'No need to worry' about government's bank borrowing: Finance Minister

Finance Minister Abul Hassan Mahmood Ali says that there is no reason to worry about the government’s dependence on bank loans to meet the budget deficit.

At a post-budget press conference at the capital's Osmani Memorial Auditorium on Friday, he said, "Taking loans from banks is standard procedure. It is done by all the finance ministers in all the budgets. The government does it and it is much more extensive in developed countries.”

“We have kept it [the deficit-to-GDP ratio] within 5 per cent this time. As such, it’s not that important, so you have no reason to worry about it.”

The finance minister presented his budget proposal of Tk 7.97 trillion for the 2024-2025 fiscal year in the parliament on Thursday.

To fund this spending, he plans to raise Tk 5.41 trillion from the government review, which will be a big challenge to implement.

Despite this, the overall deficit between the government’s spending and revenue will be Tk 2.51 trillion, which is still 8 per cent higher than the revised budget for the fiscal year 2023-24.

The finance minister plans to take loans from domestic and foreign sources to meet the deficit. Borrowing from domestic banks is key to covering the shortfall.

The budget has set a target of getting nearly Tk 1.38 billion in loans from the banking sector, which is 17.25 per cent of total government spending.