Government debt from the banking sector has surged, reaching Tk 70,558 crore by May 12 in the current financial year. Despite paying off Tk 19,659 crore in earlier loans from Bangladesh Bank, the net debt stands at Tk 50,899 crore. Factors such as increased exchange rates and interest rates contribute to rising costs, prompting increased borrowing from banks. This trend adversely affects private sector access to credit.
The CPD executive director, Fahmida Khatun, supports the contractionary monetary policy to curb inflation but stresses the need for limits on lending duration to troubled banks. Structural reforms are deemed necessary. As of March, the government’s total debt in the banking system is Tk 4,44,677 crore. The pressure on government interest expenses escalates due to rising foreign loan interest rates and exchange rates. The banking sector faces a significant cash reserve requirement (CRR) deficit, posing challenges for overall banking operations.
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