The government liabilities, in terms of borrowing through domestic debt securities, are likely to be 13 per cent lower in the next fiscal year (FY) over those of the outgoing fiscal.
The domestic debt securities are treasury bills (T-bills) and treasury bonds (T-bonds) as well as 'ways and means'.
The government usually borrows from these fixed income instruments to fund its budget deficit.
It has projected mobilisation of Tk 1.22 trillion through the sale of the debt securities.
It also expects that the balance from the ways and means will stand at Tk 100 billion in the year beginning on July 01, the budget document showed.
The people familiar with the budget preparation said there has been a falling trend of domestic borrowing in recent years.
This is because of the higher net sales of the national savings tools, they told the FE.
However, economists view that such sluggish activities in the T-bills and T-bonds are having an impact on the growth of the country's bond market.
The yield curve derived from the T-bills and bonds is an important benchmark for the financial market.
The curve, also called 'risk-free' rate, is used in the financial market to determine different types of fund procurement and other related rates.
"This transaction through government securities is not merely to fund budget deficit," said Dr Zahid Hussain, lead economist at the Dhaka office of the World Bank.
Poor transaction of the T-bills and bonds impact the overall debt market of the country, told the FE.
Mr Hussain said long-term financing for the private sector is very important and the bond is an effective mechanism to fund them.
"The government bills and bonds set a benchmark for the private bond market," he added.
Mr Hussain said a gradual fall in the volume of T-bills and bonds will also create shortage of the same in the market.
Noted economist Dr Mirza Azizul Islam said T-bills and bonds have witnessed a falling trend in transaction.
But the borrowing from the national savings certificates is on the rise, he added.
"It's bad that we're borrowing from expensive instruments," said the former adviser to a caretaker government.
As Bangladesh truly lacks an effective bond market, he said, poor transactions of government securities are no more an important matter.
"In advanced economies, even in the emerging economies, such government bond dictates the lending and borrowing rates in the banking system," Dr Islam said.
He said Bangladesh, now a 'frontier-economy', needs to make the bond market effective to scale up its economy.
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