The Bangladesh Bank (BB) has resumed the auction of 14-day special treasury bills after a hiatus since January 2020. This move is aimed at replenishing government funds without resorting to printing more money, which can fuel inflation. The government had planned to borrow Tk 21.0 billion but took Tk 15.0 billion due to higher interest rates. The central bank reintroduced these treasury bills as an alternative to injecting high-powered money through “devolvement,” as this can worsen inflation during a high inflation regime.
Economists suggest that the government is likely trying to avoid committing to high-interest longer-term loans in the current tight financing environment. Banks are expected to find investing in these short-term government securities attractive, given the current economic situation.
On the other side, experts commend the central bank for avoiding the injection of high-powered money into the economy, which can lead to inflation, and suggest the government focuses on reducing overall expenses in public financing management.
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