Repayment surpasses govt’s July bank borrowing
The government's total loan from the banking sector declined by Tk1,704 crore in July compared to what it was at the end of FY22, which means July repayment surpassed the government's monthly bank borrowing.
Central bank officials said as the new fiscal year just began and the development projects are yet to gain momentum, the government's borrowing from the banking sector is still low. Once the development works gain pace, the spending, as well as bank borrowing, will rise.
The government had borrowed Tk530.96 crore from banks in July, while it paid back Tk2,235.77 crore.
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The government borrows from the banking sector to meet the budget deficit. Most of the loan is spent for the annual development programme.
At the end of FY22, the government's borrowing from the banking sector stood at Tk270,185 crore. The figure dropped to Tk268,480 crore after the first month of the current fiscal year.
The government has set a Tk1.06 lakh crore bank borrowing target for the current fiscal year. In FY21 and FY22, the government borrowed Tk26,078 crore and Tk72,750 crore respectively from the banking sector.
Compared to FY21, the borrowing increased by Tk46,672 crore in FY22, partly due to poor revenue collection and low investment in savings tools.
According to the central bank report, the government borrowed Tk9.25 crore from the non-banking sector through treasury bill bonds at the end of July.
Meanwhile, government borrowing through savings tools sales decreased by around Tk19,915 crore in the recently concluded FY22, which was 62.23% of the annual target of Tk32,000 crore.
In FY22, the government had borrowed around Tk1.08 lakh through the sale of certificates in national savings schemes. During the period, Tk88,155 crore was repaid for loans and profits.
In FY23, the central bank is prioritising two things to blunt inflation by controlling money flow to the market, as the private sector credit flow has been reduced to 14.1% from 14.8% and repurchase agreement rate has been raised to 5.50%.
