In July 2023, Bangladesh government demonstrated a slight reduction in its borrowing, according to central bank records. An amount of Tk3,823 crore from prior borrowings was repaid through the banking channel during this period. In the same month, Tk9,355 crore was reimbursed to the central bank, partly attributed to the revenue surge observed in June, the final month of the preceding fiscal year. This trend is indicative of a cautious approach at the outset of the new fiscal year, with the implementation of the Annual Development Programme yet to achieve full momentum. Commercial banks extended loans totaling Tk5,532 crore in July, potentially contributing to the repayment of a significant portion of the central bank’s debt.
The government’s total debt from the central bank has dwindled to Tk1.48 lakh crore, while its overall debt from the banking sector now stands at Tk3.90 lakh crore. Analysts highlight the liquidity challenges faced by the banking sector in recent months, mitigated in part by increased lending through repurchase agreements and liquidity facilities. However, a surge in government borrowing from commercial banks could pose a fresh predicament, with daily lending to the banking sector surpassing Tk10,000 crore on certain days. In the backdrop of these intricacies, the central bank’s objective of containing inflation at 6% for the fiscal year beginning July has become a focal point. Inflation registered a marginal decline from 9.94% in May to 9.69% in July, yet the broader impact of these fiscal measures on the inflation trajectory remains uncertain.
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