Govt borrows Tk 23,000cr from banks in 27 days

At the beginning of the 2023-24 financial year, government borrowing from the country's banking sector was low but has increased rapidly in recent weeks. As of June 27, the government has taken a loan of Tk 84,082 crore from various scheduled banks in the country.

In the first 11 months of the last financial year (until May), the government had borrowed Tk 61,320 crore from banks. In just 27 days, the government's debt to banks has increased by Tk 22,762 crore. However, stakeholders believe the debt amount may increase further once the accounts for the last financial year are finalised.

Experts say that high inflation has decreased people's saving capacity. Additionally, the sale of $12.69 billion from reserves has brought Tk 1 lakh 40 thousand crore to the central bank. As a result, most banks are now facing a liquidity crisis. Due to inflation of about 10 percent, the government has stopped taking loans through the central bank.

Sources indicate that due to lower-than-expected revenue collection, unavailability of desired foreign loans, and a decrease in savings bond sales, the government has turned to banks to finance its deficit. Generally, when the government borrows more from banks, private sector interest rates rise, discouraging business investment. Credit growth in the private sector was only 10.35 percent until last May.

According to Bangladesh Bank, the government borrowed Tk 84,615 crore from commercial banks until June 27. Simultaneously, it repaid a previous liability of Tk 532 crore to Bangladesh Bank. In total, the government's debt in the banking sector stood at Tk 4 lakh 77 thousand 860 crore. This includes Tk 1 lakh 57 thousand 107 crore from Bangladesh Bank and Tk 3 lakh 20 thousand 753 crore from commercial banks.

The government has set a loan target of Tk 1,37,500 crore from the banking sector for the current financial year. In the previous year's original budget, the bank loan target was Tk 1 lakh 32 thousand 395 crore, later revised to Tk 1 lakh 55 thousand 935 crore.

This year's target for borrowing from savings bonds is Tk 15,400 crore. The target was Tk 18,000 crore in last year's original budget but was reduced to Tk 7,310 crore in the revised budget. However, during July-May, the government's debt in savings bonds declined by Tk 17,743 crore. In total, the government debt from savings bonds stood at Tk 3 lakh 49 thousand 650 crore.