Govt Borrows Tk 18,805 Crore in FY24

Economic Tag: Debt, Govt.

In the first two months of FY24, the government borrowed Tk 18,805 crore from scheduled banks and repaid Tk 22,088 crore in loans to the Bangladesh Bank. This borrowing trend contrasts with the previous fiscal year when the government repaid Tk 1,187 crore to scheduled banks and borrowed Tk 5,622 crore from the central bank. Critics have raised concerns about the government’s increasing reliance on borrowing from the central bank, as it has been impacting private sector credit growth.

Bangladesh’s private sector credit growth hit a 21-month low at 9.82% in July 2023, due to liquidity shortages, high non-performing loans, and economic challenges. Experts emphasize the need for government borrowing practices that do not adversely affect the private sector and inflation rates, which have been on the rise. The government’s net credit from the banking system in the first two months of FY24 was Tk 3,283 crore, compared to Tk 4,435 crore in the same period last year. However, the overall outstanding net borrowing from the banking sector increased year-on-year to Tk 3.90 lakh crore in August, compared to Tk 2.78 lakh crore. The government’s target borrowing from the banking system for FY24 is set at Tk 1,32,000 crore to cover the budget deficit.

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