Professor Mustafizur Rahman reacts to revised public sector credit growth
By December in the current fiscal year, the government went past their yearly ceiling of borrowing from the banking sector. As a result, it was compelled to amend the monetary policy.
This situation emerged only because the government is failing to earn revenues as per the target. And I think their top challenge right now is increasing the domestic asset.
Now, the government will have to focus more on how revenue earnings can be increased. They will have to handle the issue strongly.
If they fail to do so, their liability to repay internal loans will keep rising. It will create an "in-built" problem for the government.
About 80 percent of the revenue budget is spent on credit repayment, salaries for employees and staff, and supplementary to different sectors. As a result, the government's credit liability will increase as much as they will take loans.
Against this backdrop, I think the government should concentrate on applying the new VAT law, bringing the untaxed people under the tax net, and stopping different loopholes in realising revenues.
Or else, the government's bank borrowing will rise even further, shrinking the private sector credit growth. It will ultimately create pressure on the national economy.
Professor Mustafizur Rahman is a distinguished fellow at CPD