Further bank loans to narrow budget deficit: Azizul
Thursday, 28 February 2008

Staff Correspondent

Finance adviser AB Mirza Azizul Islam said Wednesday that the government would face the current budget deficit with further loans from the banking system.

However, he stressed, inflation would not be greatly escalated, as banks had adequate funds to meet the loan requirements.

Azizul's comments came after a meeting of the coordination council on policies related to financial, currency and exchange rates at the planning ministry at Sher-e-Bangla Nagar Wednesday afternoon.

Although revenue earnings and loan assistance from foreign sources increased, the overall deficit in the current year's budget may widen because government expenditure in different sectors has risen, he said.

The deficit in the overall budget of the current fiscal (2007-08) has been estimated at 4.2 per cent. "The deficit will be met by taking loans from the banking system," Azizul said.

In reply to reporters' questions the adviser said that excess liquidity in the banking sector meant the loans "will not have such an impact on inflation".

According to Bangladesh Bank, the government has already borrowed Tk 9,179 crore from the banking system in the first six months (July-December) of the current fiscal. The projected loan requirement for the whole of the current fiscal year was just Tk 7,253 crore.

The adviser mentioned that this year's ADP would be reduced to between Tk 22,500 crore to 23,000 crore, as implementation was not up to expectation.

Mirza Azizul Islam described revenue collection as good, however, projecting that that revenue growth after the current fiscal year could be as high as 25 percent. He also said that no tax rebates would be given to big industries ot the rich despite the changed situation in the country.

"The number of TIN holders is very small compared to the total population of the country," Azizul said. "Many who are able to pay tax do not pay it.

The National Board of Revenue has taken massive steps to widen the tax net to increase the number of tax payers." "But this does not mean that the big industries and rich people will be spared."

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