Dhaka, Bangladesh (BBN)– The government’s net bank borrowing crossed BDT 500 billion until middle of this month, compelled by the need for meeting budget deficit.

Falling trend in sales of national savings certificates coupled with a shortfall in revenue collection has led to higher debt from the banking sector during the period.

The government’s combined net bank borrowing reached BDT508.42 billion at the end of January 15 of the current fiscal year.

Senior bankers, however, said liquidity pressure on the market is already visible after higher bank borrowing by the government.

The amount of overall transaction in the inter-bank call money market came to BDT 26.21 billion on Wednesday from BDT 57.70 billion a week before. The amount was BDT 73.54 billion on January 14.

Bankers feared liquidity pressure on the market would intensify in the coming months, particularly from the final quarter of this fiscal when the pace of implementation of annual development programme (ADP), gets expedited.

Besides, the demand for credit may go up from April since the regulator instructed the banks to implement single-digit interest rates on both lending and deposits, they added.

The government has already used ways and means advances (WMAs) facility from the central bank to meet its account deficit, the Bangladesh Bank (BB)’s report showed.

Under the existing rules, the government is empowered to borrow up to a maximum BDT 60 billion from the central bank under such a facility without any securities.

After availing the facility, the government may use overdraft (OD) drawing arrangement as well from the central bank, if its negative account balance crosses the BDT 60 billion mark.

The government had set to borrow BDT 473.64 billion from the country’s banking system to partially meet its budget deficit for the FY ’20. It was BDT 308.95 billion in FY ’19.