TBT DESK: The government's borrowing from the banking sector has increased significantly. In the first six months (July-December) of the current 2024-25 fiscal year, the government took a net loan of Tk 6,744 crore from banks. As a result, by the end of December, the total outstanding government debt from the banking sector stood at Tk 4,75,666 crore.
Not only bank loans but non-bank borrowing has also risen. During the first half of the fiscal year (July-December), the government borrowed Tk 24,688 crore from non-bank sources, a sharp increase compared to Tk 7,090 crore borrowed during the same period last year.
This data comes from a report by Bangladesh Bank, published last week. According to the report, the government's reliance on domestic sources for borrowing has grown significantly. In the first half of the current fiscal year, net borrowing from domestic sources stood at Tk 31,432 crore-an astonishing 69 times higher than the Tk 456 crore borrowed during the same period in the 2023-24 fiscal year.
The central bank's report attributes this increase to repayments of previous government loans.
However, the government did not take any fresh loans from Bangladesh Bank during this period. Instead, it repaid Tk 58,116 crore to the central bank between July and December.
The report further reveals that in the first six months of the fiscal year, the government issued special bonds to pay off Tk 12,542 crore in fertiliser and electricity bills. Last year, the government repaid Tk 36,586 crore under similar arrangements.
Meanwhile, the increased interest of institutions and individual investors in government securities has also contributed to higher borrowing from non-bank sources. With the additional Tk 24,688 crore borrowed in the first half of the fiscal year, the total non-bank government debt now stands at Tk 4,58,130 crore.
Typically, the government raises funds from non-bank sources through the issuance of savings certificates. However, in recent times, the trend of encashing savings certificates has surpassed new purchases. As a result, instead of increasing, borrowing through savings certificates decreased by Tk 2,244 crore in the first half of the current fiscal year. In the same period last year, this figure dropped by Tk 6,063 crore.
According to the revised budget for this fiscal year, the government plans to borrow Tk 1,17,000 crore from domestic sources for the entire year. Out of this, Tk 99,000 crore is expected to come from banks, while Tk 18,000 crore will be sourced from non-bank institutions. However, by the end of the first half of the fiscal year, the government had already exceeded its annual non-bank borrowing target by Tk 6,688 crore.