Bangladesh’s government has turned to borrowing from the Bangladesh Bank, exceeding set limits. The government borrows through overdrafts and Ways and Means Advances (WMA), akin to printing money, as the central bank stopped the devolvement process.
The borrowing, exceeding Tk18,000 crore against a Tk16,000 crore ceiling, indicates a cash crunch. Dr. Ahsan H Mansur warns of inflationary risks, and the Bangladesh Bank charges 5.75% for WMA and 6.75% for overdraft. While the government faces daily revenue deficiencies, commercial banks and exporters feel the impact, with delays in cash incentive disbursements affecting liquidity. Tight liquidity may impede private sector expansion. The Bangladesh Knitwear Manufacturers and Exporters Association seeks the prompt release of pending incentives.