Dhaka, Bangladesh (BBN)– The Bangladesh government is set to borrow a net BDT 55 billion from the banking system for the month of November to partly meet its budget deficit.

It may take up to BDT 144 billion as gross borrowing from the banking system in November by issuing treasury bills (T-bills) and bonds, according to the government’s auction calendar, issued by the Bangladesh Bank (BB) on Thursday.

The government’s net bank borrowing may reach BDT 55 billion in the single month, after deducting BDT 89 billion against the government securities that would mature during the month, according to the officials.

Talking to the BBN, a senior official familiar with the government debt-management activities said the government faced deficit balance in its account significantly by the end of October because the inflow of fund was lower than that of outflow.

The government’s account deficit stood at BDT 40 billion as on October 29 that was fulfilled with using ways and means advances (WMAs) facility from the central bank, according to the official.

Under the existing rules, the government is empowered to borrow up to a maximum amount of BDT60 billion instead of BDT 40 billion earlier from the central bank of Bangladesh under WMAs facility without issuing any securities.

Meanwhile, the government’s aggregate net bank borrowing stood at BDT276.34 billion, which was more than 58 per cent of the total target, as of October 21 of FY 2019-2020, according to a BB’s confidential report.

Of the total, the government borrowed BDt 256.88 billion from the scheduled banks using T-bills and bonds, and the remainder BDT 19.46 billion from the central bank.

A falling trend in sales of national savings certificates along with a shortfall in revenue collection has led to higher bank borrowing by the government during the period under review.

“The government’s bank borrowing may exceed the target by the end of this fiscal if the decreasing trend in sales of the national savings instruments continued,” another official added.

The government had already targeted higher borrowing from the banking system to finance the budget deficit partly for the FY ’20.

Its bank borrowing is set to be BDT 473.64 billion for the FY ’20, up from BDT 308.95 billion in the previous year, according to the budget documents.

Under the arrangement, the government will borrow BDT 280.94 billion by issuing long-term bonds while the remaining BDT 192.70 billion will come from T-bills.

Currently, four T-bills are being transacted through auctions to adjust the government’s borrowings 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-year, five-year, 10-year, 15-year and 20-year are traded on the market.

Market operators, however, did not see immediate impact on the government’s higher bank borrowing on the market as liquidity memains manageable.

But the government’s higher borrowing from the banking system may put pressure on the market in the coming months while banks will try to grow their lending activities, they added.