Government bank borrowing sees a sudden surge amid bid for turning its accounts position positive from the negative as fund deficit doubled in a day, officials said.
Deficit amount in the government accounts stood at around Tk 45 billion as on December 05 from Tk 22.50 billion two days before, according to official reckonings.
Huge payouts on account of salaries of government employees alongside maturity of Bangladesh Government Treasury Bonds (BGTBs) pushed up pressure on government's accounts in last few days, they said to explain the spurt in government bank borrowing.
The government paid Tk 45 billion on December 05 against maturity of the BGTBs.
The government borrowed more than double on Sunday through issuing two types of treasury bills (T-bills)--91-day and 364-day ones- to meet its budget deficit partly.
A total of Tk 66.81 billion was borrowed on the day instead of pre-auction target at Tk 25 billion through issuing the T-bills, according to the officials.
Earlier on December 02, the government borrowed Tk 38.88 billion through issuing T-bills against pre-auction target at Tk 25 billion on the same ground.
"We expect that the position on the government accounts will come into positive level again from negative one after depositing the amount of the latest higher borrowings with the accounts," a senior official familiar with government debt-management activities said on Monday.
He also says the government borrowing from the country's banking system normally increases in December and June each fiscal year (FY), in relation to half-yearly and yearly closings.
Meanwhile, the aggregate net borrowings from banks stood at Tk 137.60 billion as on November 25, 2021, according to Bangladesh Bank (BB) confidential report.
Actually, the government borrowed Tk 177.97 billion during the period under review from the scheduled banks by issuing T-bills and bonds, but repaid Tk 40.37 billion to the central bank, the BB data showed.
During the period, the government also borrowed Tk 10.15 billion from non-banking sources through net issuance of T-bills and bonds.
"Therefore, during 30 June 2021-25 November 2021of FY'22 government borrowed a total of Tk 147.75 billion from domestic sources, excluding net sales of national savings certificates (NSCs)," the central bank said in the report.
The treasury head of a leading private commercial bank (PCB) said the upward trend in government borrowing may continue in the near future if loans or financial assistance from overseas sources are not available.
He also said lower sales of national savings instruments recently also pushed up the government borrowings from the banking system to meet its budget deficit partly.
"Liquidity pressure on the money market may increase if the existing trend in government bank borrowing continues," the private banker said while replying to a query.
Earlier, the government had set a lower borrowing target from the banking system to meet the budget deficit in FY 2021-22.
Its bank borrowing is set to be Tk 764.52 billion for FY'22 from Tk 797.49-billion worth of revised target for the past fiscal year, according to the budget documents.
In FY'21, the government had slashed its bank-borrowing target by more than 6.0 per cent to Tk 797.49 billion, compelled by lower implementation of the annual development programme (ADP).
The original target was Tk 849.80 billion for FY'21.
Under the arrangement, the government will borrow Tk 516 billion issuing long-term BGTBs, generally known as bonds, while the remaining Tk 248.52 billion through T-bills.
Currently, three T-bills are transacted through auctions to adjust government borrowings from the banking system. The T-bills have 91-day, 182-day and 364-day maturity periods.
Furthermore, five government bonds with tenures of 02, 05, 10, 15 and 20 years are traded on the money market.
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