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Govt borrowing from BB hits Tk 45,437cr in eight months

Published : Thursday, 16 March, 2023 at 12:00 AM  Count : 337

The government borrowing from Bangladesh Bank (BB) reached Tk 45,437 crore in eight months till February 28 of the current fiscal 2022-23 having a worsening inflationary pressure.

Its total outstanding loans from the banking sector in eight months soared to Tk 2,10,274 crore at the end of February from Tk 1,96,608 crore in December 2022, according to BB data.

The net government borrowing from the banking system was Tk 41,393 crore until February, which was 38.92 per cent of the government's borrowing target. The target of borrowing from the banking system has been set at Tk 1,06,334 crore for FY23.

The government's total outstanding borrowing from banks increased to Tk 3.15 lakh crore on February 28, 2023, which was Tk 2.14 lakh crore on June 30, 2022. According to the BB data, the government's borrowing from the central bank was Tk 24,542.14 crore as of June 30, 2021.

According to bankers, the government's bank borrowing increased due to rising government spending relative to its noticeably low income. They said it was likewise unable to profit from the sales of national savings certificates.

In December 2022, net sales of national savings certificates (NSC) were negative for four consecutive months, which indicates that the government paid back more money borrowed through the tools during the period as opposed to borrowing.

The net sales of NSCs witnessed a negative growth of Tk 3,106 crore in the first half (July-December) of FY23.

Executive Director of Policy Research Institute, Bangladesh Ahsan H Mansur told: the government's increased borrowing from the central bank could spark inflationary pressure since it would raise the level of consumer prices even more.

As people have already been dealing with rising inflation, the excessive borrowing from BB is concerning, he said. Borrowing money from banks is expensive, and the government does not want to pay any more in interest, he said.

The country's banking sector was experiencing a liquidity constraint as a result of a slow rise in deposits compared to a fast growth in loans as well as an increase in dollar purchases by the central bank to address the foreign exchange problem.

In order to handle dollar issue, BB sold close to $10 billion to banks directly between July and February, which withdrew an equivalent amount of local currency from the banking system.






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