Dhaka, Bangladesh (BBN)– Bangladesh government’s bank borrowing is set to rise further in June as the execution of the Annual Development Programme (ADP) gained momentum, but revenue target fell short of target.

The government has set the net bank borrowing target at nearly BDT 99 billion only for June 2019 to finance the budget deficit, according to the auction calendar, issued by the Bangladesh Bank (BB) recently.

According to the calendar, the government may take up to BDT 228 billion as gross borrowing from the banking system this month by issuing treasury bills (T-bills) and bonds.

The government’s net bank borrowing is set to reach BDT 98.90 billion by the end of June, after deducting BDT 129.10 billion as maturity amount of the government securities from the gross borrowing amount, central bank officials said.

Besides, BDT 20 billion will be borrowed through issuing short-term 14-day T-bills on Monday, which will be cleared on June 25, they said.

“There will be no additional impact on the overall net borrowing of the government for June,” a senior BB official said about the short-term bill.

The government borrowed BDT 40 billion on Sunday through issuing 91-day T-bills, 182-day T-bills and 364-day T-bills on Sunday as per the auction calendar.

The yield on each T-bill increased significantly, another BB official said.

The update trend of yield on the government securities may continue till July, he hinted.

The BB, however, devolved BDT 22 billion on its own accounts while the remaining BDT 18 billion was borrowed from commercial banks.

Senior bankers, however, expressed concern over such higher bank borrowing of the government, saying that it might adversely impact on the money market if the entire amount borrows from the scheduled banks.

They also urged the central bank to devolve major portion of borrowing amount on its own accounts that would help improving money supply in the market.

Normally, the implementation rate of ADP goes up with faster speed in the last two months of each fiscal year, according to the bankers and central bankers.

Besides, revenue shortfall id forcing the government to borrow more from the banking system to meet the budget deficit partly, they explained.

The National Board of Revenue (NBR) had faced more than Tk 504 billion shortfall against its target in the July-March period of the current fiscal year (FY) 2018-19.

Meanwhile, the government has used around BDT 22 billion as on May 28 borrowed under ways and means advances (WMAs) facility from the central bank to meet its budgetary expenses, an official familiar with the government debt management activities said.

The authorities are now empowered to borrow up to BDT 40 billion from the central bank under the facility to meet its day-to-day expenditures without issuing any securities.

Besides, the government is entitled to borrow a maximum of BDT 40 billion under overdraft (OD) drawing facility from the central bank on the same ground.

“But the government has not availed such a facility from the BB till May 28,” the official added.

The Ministry of Finance had set a bank borrowing target of BDT 420.29 billion for the FY 19 to partly finance the budget deficit.

Under the proposed bank borrowing, the government will borrow BDT 239.65 billion by issuing long-term bonds, while the remaining BDT 180.64 billion through T-bills.

Currently, four T-bills are being transacted through auctions to adjust the government’s borrowing from the banking system. The T-bills have 14-day, 91-day, 182-day and 364-day maturity periods.

Also, five government bonds with tenures of two, five, 10, 15 and 20 years respectively are traded in the market.