The country’s interest payment is swelling every year as the proposed budget for the next fiscal year showed that 12.20 per cent of the total expenditure would go for interest payment.
Finance minister AMA Muhith on Thursday proposed that Tk 23,202 crore, or 12.2 per cent, would be allocated for interest
payment in the budget for FY 2012-13 having a layout of estimated total
expenditure of Tk 1,91,738 crore.
Finance ministry officials said that the government’s interest payment was rising because of hefty borrowings from local banks.
The budget documents for FY 2012-13 showed that Tk 21,604 crore would be spent for domestic interest payment while Tk 1,698 crore would for foreign interest payment.
It also showed that although the government had targeted to pay Tk 16,519 crore as domestic interest payment in the current FY 2011-12, it spent Tk 18,145 crore.
The government had to pay additional interest because of hefty borrowings from banks for import of fuel oils to run the costly rental power plants.
Although it had a target to borrow Tk 18,957 crore in FY 2011-12, in the revised budget for the year it set a target to borrow Tk 29,115 crore, causing a huge liquidity crisis in the banking system.
Muhith on Thursday also proposed that the government would borrow Tk 23,000 from banking system in the next FY 2012-13.
Interest payment in the FY would remain one of the major sectors of spending as the education and IT sectors’ allocation has been proposed at 11 per cent of the total budget, energy and power 5 per cent, agriculture 4.3 per cent, health 4.7 per cent, transport and communication 6.8 per cent, LGRD 7.4 per cent and defence 6 per cent.