Dhaka, Bangladesh (BBN)- The government’s short-term borrowing limit from the central bank has been doubled, from BDT 20 billion to BDT 40 billion, to discourage overdraft (OD) drawing by the government.
Under the amended provisions, the government will be able to borrow up to a maximum amount of BDT 40 billion from the Bangladesh Bank (BB) without issuing any securities.
Earlier, the government could borrow maximum BDT 20 billion as short-term loan from the BB under the head -- ways and means advances (WMAs) -- to meet its day-to-day expenditures.
“The extended limit came into effect from July 9,” a senior government official, familiar with public borrowings from the banking sector, said, adding that the new limit of WMAs has been set, considering the size of the national budget as well as the country’s growing economic activities.
“We expect that the new WMAs ceiling will help decrease the government’s OD drawing from the central bank to meet its regular expenditures,” the official noted.
The BB has taken necessary measures to implement the new limit of WMAs, according to the officials.
“We’re implementing the new limit of WMAs in line with the cash and debt management committee’s (CDMC) decision, which is planning to discourage OD drawing for longer period,” a BB senior official said.
Besides, the government is set to borrow an aggregate amount of Tk 259.93 billion from the banking system through issuing treasury bills (T-bills) and bonds to partly finance its budget deficit for the current fiscal year (FY), 2013-14.
Under the arrangement, the government has decided to borrow BDT 143.55 billion from the banking system by issuing bonds, while BDT 116.38 billion will be borrowed through auction of short-term T-bills.
Currently, three T-bills are being transacted through auctions to adjust the government's borrowing from the banking system. The T-bills have 91-day, 182-day and 364-day maturity periods.
On the other hand, five government bonds with duration of two, five, 10, 15 and 20 years are being traded in the market.
BBN/SSR/AD-12July13-4:13 pm (BST)
