Government’s bank borrowing from the scheduled banks stood at Tk253bn as of June 18, a couple of weeks before ending the current fiscal year.
The borrowing fell short of only Tk7bn from the fiscal’s revised target of Tk260bn.
At beginning of FY2012-13, the borrowing started with a slow trend that continued till March this year to stand only at Tk80bn while from the non-banking system, the government borrowing stood at Tk10bn.
But, in just over two and half month the bank borrowing shot up rapidly, thanks to repayment in the meantime that helped keep the borrowing below the target.
“The government’s bank borrowing increases in the last months, which is a common phenomenon. But the repayments made this year were higher than the previous trend. As a result, borrowing did not cross the target,” said a senior Bangladesh Bank executive. “However, we think the figure is unlikely to be changed largely in last two weeks of the fiscal year.”
In May, the government borrowing from the scheduled banks crossed Tk195bn against the period’s target of 230bn. Later, the target was revised in the budget.
In accordance with the revision, Tk259.93bn (2.2% of GDP) is estimated to come from the banking system and Tk79.71bn (0.7% of GDP) from savings certificates and other non-banking sources.
In accordance with the BB data, the government repaid the banks Tk79.78bn as of May 15, pushing down its overall borrowing to Tk116.19bn – which was Tk151.09bn in the corresponding period of last year.
The overall borrowing declined slightly to Tk120bn as of May 13 due to repayment of Tk71.5bn. Despite borrowing from the scheduled banks increased alarmingly, it did not make crisis in the money market, said the Bangladesh Bank executive.
He said banking sector has been warned of being careful about loan disbursement after the current loan scam by the Hall-Mark Group. Besides, industrial investors remained reluctant in taking loan as they remained on the sidelines amid political turmoil. As a result, the money market witnessed surplus liquidity while the bankers are becoming interested to invest in the government securities and bonds for safety.
The scheduled banks investment in treasury bills and bonds stood at Tk257bn as of June 18 and, as of May 15, the scheduled banks investment was Tk216bn in the government securities, Tk109.6bn in treasury bills and Tk106bn in treasury bonds.