Dhaka, Bangladesh (BBN)– Bangladesh government has revised its auction calendar keeping an option for borrowing BDT 20 billion more for financing budget deficit ahead of the general elections, officials said.
The government’s net borrowing from the banking system is set to reach BDT 30.42 billion by the end of this month instead of BDT 10.42 billion earlier, according to the revised calendar, issued by the Bangladesh Bank (BB) on Monday.
The government may borrow the additional amount of money from the market by the end of this month through issuing bonds, the officials added.
Talking to the BBN, a BB senior official said the central bank has revised the auction calendar in line with the Ministry of Finance (MoF) advice.
The revised calendar will come into effect from today (Tuesday), the official added.
Senior treasury officials of commercial banks, however, did not see immediate impact of the extra bank borrowing on the market.
They also said the demand for local currency may pick up in the market if the existing upward trend in government bank borrowing continues.
The weighted average rate (WAR) on call money rose to 3.60 per cent on Sunday from 3.50 per cent of the previous working day, the BB data showed.
“The government has revised its auction calendar to meet immediate cash requirements ahead of the upcoming national polls,” a senior official familiar with the government debt-management activities explained.
The 11th national election is scheduled to be held on December 30.
The finance ministry had set a bank-borrowing target of BDT 420.29 billion for fiscal year 2019 to finance the budget deficit.
Under the proposed bank borrowing, the government will borrow BDT 239.65 billion issuing long-term bonds while the remaining BDT 180.64 billion through treasury bills (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 on the market.