The government borrowed Tk 94,281 crore from the country鈥檚 banking system in the financial year 2023-24 while its revised target for the borrowing for the period was Tk聽1,55,935 crore.
Bankers said that the government failed to borrow from the banking system as per its target due to a severe liquidity crisis in the banking system.
In the past financial year 2022-23, the government鈥檚 borrowing from the country鈥檚 banking sector amounted to Tk聽1.18 lakh crore.
Considering inflationary pressures in the country, the central bank stopped lending to the government by printing money, bankers said.
The government managed to repay the Bangladesh Bank a substantial amount of money in the period.
As the banking sector has been facing an acute liquidity shortage, it also failed to lend the government at the desired level.
The lending capacity of the country鈥檚 banks diminished due to high non-performing loans, deposit withdrawals and rising cash outside banks amid high inflation, bankers said.
Bangladesh Bureau of Statistics recorded headline inflation of 9.73 per cent in June.
Over the past three years, the BB sold from its foreign exchange reserves approximately $33.91 billion, including $12.8 billion in FY24, $13.5 billion in FY23 and $7.62 billion in FY22.
The extensive dollar sales have absorbed a significant amount of local currency from banks, worsening the liquidity condition in the banking sector, bankers said.
The government has set a net borrowing target of Tk聽1.37 lakh crore from the banking system for FY25.
The government鈥檚 outstanding borrowing from the banking sector has reached Tk 4.5 lakh crore due mainly to sluggish revenue collection.
Bankers said that the government relied on borrowing from the banking sector due to increased expenditures against poor revenue collection and a decline in foreign direct investments.
To finance significant budget deficits, the government has had to turn to domestic sources.
The government primarily relies on advances, overdrafts and the issuance of treasury bills and bonds from the banking system to manage its borrowing needs.
The government鈥檚 borrowing from non-banking domestic sources includes government T-bills and bonds owned by non-bank financial institutions, insurance firms and private investors, as well as savings vehicles developed by the Directorate of National Savings.