Dhaka, Bangladesh (BBN) – The government has increased its bank borrowing target by more than 47 percent to around BDT 279 billion to finance the budget deficit of the current fiscal year (FY) ending June, officials said.
Under the revised target, the government is empowered to borrow BDT 279 billion from the country’s banking system against the original budgetary target of BDT 189.57 billion.
The decision was taken at a meeting of the cash and debt management committee (CDMC) held at the secretariat on Wednesday with Finance Secretary Mohammad Tareque in the chair.
“The government will redesign the auction calendar in line with the government’s revised bank borrowing target shortly,” a senior official told BBN in Dhaka after the meeting.
The meeting also decided to restructure the auction amount of the bonds and of treasury bills (T-bills) at the ratio of 50:50 instead of the existing 92.5:7.5.
The official also said the revised auction amount ratio of the government securities may come into effect from the April-June quarter of fiscal year 2011-12.
The primary dealers (PDs) earlier urged the government to review the debt management strategy, particularly that concerning the ratio of T-bills and bonds, to minimize their fund mismatch.
The government borrowing from banking system increased by more than three times until March 25 this year compared to the corresponding period of the last year.
The government’s net borrowing from banking system shot up to BDT 169.67 billion during the period under review as against BDT 48.92 billion in the same period the previous year, according to the central bank statistics.
During the period, the government borrowed BDT 113.77 billion from the scheduled banks through issuing T-bills and bonds during the period, while BDT 55.90 billion was borrowed from the central bank to finance the budget deficit.
BBN/SSR/AD-28Mar12-11:48 pm (BST)