Reimbursement exceeds government bank loan in July


Total government lending to the banking sector decreased by Tk 1,704 crore in July compared to end of FY22, meaning July repayment exceeded monthly government bank borrowing .

Central bank officials said the new fiscal year has just started and development projects have yet to gain momentum, government borrowing from the banking sector is still low. Once development work picks up, spending, as well as bank borrowing, will increase.

The government had borrowed Tk 530.96 crore from banks in July, while it was repaying Tk 2,235.77 crore.

The government borrows from the banking sector to cover the budget deficit. Most of the loan is spent on the annual development program.

At the end of FY22, government borrowing from the banking sector stood at Tk 270,185 crore. The figure fell to Tk 268,480 crore after the first month of the current financial year.

The government has set a bank borrowing target of Tk 1.06 lakh crore for the current financial year. In FY21 and FY22, the government borrowed Tk 26,078 crore and Tk 72,750 crore respectively from the banking sector.

Compared to FY21, borrowing increased by Tk 46,672 crore in FY22, partly due to poor revenue collection and low investment in savings tools.

According to the central bank report, the government borrowed Tk 9.25 crore from the non-banking sector through treasury bills at the end of July.

Meanwhile, government borrowing through sales of savings tools declined by around Tk 19,915 crore in the recently concluded FY22, which was 62.23% of the annual target of 32,000 crore Tk.

In FY22, the government had borrowed about Tk 1.08 lakh through the sale of certificates in national savings schemes. During the period, Tk 88,155 crore was repaid for loans and profits.

In FY23, the central bank is prioritizing two things to dampen inflation by controlling money flow to the market, as private sector credit flow has been reduced to 14.1% from 14, 8% and the repurchase agreement rate was raised to 5.50%.


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