Massive deficit budget

Published:  01:38 AM, 14 June 2017

Per capita debt burden to rise

Per capita debt burden will rise to 46,177 due to heavy dependency on borrowing to feed the massive deficit budget proposed for the coming fiscal year. At the moment of a baby's birth, the per capita loan on him/her head is about Tk 40,000. And following Finance Minister Abul Maal Abdul Muhith's new budget proposal, the per capita loan will increase to Tk 46,177 at the end of the next fiscal year.

Of the Tk 4 lakh 266 crore proposed budget for the coming fiscal year, the non-development budget is Tk 2 lakh 45 thousand 14 crore. Of this, Tk 41,457 crore has been allocated for paying loan interest.  Of the allocation, the interest on the internal loan is Tk 39,511 crore and about 17 percent of the total non-development budget will be spent on paying interest on the loans. According to the budget document, the highest amount of the money will be spent to pay interest on savings certificates. The second maximum expense will be the term loan interest.

Dr Ahsan H Mansur, executive director of Policy Research Institute, said, "It is easily understood if you have a look at the allocated amount for interest payments in the proposed budget that the dependence of the government on internal debt is too much. Sadly, we cannot afford foreign loans of cheap interest due to a lack of skills of some government employees." Though the finance minister has given a big budget, he cannot earn more. That is why the budget deficit is going up gradually.

And to meet the deficit, now debt is the only way. That is why the loan is increasing every year. On the other hand, foreign credit with easier terms has been reduced. As a result, the finance minister is taking much expensive home loans. It also destroys budget discipline.

Due to this, a huge amount of money is being spent on paying interest. Talking to The Asian Age, former caretaker government adviser AB Mirza Azizul Islam said, "Our internal debt is very expensive. If a large portion of the loan becomes savings certificates, then it is much more expensive.

The government is taking more expensive loans, which means the government is  not able to make sufficient allocation for priority sectors like health  and education." According to information received from the finance ministry, now there are loans of 6 lakh 59 thousand 390 crore taka on the people of the whole country. In the coming fiscal year, the government will take more than Tk 1 lakh crore in new loans, of which two-thirds will come from domestic sources. 

State Minister for Finance MA Mannan told a vernacular daily that though more money is being kept for paying the interest on the internal loan, it is okay, because the money will remain in the country. Apart from that, the interest rate of foreign debt seems to be low, but it is not actually low. They have many conditions and spend a lot of money on consultant fees.

At the end of the next fiscal year, the state's total debt will be 7 lakh 61 thousand 930 crore taka, which is 34.5 percent of the total country's gross domestic product (GDP). Of this, the amount of loan taken from within the country is 4 lakh 71 thousand 500 crore taka and foreign loan is 2 lakh 90 thousand 430 crore taka.

Speaking to The Asian Age, PRI Executive Director Ahsan H Mansur said people have to take responsibility for the inability of government to manage debt properly. He said at one time the ratio between foreign and internal loans was fifty-fifty. Since there is a question of transparency and accountability in borrowing from abroad, so the government does not go that way. The government chose the simplest way of internal source with more interest. Ahsan H Mansur suggested the formation of a separate department for proper credit management.

The Bangladesh Bureau of Statistics (BBS) gave an account of the country's population on May 30, two days before the budget. The BBS officially said that till January 1, the population of the country was 16 crore 17 lakh and 50 thousand. Accordingly, the country's population will stand at 16 crore 50 lakh by the end of the next fiscal year and per capita loan will stand at Tk 46,177. Currently, the per capita loan is Tk 39, 963.

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