury Bond-2008 bearing 5.0 percent interest For interest remission of sick industries and export-oriented industry of frozen food. 93.9 93.9 94.0 viii) 5-Year Treasury Bond-2008 bearing 5.0 percent interest To repay the loan of sick industries. 30.0 30.0 30.0 ix) 5-Year Treasury Bond-2008 bearing 5.0 percent interest To repay the interest of loan of flood affected farmers 9.3 9.3 9.3 x) 5-Year Treasury Bond-2008 and 2009 bearing 5.0 percent interest 4/ To repay the interest remission of sick industries. 53.4 53.4 53.4 xi) 5-Year Bangladesh Govt. Treasury Bond bearing 7.5 percent interest To increase long-term investment of different industries 3008.1 3333.7 3721.3 xii) 5-Year Treasury Bond-2010 bearing 5.0 percent interest To repay the interest remission of sick dairy farms 0.5 0.5 0.5 xiii) 5-Year Kohinoor Bat. Manu. Co. Privatization Treasury Bond-2012 bearing 5.0 percent interest 5/ To finance the Privatization of Kohinoor Bat. Manu. Co. 10.1 10.1 10.1 xiv) 10-Year Bangladesh Shipping Corporation (BSC) Bond-2008 bearing 8.0 percent interest To repay the loan of Bangladesh Shipping Corporation to different commercial banks 103.3 103.3 103.3 xv) 10-Year Bangladesh Govt. Treasury Bonds bearing 8.5 percent interest To increase long-term investment of different institutions 3181.3 3530.0 3877.7 xvi) 15-Year Bangladesh Govt. Treasury Bond bearing 8.5 percent interest To increase long-term investment of different institutions 0.0 163.2 xvii) 20-Year Bangladesh Govt. Treasury Bond bearing 8.5 percent interest To increase long-term investment of different institutions 0.0 91.8 xviii) 15-Year Treasury Bond-2008 bearing 5.0 percent interest 6/ To meet shortfall due to agricultural loan write-off and shortfall in capital and provisioning against bad loans of Sonali Bank, Janata Bank, Agrani Bank and Rupali Bank Ltd. 500.0 500.0 500.0 xix) 15-Year Agriculture Treasury Bond-2011 bearing 5.0 percent interest 6/ To meet the shortfall of agricultural loan write-off of BKB 145.0 145.0 145.0 xx) 15-Year Special Treasury Bond bearing 5.0 percent interest To meet the shortfall in provisioning against the bad loans and recapitalization of nationalized banks. 613.4 613.4 613.4 xxi) 25-Year Treasury Bond-2018 bearing 5.0 percent interest To compensate for the liquidation of jute sector credit 266.0 266.0 266.0 xxii) 25-Year Treasury Bond-2019 bearing 5.0 percent interest To compensate for the liquidation of jute sector credit 184.6 184.6 184.6 xxiii) 25-Year Treasury Bond-2020 bearing 5.0 percent interest7/ To reimburse one-third of the debt due to jute mills' loan write-off by the private banks. 36.3 33.5 33.5 3. Prize Bond/Income Tax Bond To increase Government Cash balance 28.7 12.0 30.3 4. Government's other Securities To increase Government cash balance 0.4 0.3 0.3 5. Sub-Total : (1+…+4) 19443.5 21177.7 21801.9 6. Advances to Food Ministry 484.8 623.2 335.9 7. Advances to Other Ministries and Autonomous/Semi-Autonomous Bodies 435.6 670.7 682.6 8. Accrued Interest 1902.6 1918.4 1806.8 9 Government Deposits (-) -12157.6 -11923.9 -12010.6 B. Total : (5+…+9) 10108.9 12466.1 12616.6 Grand Total (Net Government borrowing from the Banking System) : A+B 36040.0 37121.0 34495.5
