Dhaka, Bangladesh (BBN) - The Bangladesh government net bank borrowed more than Tk 107 billion during the July-August period of the current fiscal year (FY), 2024-25, partly to meet its budget deficit, officials said.
Actually, the ministry of finance borrowed Tk 289.52 billion from all the scheduled banks through issuing treasury bills and bonds during the period under review on the same grounds while Tk 182.49 billion was paid to the central bank, according to a confidential report on the government borrowing from the banking system, prepared by the Bangladesh Bank (BB).
Talking to the BBN, a senior official familiar with the government debt-management activities said the government has borrowed mainly from the commercial banks to avoid injecting fresh funds of the central bank into the market. “It will help curbing inflationary pressure on the economy.”
He also said the government has availed Tk 40 billion under ways and means advances (WMAs) facility to finance the budget deficit.
The government is now empowered to borrow up to Tk 120 billion from the central bank under the WMAs to meet its day-to-day expenditures without issuing any securities.
Besides, the government is entitled to borrow a maximum of Tk 120 billion through overdraft (OD) drawing facility from the central bank on the same ground.
“The government had availed the OD facility earlier but now it is being cleared,” the official said, adding that such measures indicate that the government expenditure is reducing as a slower pace of development projects implementation.
Meanwhile, the net government bank borrowing is set to be Tk 1375.00 billion for the FY’25 in a rise from Tk 1323.95 billion in the previous year, according to the budget documents.
However, the government revised its bank-borrowing target to Tk 1559.35 billion from the proposed Tk 1323.95 billion for the past FY '24. But the net government borrowing from banks was Tk 942.82 billion by the end of FY '24.
Under the arrangement, the government will borrow Tk726.82 billion issuing long-term bonds while the remaining Tk 648.18 billion through treasury bills (T-bills).
Currently, four treasury bills (T-bills) are being transacted through auctions to adjust the government borrowings from the banking system. The T-bills have 14-day, 91-day, 182-day and 364-day maturity periods.
Furthermore, five government bonds, with tenures of two, five, 10, 15 and 20 years respectively, are traded on the market.
BBN/SSR/AD