Dhaka, Bangladesh (BBN)– The government is set to borrow a net nearly BDT 50 billion from the country’s banking system for the month of January to partly meet its budget deficit, officials said.

The government may take up to BDT 210 billion as gross borrowing from the banking system in January by issuing treasury bills (T-bills) and bonds, according to the government’s auction calendar, issued by the Bangladesh Bank (BB) recently.

The auction calendar means the schedule and the amount of T-bills and bonds to be issued through auction for raising funds from the market to meet the government budget deficit partly.

The government’s net bank borrowing may reach BDT 49.50 billion in the single month, after deducting BDT 160.50 billion against the government securities that would mature during the month, according to the officials. It was BDT 90 billion for December 2019.

“The government faced deficit balance in its account significantly by the end of December because the inflow of fund was lower than that of outflow,” a senior official familiar with the government debt-management activities told the BBN in Dhaka.

The government’s account deficit stood at around Tk 70 billion as on January 01 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 BDT 60 billion from the central bank of Bangladesh under WMAs facility without issuing any securities.

Meanwhile, the government’s aggregate net bank borrowing stood at BDT 459.13billion, as of December 26 of FY 2019-2020, according to a BB’s confidential report.

Of the total, the government borrowed BDT 371.84 billion from the scheduled banks using T-bills and bonds, and the remainder BDT 87.28 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 official also said 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.

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.