Higher sales of savings tools and slower ADP implementation help cut it

The government borrowing from the banking system turned negative in net terms during the just concluded fiscal year (FY17) as the repayments of loans were more than what it borrowed.

Higher sales of savings instruments and slow implementation of development projects had helped the government refrain from borrowing much from the banks, according to officials.

The government paid back Tk 180.29 billion to the banks in the FY 2016-17 as against its borrowing of Tk 48.07 billion in the FY 2015-16, according to provisional data of Bangladesh Bank obtained by the FE Tuesday.

The government's borrowing from the banking system stood at Tk 906.60 billion at the end of June 30 this year, declining from Tk 1,086.89 billion on the same day of the previous year, showing a negative balance in net terms.   

Initially, the government's bank borrowing target was set at Tk 389.38 billion for the FY 17, but was later revised down to Tk 239.03 billion.

The government's borrowing was, however, higher in the last month of FY 17 partly due to financing the budget deficit, a senior official familiar with the government debt-management told the FE Tuesday.

In June last, the government's net bank borrowing stood at around Tk 170 billion, he said.

Implementation of the development projects normally becomes faster during the last month of each fiscal year, he explained.

The government ministries and agencies spent Tk 1.06 trillion out of total Annual Development Programme (ADP) of Tk 1.19 trillion worth of outlay in the FY 17, according to the official figures.

On the other hand, net sales of national savings certificates jumped by more than 39 per cent to Tk 469.69 billion during the July-May period of the FY17 from Tk 336.89 billion in the same period of FY16.

A senior official of the BB said the government has already availed of ways and means advances (WMAs) partly to finance the budget deficit.

The government is now empowered to borrow up to Tk 40 billion from the central bank under the WMAs to meet its day-to-day expenditures without issuing any securities.

The Ministry of Finance had set a bank-borrowing target of Tk 282.03 billion for the FY18 to finance the budget deficit.  

Under the proposed arrangement, Tk 208.87 billion will be borrowed from the banking system by issuing long-term Bangladesh Government Treasury Bonds (BGTBs) while the remaining Tk 73.16 billion through auctions of short-term treasury bills (T-bills).

Currently, three treasury bills (T-bills) are being transacted through auctions to adjust the government borrowings from the banking system. The T-bills have 91-day, 182-day and 364-day maturity periods.

Furthermore, five government bonds with tenures of 02, 05, 10, 15 and 20 years are traded on the market.