;Note : Figures on Bonds are being calculated of coast value since January, 2006. 1/ Including ERD deposits. 2/ This Bond matured in March 2007 and then extended for 1 year but it has been reported in the Monetary Servey in July 2007. 3/ Out of Tk. 73.1 crore an amount of Tk. 72.5 crore has been paid during February-April 2007 and the rest has been paid in July 2007 4/ Out of Tk. 54.2 crore an amount of Tk. 53.4 crore has been issued to different commercial banks and rest of the amount to the ICB 5/ 5-year Kohinoor Batery Manufacturing Company Privatization Treasury Bond-2012 has been issued on 23 April 2007. 6/ 15- Year and 20-Year Bangladesh Government Trasury Bond have been issued in July 2007. 7/ Out of total amount of Tk. 36.3 crore an amount of Tk. 2.8 crore was paid in July 2007 Sources : 1) Monetary Survey, Statistics Department, Bangladesh Bank (BB). 2) Bangladesh Bank Affairs, Accounts and Budgeting Department , BB. 3) Outstanding Balance of Government Borrowings, FOREX Reserve and Treasury Management Department, BB. Table - II Non-Bank Government Borrowing (Net)
(Taka in Crore) Sl. July-August 2006/2007 July-August 2007/2008 No. Name of the Schemes Sale Repayment Net Sale Repayment Net Principal Interest Sale Principal Interest Sale 1 2 3 4 5 6 = (3-4) 7 8 9 10 = (7-8) NSD Instruments 1. Defence Savings Certificate 0.0 300.86 385.36 -300.86 0.0 340.5 446.1 -340.5 2. 5 -Year Bangladesh Savings Certificate 410.49 106.8 37.99 303.69 367.5 220.9 64.1 146.6 Bonus Savings Certificate 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4. 6 - Month interest bearing Savings Certificate 0.0 34.3 8.1 -34.3 0.0 28.7 3.2 -28.7 5. Family Savings Certificate 0.0 65.4 8.3 -65.4 0.0 13.0 1.0 -13.0 6. 3 - Month interest bearing Savings Certificate 1,226.2 864.1 230.6 362.1 865.2 830.8 219.2 34.4 7. Jamanat Savings Certificate 0.0 0.1 0.0 -0.1 0.0 0.1 0.0 -0.1 8. Pension Savings Certificate 256.9 20.5 27.3 236.5 263.2 18.8 47.4 244.4 9. Post Office Savings Bank 759.0 501.5 133.2 257.4 833.6 644.8 141.5 188.8 10. a) General Account 143.7 123.7 4.2 20.1 156.1 140.5 6.2 15.6 b) Fixed Account 615.2 377.8 128.9 237.4 677.5 504.3 135.3 173.3 c) Bonus Account 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0 Postal Life Insurance 13.1 2.9 0.3 10.2 12.1 2.9 0.4 9.2 11. Prize Bond 16.6 10.9 1.2 5.6 16.1 9.8 1.0 6.4 12. Wage Earners' Development Bond 96.2 13.5 21.7 82.7 129.7 17.0 40.5 112.7 13. 3-Year National Investment Bond 26.9 23.5 6.0 3.4 27.1 61.7 15.7 -34.6 14. US $ Premium Bond 7.4 3.6 2.1 3.8 4.0 14.3 1.6 -10.4 15. US $ Investment Bond 41.5 7.8 4.3 33.7 29.1 22.4 3.9 6.7 16. Total : (1+...+15) 1/ 2,854.1 1,955.5 866.5 898.6 2,547.6 2,225.7 985.5 321.9 17. Banking Sector (net) (-) minus 2.2 1.6 2/ 18. Total NSD Instruments (net): (16-17)
Govt. Treasury Bills/Bonds 896.4 320.3 19. Govt. Treasury Bills 3/ -42.9 5.2 20. 5 -Year Treasury Bond-2005 -0.1 86.8 21. 10 -Year 32.7 103.5 22. 15 -Year Bangladesh Govt. Treasury Bonds 4/ 36.8 23. 20 -Year Bangladesh Govt. Treasury Bonds 4/ 8.2 24. Total Non-Bank Govt. Borrowing (net) : (18+….+23) 886.1 560.8
1/ Including Investment in the Banking Sector. 2/ Tk.-1.6 crore in Prize Bond / Income Tax Bond. 3/ The amount of Treasury Bills was shown at sale value 4/ 15- Year and 20-Year Bangladesh Government Trasury Bond have been introduced on 04/07/2007 and 18/07/2007 respectively. Sources : a) National Savings Directorate. b) Outstanding Balance of Government Borrowings, FOREX Reserve and Treasury Management Department, Bangladesh Bank.
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