Dhaka, Bangladesh (BBN)– The Bangladesh government started the new fiscal year with higher bank borrowing as July loans figure almost doubled following lower revenue collection.

The government’s such borrowing reached BDT 130.87 billion in the first month of FY 2020-21 through issuance of treasury bills (T-bills) and bonds against BDT 70.50 billion pre-auction target, set by the Ministry of Finance earlier to partly meet budget deficit.

Of the total borrowing, BDT 109.32 billion was taken out from the banks and the remaining BDT 21.55 billion from individuals and corporate entities, according officials.

Meanwhile, the government’s cumulative net bank borrowing stood at BDT 80.59 billion until July 29 after adjustment of payback worth BDT 28.72 billion to the central bank, according to a Bangladesh Bank (BB), the country’s central bank, confidential report.

Actually, its borrowing from the banking system rose by nearly 109 per cent to BDT 722.46 billion as on June 30, 2020 from BDT 345.87 billion in the same period of the previous fiscal.

Falling trend in sales of national savings certificates and lower revenue collection was forced the government borrowing more from the banking system in FY ’20.

The government’s net borrowing through selling savings tools dropped by more than 71 per cent to BDT 144.28 billion in FY ’20 from BDT 499.39 billion a year ago.

A drastic fall in the sales of the savings instruments mainly due to the automation of its selling process amid COVID-19 led to such decrease in the government’s borrowing from the source.

The government has already targeted a ‘hefty’ borrowing from the country’s banking system to finance the budget deficit partly for the current fiscal year.

As per the budget documents, the government’s bank borrowing is set to jump by over 79 per cent to BDT 849.80 billion for the FY ’21 from BDT 473.64 billion a year ago.

On the other hand, the government has already set its borrowing target from savings instruments at BDT 200 billion to meet the budget deficit partly for FY ’21.