The government's bank borrowing dropped 18 percent in the first half of the fiscal year due to low development spending and high sales of national savings certificates.

Between July 1 and January 6, bank borrowing stood at Tk 5,931 crore, which was Tk 7,213 crore in the same period a year ago, according to central bank statistics.

In the first six months of fiscal 2013-14, the government received Tk 3,857 crore from net sale of national savings certificate, which was only Tk 177 crore in the same period of fiscal 2012-13.

Another reason for the lower bank borrowing is the slow implementation of annual development programme: only 27 percent of total ADP allocation was spent in the first five months of the fiscal year.

Non-development expenditure in the same period was only 30 percent of total allocation.

If the slow revenue growth and the rising expenditure continue through to the second half, bank borrowing may cross the budgetary target of Tk 25,993 crore, a finance ministry official said.

In light of the probable development, the finance division is set to come up with a revised bank borrowing estimate at a meeting of the fiscal coordination council to be held at the end of this week, he added.

The finance division is under dual pressure as the planning ministry wants higher expenditure to achieve high growth but the central bank wants borrowing to remain within the budgetary target to contain inflation.

The government plans to give an incentive package to the garment sector following the political unrest, which will result in an increase in non-development expenditure.

At the same time, about Tk 4,200 crore will be added to the allocation for non-development expenditure to accommodate 20 percent dearness allowance for the government staff, which was not included in the original allocation.

Though ADP expenditure was low in the first six months, the planning ministry does not want to make big cuts in ADP as the new lawmakers are making fresh funding demands for new projects, the ministry official said.

Another planning ministry official said they do not want to lower the GDP growth target to less than 6.5 percent, meaning further increase in development expenditure is needed.

The ADP allocation for fiscal 2013-14 is Tk 65,872 crore. The planning ministry in the meeting of the fiscal coordination committee may propose a small slash in the figure, the official added.

The government's major revenue earner is the National Board of Revenue, who has already slashing its collection target ofTk 1,36,90 crore by more than Tk 16,000 crore.

But the finance division is considering cutting the target by Tk 11,000 crore, officials said.

However, the central bank in the Monetary Policy Statement (MPS) released last week clearly stated the government's bank borrowing must be within the budgetary target to achieve inflation target.

An official of the finance division said in the next meeting of the fiscal coordination council they will coordinate proposals from different ministries and set up the revised targets.