Govt Seeks World Bank and IFC Support for Reforms Programs

The yield on five-year Bangladesh Government Treasury Bonds (BGTBs) surged to 11.50% from 10.47% as banks showed reluctance to invest ahead of Eid-ul-Fitr. The government raised Tk 40 billion through these bonds to manage its budget deficit. A senior Bangladesh Bank (BB) official stated that banks are prioritizing liquidity management over bond investments.

Government borrowing from commercial banks has surged by 74% in the current fiscal year as private sector credit growth remains low and authorities aim to reduce central bank debt under a contractionary monetary policy. Between July and 20 February, the government borrowed Tk78,832 crore through Treasury bills and bonds, compared to Tk45,231 crore in the same period last year.

The interim government has yet to act on the recommendations of the White Paper and task force report on Bangladesh's economy, despite their submission on December 1, 2023, and January 30, 2024, respectively. Economist Prof. Selim Raihan, a panel member, stated that no discussions have taken place within the government or among ministries regarding the reports' findings.

Bangladesh's interim government has traced assets linked to former Prime Minister Sheikh Hasina and her family in six countries, including the US, UK, Malaysia, Singapore, Hong Kong, and the Cayman Islands, freezing over Tk 6.35 billion from 124 bank accounts and seizing properties worth Tk 88.5 million.

The Bangladesh government is increasing its food subsidy allocation by nearly 12%, raising the total to Tk 8,100 crore, aiming to enhance food distribution programs and support low-income groups. This decision follows production losses due to flash floods and persistent inflation, with food inflation reaching over 14% last year before easing.

Interest payments on government borrowings reached Tk625.6 billion in the first half of FY25, consuming over 55% of the annual allocation. This marks a 27% rise from the same period in FY24. Domestic interest payments accounted for Tk535.38 billion (58% of the annual estimate), while foreign interest payments stood at Tk50.22 billion (44%).