Govt bank borrowing up as saving tools sales fall

The government has rushed to borrow funds from banking sources as sales of saving tools continue to fall in recent months.

It borrowed Tk 52,360 crore from the banking sector from July to March of this fiscal year, up from Tk 13,767 crore in the same period of the previous fiscal year, as per the latest data of the Bangladesh Bank.

The government, however, borrowed 49.24 per cent of its total target for the current fiscal year.

The net target of government borrowing from the banking system has been set at Tk 1,06,334 crore in the national budget for FY23.

A senior official of the central bank said that the government’s bank borrowing generally increases in the second half of every year due to the government’s payment for implementing the Annual Development Programme (ADP).

“It is true that the government bank borrowing has increased. Yet, the figure remains far below the fiscal target,” said the senior official of the central bank.

Industry insiders said that the negative growth of national saving certificates sales was also a reason behind the increase in bank borrowing.

The net sales of national savings certificates were Tk 3,509.5 crore negative in July-February in this fiscal year as the government chose repayment instead of borrowing any money through the tools.

The price rise of essential commodities discouraged people to invest in national savings certificates, as per the industry insiders.

The central bank data said that the government has also borrowed Tk 8,195.72 crore from the non-banking source including non-bank financial institutions, insurance companies, individual investors etc.

Of the total Tk 52,360 crore borrowing funds, Tk 50,380 crore was borrowed from the Bangladesh Bank and Tk 1,980 crore was borrowed from the scheduled banks, BB data said.

The government’s net borrowing from the banking system stood at Tk 68,652 crore in the last fiscal year, which was 78.7 per cent of the target reset in the national budget.

The total net domestic borrowing of the government was both from the banking system and from the other non-banking domestic sources in FY22 stood at Tk 95,583.2 crore.