Govt borrows 27,952C from banks in H2'23

The government had borrowed Tk31,274 crore from the commercial banks in November, according to Bangladesh Bank data.

The net government borrowing from the banking sector was Tk26,097 crore in July-December in 2022

The government’s net borrowing from the country’s banking sector was Tk7,846 crore negative in July-December, as the government borrowed Tk27,952 crore from the commercial banks and repaid the Bangladesh Bank Tk35,789 crore in the same period.

The government had borrowed Tk31,274 crore from the commercial banks in November, according to Bangladesh Bank data.

The net government borrowing from the banking sector was Tk26,097 crore in July-December in 2022.

The excess liquidity in the banking sector dropped to Tk160,000 crore in October from Tk170,000 crore in September.

To address the ongoing dollar crisis, the Bangladesh Bank used approximately $27.82 billion of the country›s foreign currency reserve over the past 30 months.

Of this amount, $6.7 billion was allocated to banks from July to November of FY24, $13.5 billion in FY23 and $7.62 billion in FY22.

The banking sector is also facing challenges due to increased distressed assets, particularly non-performing loans, and a slow deposit growth.

In the previous FY23, the government borrowed Tk124,000 crore from the banking sector, with Tk98,826 crore borrowed from the central bank and Tk25,296 crore from the commercial banks.

The government relies heavily on advances, overdrafts, and the issuance of treasury bills and bonds from the banking system to manage its borrowing needs.

This reliance may signal challenges in revenue generation and limited access to alternative financing avenues.

Additionally, the government’s borrowing from non-banking domestic sources includes T-bills and bonds held by non-bank financial institutions, insurance firms, and private investors, as well as savings vehicles developed by the Directorate of National Savings.

For FY24, the government has set a borrowing target of Tk132,000 crore from the banking sector.

The total outstanding loans of the government from the commercial banks reached Tk254,847 crore on December 27, 2023 against Tk239,615 crore on June 30, 2023, according to the BB data.

However, the government’s total outstanding borrowing from the banking sector declined to Tk390,417 crore as on December 27, 2023 against Tk393,774 crore on June 30, 2023.