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Wednesday, March 28, 2012

Higher govt. borrowing from banks!

The government is going to increase its borrowing from banks to Tk294 billion in FY12, up from its revised budget target of Tk279 billion. The original budget target of bank borrowing was only Tk190 billion.

Why? Higher subsidy requirements in energy, power and agriculture sector and lower foreign aid flow have compelled the government to borrow aggressively from the banking system. However, higher import of fuel has particularly put pressures on the government expenditure patterns.

1. More liquidity shortage in the banking system;
2. Less money left for the private sector;
3. Less investment both from the government and private sectors;
4. Less growth in the current fiscal;
5. Higher debt for the future.

Here is the link on the news.

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