Dhaka, Bangladesh (BBN)– The Bangladesh government’s net borrowing from the banking system is set to be negative in October, as it is scheduled to repay over BDT 13billion from surplus, officials said.

The Ministry of Finance has set the net negative bank borrowing target at BDT 13.93 billion for the next month, according to the auction calendar issued by the Bangladesh Bank (BB) on Sunday.

Under the calendar, the government may take up to Tk 98 billion as gross borrowing from the banking system in October by issuing treasury bills (T-bills) and bonds.

The auction calendar gives the schedule and the amount of T-bills and bonds, to be issued through auction for raising funds from the market to partly meet the government’s budget deficit.

The government’s net bank borrowing is set to be negative at BDT 13.93 billion by the end of October, after deducting BDT 111.93 billion as maturity amount of the government securities from the gross borrowing BDT 98 billion.

The latest move came against the backdrop of the government’s holding adequate liquidity in the recent days, according to the BB officials.

The government was holding around BDT 15 billion excess liquidity in its accounts as on September 26.
Talking to the BBN, a senior official familiar with the government’s debt management said it’s a seasonal impact.

“Such trend of the government’s bank borrowing may continue until this November, but it may pick up from December,” he predicted.

The official also said the government has taken the measure to keep the government’s bank borrowing within the target by the end of the current fiscal year (FY), 2019-20.

Senior bankers said the government’s negative bank borrowing will slightly improve liquidity situation in the market.

“Such negative bank borrowing means the government will inject BDT 13.91 billion in the market next month,” a senior treasury official of a leading private commercial bank (PCB) explained.

The government has already set higher borrowing target from the banking system to partly finance the budget deficit in FY 20.

Its bank borrowing is set to be BDT 473.64 billion in the fiscal, 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 borrowing from the banking system. The T-bills have 14-day, 91-day, 182-day and 364-day maturity periods.

Five government bonds, with the tenure of 02, 05, 10, 15 and 20 years respectively, are also traded on the money market.

“The government bank borrowing target may cross the target if the falling trend of national savings certificates sales continues,” another official hinted.