Dhaka, Bangladesh (BBN) - The government’s borrowing from the banking system in the first-half (H1) of this fiscal has declined following increased net sale of national savings directorate (NSD) certificates.
The government’s net bank borrowing dropped by 21.91 percent to BDT 61.46 billion during July-December period of the fiscal 2009-10 (FY10) against the target of BDT 78.71 billion, according to the central bank statistics.
On the other hand, net borrowing of the government through NSD certificates recorded a significant rise by 313.21 percent to BDT 39.30 billion during July-October of this fiscal. The figure was BDT 9.51 billion in the same period of the previous fiscal.
The government had set a net borrowing target of BDT 23.77 billion issuing NSD certificates to fund the budget deficit for the current fiscal, according to the budget documents.
"The government bank borrowing has decreased because of the huge surplus fund in its accounts and lower rate of implementation of the annual development program (ADP)," a senior official of the Bangladesh Bank (BB) said.
The surplus balance in government account stands at over BDT 100 billion, the BB official said, adding that the government’s bank borrowing may increase when the ADP implementation is expedited.
Around 28 percent progress in implementation of the ADP has been recorded during the July-December period of this fiscal, according to the planning ministry.
Currently, three T-bills are being transacted through auctions to adjust the government borrowing from the banking system.
The T-bills have 91-day, 182-day and 364-day maturity periods.
On the other hand, four government bonds – 5-year, 10-year, 15-year and 20-year –are being traded in the markets.
“The government's interest expenditure will increase by end of this fiscal because of huge borrowing through higher-interest bearing savings instruments,” a treasury official of a commercial bank told BBN.
BBN/SS/SI/AD-08January10-1:52 am (BST)