The risks of increasing domestic financing of budget deficit in Bangladesh Bangladesh has traditionally maintained a not very high budget deficit at around 5 %. The deficit was mainly financed by external assistance in the past but the percentage has decreased from 91% in 1991 to 44% in 2010. In any case, external assistance still finances 40 % of the Annual Development Plan. The bigger reliance on domestic financing should make the Government more cautious about deficit control as domestic borrowing is more expensive and has additional effects like increase on repayment expenses, less flexibility in budget allocations, inflationary pressures and crowding-out of private sector
Posted on: Fri, 02 Aug 2013 16:39:03 +0000