The government's borrowing from savings certificates and banks to meet the budget deficit was slow but towards the end of the current fiscal year, the borrowing from the banking system has risen sharply.
In the first 11 months through May, the government received a net loan of Tk32,652 crore but the borrowing jumped to Tk15,265 crore in just 22 days of June.
The government has borrowed Tk18,157 crore from savings certificates in the first 11 months of the current fiscal year which is only 56.74% of the government's fiscal year target from this sector.
For the current financial year, the government has set a target of Tk32,000 crore of borrowing from the savings instruments. Therefore, in the current month, the government has to borrow Tk13,842 crore from this sector to meet the target.
People concerned said the government has taken fewer net loans from the sector due to lower expenditure on the Annual Development Programme (ADP).
Although the government's borrowing from the banking system was on a slow lane, its bank borrowing increased at the end of the financial year.
The target of the government domestic borrowing for FY22 has been revised down to Tk1,24,288 crore. The borrowing target from the banking system has been reset at Tk. 87287.0 crore and from other domestic non-banking sources at Tk. 37,001.0 crore (including Tk32,000 crore through net sales of National Savings Schemes).
In the first 11 months of the current financial year, the government has taken a total loan of Tk97,350 crore by selling savings certificates. Earlier, it had repaid Tk79,192 crore in terms of principal and profit from the sector.
An official at National Savings Directorate said on condition of anonymity, "The government has reduced borrowing from savings certificates as it getting loans at lower interest rates from the banking system. In addition, the expenditure in the current financial year has been less than the target in the development budget, so borrowing from the savings certificate has decreased."
In the current fiscal year, the government has set an ADP implementation target of Tk2.17 lakh crore. However, the government has spent over Tk1.42 lakh crore, which is 65.56% of the target, in the first eleventh months of the fiscal year.
Meanwhile, the government's demand for loans increased towards the end of the financial year although it's borrowing from the banking sector was slow.
As of 22 June of this financial year, the government has received a net loan of Tk47,917 crore from banks.
According to data from the Bangladesh Bank, the interest rate on the 182-day Treasury Bill was 6.59% on 12 June. On the same day, the government set 6.5% interest on the 91-day Treasury Bill. Earlier, on 15 June, the interest rate on five-year Treasury bonds stood at 7.80%.
However, in June last year, the interest rate on 91-day treasury bills was only 0.52%. The interest was 0.6% on 182-day treasury bills. Besides, the interest rate on five-year bills was 3.84%. Banks are investing heavily in government debt instruments as their interest rates continue to rise.
In recent times, the government has increased borrowing a lot. In all, on 14 June, the total debt of the government in the banking system stood at over Tk2.50 lakh crore.
The government has set a target of borrowing Tk1,06,334 crore from the banking system for the upcoming fiscal year of 2022-23. Of this, Tk87,287 crore has been earmarked from the banking system.