In the first five months of the current fiscal year 2023-24, the government’s bank borrowing plummeted by 88%, totaling Tk31,274 crore compared to Tk31,372 crore in the same period last year. This shift is marked by reduced reliance on the Bangladesh Bank and increased involvement of commercial banks, attracted by favorable returns on financial instruments.
However, concerns arise about potential liquidity shortages in commercial banks, impacting their ability to extend credit to the private sector. The central bank’s move to control inflation involves tightening the money supply by reducing government debt and increasing policy rates. The government has borrowed only 2.76% of the annual target, raising questions about spending cuts and increased revenue to narrow the budget deficit. Experts stress the need for coordinated fiscal and monetary policies.
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