Dhaka, Bangladesh (BBN)- The government is likely to set its target of borrowing from the banking sector at BDT 230 billion to finance the budget deficit in the next fiscal year (FY), 2012-13, officials said.
The government’s new bank borrowing target (for the FY’13) is almost equivalent to that of the revised target of BDT 227.95 billion for the outgoing fiscal (FY’12), a senior official close to the government debt management activities said.
“The government will borrow the money from the scheduled banks by issuing Treasury Bills (T-bills) and Bangladesh Government Treasury Bonds (BGTBs) to finance budget deficit in the FY’13,” the official said.
He also said around 80 per cent will be borrowed issuing long-term bonds while the remaining 20 per cent through T-bills in the next fiscal.
The Ministry of Finance earlier revised the government’s bank borrowing target, particularly from the scheduled banks, for the FY’12 up to BDT 227.95 billion from the original target of BDT 189.57 billion.
The government can borrow BDT 160.15 billion through issuing long-term BGTBs, and the remaining BDT 67.80 billion through T-bills by the end of June 30, according to the revised bank borrowing target.
Under the revised target, the government is empowered to borrow BDT 279 billion from the banking system including the central bank against the original budgetary target of BDT 189.57 billion for the FY’12.
Currently, three T-bills are being transacted through auctions to adjust the government’s 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 having the tenures of 5-year, 10-year, 15-year and 20-year – are being traded in the market.
The government’s net borrowing from the banking system shot up to BDT 172.05 billion on May 31 this year, as against BDT 107.94 billion in the same period of the previous year, according to official figure.
The government has already borrowed BDT 157.01 billion from the scheduled banks through issuing bonds and T-bills during the period under review, while BDT 15.04 billion from the central bank to finance the budget deficit for the FY’12.
BBN/SSR/AD-07June12-12:33 pm (BST)