In a country like Bangladesh with a deficit budget, the government has to rely on borrowing to run its operations. Such borrowing can come from both domestic and foreign sources. The government spends first and then arranges the funds. The new government is now also having to bear the costs of previous governments’ poorly planned projects.

The only source of income for the government of Bangladesh is the revenue sector, but the revenue situation is very poor. In the first nine months of the current fiscal year, there has been a revenue shortfall of about Tk 1 trillion in customs and tax collection, which is the highest ever. The country’s business and trade situation is also not very strong. Therefore, it is difficult to expect an increase in revenue.

In such a situation, the government is continuously taking loans to pay salaries and allowances of government employees, interest payments, subsidies, and ongoing project costs.

Meanwhile, the government’s debt management has reached such a level that, in addition to the banking sector, the central bank is also occasionally printing money to provide loans.

Printing money to finance loans means an increase in reserve money, known as high-powered money. Printing one taka can create up to five taka in the market, which increases inflation. People are already under pressure due to rising oil and gas prices. Now an additional burden is being added.