The government did not borrow from the banking system last fiscal year; rather it repaid a big portion of debts.

This was due to a rise in sales of savings instruments and slow implementation of development projects.

The government paid back Tk 6,869 crore to banks in fiscal 2014-15, according to provisional data from the central bank, in contrast to Tk 6,428 crore it borrowed in the previous year.

Initially the bank-borrowing target was set at Tk 31,221 crore, but the amount was later revised up to Tk 31,714 crore.

The government has two domestic sources to borrow -- from banks and through savings instruments.

Sales of savings instruments have been on the rise as they offer higher interest than banks do.

Though interest rates on savings instruments were lowered by around 2 percentage points last month, the rates are still above 11 percent for some savings tools, while the average interest on bank deposits was 7.04 percent in April.

The deposit interest rate was 8.61 percent in July 2013 and 7.79 percent in June last year -- the decline is blamed on huge excess liquidity in the banking system amid sluggish investment in the country.

As a result, the government's borrowing through savings instruments rose every month last fiscal year and stood at Tk 26,562 crore in the first eleven months, though the initial target was Tk 9,056 crore and the revised target Tk 21,000 crore.

A finance ministry official said the cuts in interest rates of the savings tools could not contain sales of such instruments.

The earnings of the National Board of Revenue were higher than the revised collection target, which the official said is another reason why the government did not borrow from banks.

Historically, the government can never spend the entire amount allocated to its annual development programme, he said.

The revised ADP last fiscal year was worth Tk 75,000 crore, but the spend would finally be around Tk 65,000 crore, the official said.

Fiscal 2009-10 was another year when the government did not borrow from the banking system.