The government’s bank borrowing has surged in the first two months of the fiscal year 2023-2024, reaching Tk 750.24 billion, double the amount borrowed during the same period in the previous year. This substantial increase in gross bank borrowings, up 99.4%, has raised concerns about inflation. The government has issued a debt calendar for September 2023, indicating plans to borrow Tk 320.5 billion from the banking system. This borrowing includes funds from both primary dealers and the central bank’s ‘devolvement’ mechanism, which occurs when interest rates set by primary dealers are higher than expected. While sluggish revenue performance has driven the government to borrow more, concerns about inflation arise as the central bank essentially prints money to lend to the government. The depreciation of the local currency against the US dollar has also contributed to higher prices of imported goods.
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