More borrowing by govt will add to per head public debt04 June 2020
THE national budget will be placed before the parliament at a cost of Tk 5.569 trillion on June 11 for fiscal year 2020-21 aiming at a GDP growth of 8.2 per cent. The budget is going to be mainly based on bank and non-bank borrowing and will earmark Tk 635.25 billion for paying interest on existing loans. It will be 11.31 percent higher over the outgoing budget to show that interest payment on public debt is alarmingly growing to threaten fiscal discipline very soon.
Finance ministry officials reportedly justified the sharp rise in borrowing in the upcoming budget fearing serious shortfall in revenue collection. It is not unexpected at a time when all sources of the government revenue have been seriously impacted by the shutdown amid coronavirus pandemic. The government will have to pay more interest to local and external sources in additional to bearing burden of interest on various bailout packages amounting to more than Tk 1.0 trillion. So we must say the government must be sensible to target new borrowing.
Its target to borrow Tk 880 billion in the next fiscal down from Tk 473.64 billion by early June at the year end of this fiscal is a highly critical decision. It has, however, reduced borrowing from sale of saving certificates to Tk 200 billion. But the high interest bearing previous public borrowing by sales of saving instruments has already spiked public debt for which the government will have to largely increase interest payment taking a larger part of the budget.
We are awfully worried by the surge in interest payment on public debt when most money being misused by dishonest people in a corrupt system. Without a proper checking mechanism on spending public money such borrowing is only going to largely add to per head borrowing from which general people hardly benefit. Moreover, the high rise in bank borrowing may cause serious impact for the private sector development which may suffer serious setback slowing down job creation and income generation activities when the nation needs it the most.
We would like to suggest that the government should limit unproductive revenue expenditures and keep the development budget mainly focused on essential projects. More spending may be directed to recovery of the rural economy to help the poor and strengthening the health delivery system to fight the pandemic.
We should not forget what the government borrow today the future generation would have to carry the burden to repay. Borrowing has become so essential for abuse of public funds and allowing plundering by its party men. There is no justification for shifting the burden on younger generation. The plunderers should be asked to return at least part of the money they looted.