Dhaka, Bangladesh (BNN) – The government has slashed borrowing target, for the first time, from banking system by around BDT 30 billion due mainly to lower implementation of the Annual Development Program (ADP) this fiscal.
Under the revised target, the government will borrow around BDT 106 billion instead of BDT 134 billion by the end of June from the commercial banks issuing different treasury bills (T-bills) and bonds.
“We’ve started implementation of the government’s revised borrowing target from the country’s banking system through amending auction calendar for fiscal 2008-09,” a senior official of the Bangladesh Bank (BB), the country’s central bank, told BBN in Dhaka on Monday.
He also said the central bank has issued the revised auction calendar to the commercial banks and non-banking financial institutions (NBFIs) with indicative figures of the government borrowing for May 24 to June 30 period of this fiscal.
“We’ve asked the banks and NBFIs to follow the revised calendar of T-bills and bond auctions,” another BB official said, adding that the revised borrowing target would help keep the money market stable.
Currently, three categories of 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.
The government borrowed BDT 74.82 billion from the banking system as on May 19 last against BDT 69.74 billion of the corresponding period of the previous year, according to the central bank statistics.
Meanwhile, the government revised the ADP for current fiscal year following a “very poor” project implementation rate, the planning commission officials said.
The commission has revised ADP downward by BDT 26 billion from the original development budget of BDT 256 billion as the project implementing agencies have, so far, spent a small amount of the total outlay.
The government ministries and divisions have implemented only 41 per cent of the total BDT 256 billion development budget during ninth months until March of the current fiscal, they added.
The government usually slashes the ADP outlay in the third quarter of every financial year because of failure of the implementing agencies to execute their projects in time.
“The government’s latest move may help increase the credit flow to the private sector as well as to keep the country’s inter-bank call money rate stable,” a senior official of a commercial bank told BBN in Dhaka. .
BBN/SS/SI/AD-25May09-10:08 pm (BST)
