Govt borrows 25% of yearly target in H1

The government has borrowed 25 per cent of the fiscal target in the first half (H1) from the banking system.

The borrowing reached Tk 18,781 crore in the July-December period of the fiscal 2021-22, as per the latest data from Bangladesh Bank.

The figure is around 25 per cent of Tk 76,452 crore targeted in FY22 but much higher than the same period of last year when it was Tk 595.4 crore.

The government’s bank borrowing increased in recent times owing to rising expenditure and lower sales of savings tools, according to officials at the BB’s Debt Management Department.

The net sales of national saving certificates fell by 40.38 per cent to Tk 9324.65 crore in the July-October period of the fiscal year, the BB data shows.

However, the borrowing amount was not that high considering the target, said a BB official.

From July to December of FY22, the government borrowed Tk 33,380 crore from the scheduled banks and repaid Tk 14,598.79 crore to the Bangladesh Bank. As a result, the net bank borrowing stood at Tk 18,781 crore, said BB data.

“The government’s increasing bank borrowing trend has so far not been a problem. But now it is a problem as the trend will put pressure on the money market,” said Ahsan H Mansur, the Policy Research Institute executive director.

But there was no other option for the government to meet the budget deficit as there was a shortfall in revenue income, which was the reason behind the surge in bank borrowing, he added.

The revenue shortfall was Tk 17,082 crore against the target of Tk 1,43,291 crore during the period.

The current bank borrowing situation would continue for some days, said Ahsan, also the BRAC Bank chairman.

The government’s expenditure had increased as fertilizer prices had gone up and food subsidies had also increased due to price hikes in the global market.

Three treasury bills are now transacted through auctions to adjust the government’s borrowing from the banking system. The bills have 91-day, 182-day, and 364-day maturity periods.

Furthermore, five government bonds with tenures of two, five, 10, 15, and 20 years are traded in the money market.