The Financial Express

Govt’s net bank borrowing may hit Tk 600b mark

Revised borrowing targets soon

SIDDIQUE ISLAM | Published: February 03, 2020 10:13:58 | Updated: February 07, 2020 10:50:33

Picture used for illustrative purpose only Picture used for illustrative purpose only

The government's net bank borrowing during the current month would be around Tk 46 billion, officials said.

The net bank borrowing had reached Tk 508.42 billion until January 15 of the current fiscal year 2019-20, according to a BB's internal report.

Such borrowing may well cross the Tk 600 billion mark at the end of the current fiscal, sources expressed the fear.

The ministry of finance is now working on a revised bank borrowing target for FY '20, in view of the falling trend in sales of national savings instruments, an official familiar with the debt-management activities told the FE on Sunday.

He also said the government is going to raise the bank borrowing target significantly for this fiscal while the target for non-bank borrowing, particularly from national savings schemes, will be drastically reduced to narrow down its budget deficit.

"The government is likely to announce a revised borrowing target for banks as well as the non-bank borrowing shortly for the fiscal 2020," the official noted.

The gross bank borrowing may hit Tk 127 billion for the month. The amount to be collected though the issuance of treasury bills and bonds, according to the auction calendar, issued by the Bangladesh Bank (BB) recently.

The auction calendar includes the schedule and amount of T-bills and bonds to be issued through the auction for raising funds from the market.

The net bank borrowing may reach Tk 46 billion in February, after deducting Tk 81 billion against the government securities that will be matured.

Talking to the FE, a senior official of the Bangladesh Bank said the government is facing deficit balance in its account owing to lower revenue collection along with the ongoing falling trend in the sale of national savings certificates.

The government's account deficit stood at around Tk 20 billion as on January 28, which was plugged by the ways and means advances facility from the central bank, he added.

Under the existing rules, the government is empowered to borrow up to a maximum of Tk 60 billion from the central bank using such a facility without issuing any securities.

After availing the facility, the government may use overdraft drawing arrangement as well from the central bank, if its negative account balance crosses the Tk 60 billion mark, according to the official.

Earlier, the government had set to borrow Tk 473.64 billion from the country's banking system to meet its budget deficit for the FY '20. It was Tk 308.95 billion in FY '19.

Senior bankers have already predicted that the government borrowing from the banking system would pick up from the final quarter of FY '20 when the pace of execution of annual development programme (ADP) gets expedited.

"The government's bank borrowing normally picks up in the final quarter of each fiscal year because of increased execution of the ADP," Syed Mahbubur Rahman, managing director and chief executive officer of Mutual Trust Bank Limited, told the FE earlier.



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