Govt borrowing from banks up by 12-time

Zarif Mahmud: The government is borrowing heavily from the commercial banks of the country. In the first 9 months and 22 days of the current financial year, the amount of loans from these banks is about Tk 65,432 crores, which is 12 times more than the same period of the last financial year. The banking sector is suffering from liquidity crisis due to borrowing from commercial banks. Most of the banks are borrowing regularly. The latest report of the regulatory body Bangladesh Bank has revealed such a picture of the government’s bank debt.
According to the report of the central bank, at the end of April 22, the government’s total bank debt stood at Tk 4 lakh 39 thousand 335 crore, which was Tk 3 lakh 93 thousand 778 crore at the end of June 30. According to this, in the first 9 months and 22 days of the fiscal year, the amount of net

bank debt of the government stood at Tk 45,557 crores. However, from last July 1 to December 30, the government’s loan status from the banking system was in the negative trend of about Tk 6,634 crores.
According to the report, the loan status taken from commercial banks at this time stood at Tk 3 lakh 1 thousand 570 crores, which was Tk 2 lakh 36 thousand 138 crores at the end of last June 30. As a result, the government’s debt from commercial banks has increased by Tk 65,432 crores. In the same period of the last financial year, the amount of this loan was only Tk 5,333 crores. That is, in the first 9 months and 22 days of the current financial year, the debt has increased by 12.26 times compared to the same period of the last financial year.
On the other hand, the bank loan taken from Bangladesh Bank at this time stands at Tk 1 lakh 37 thousand 765 crores, which was Tk 1 lakh 57 thousand 640 crores at the end of June 30. As a result, the government’s debt from Bangladesh Bank has decreased by Tk 19,875 crore. And the whole of this loan has been paid with a loan from a commercial bank.
Those concerned said that Bangladesh Bank has completely stopped giving loans to the government by overprinting money since August last year to control inflation. Besides, the government is not getting any loan from the savings bank. In such a situation, the government’s bank loan has now become dependent on commercial banks. But most of the banks are in liquidity crunch and the government is not showing much interest in giving long term loans. They are demanding more interest even if they give it again. As a result, Bangladesh Bank is forced to auction short-term treasury bills beyond the schedule to meet daily expenses including implementation of development projects. It also increases the interest rate of short-term treasury bills.
Every year, the government presents the budget with a large deficit. This deficit is met from two sources-domestic and foreign sector. If the necessary financial support is not available from the foreign sector, the government has to rely more on internal sources. Internal sources include banking systems and savings bonds. In the current financial year, the target of borrowing from the banking system has been fixed at Tk 1 lakh 32 thousand 395 crores. Of this, long-term loans will be taken to the tune of Tk 86,580 crores. Short term loan will be taken Tk 45,815 crores. The schedule calendar for taking these loans has been fixed at the beginning of the financial year.
The report also shows that this time only Tk 36,299 crores of loans taken from commercial banks have been taken against treasury bills. The government has been able to take this loan for a minimum period of 14 days to a maximum of 364 days. The rest of the loans are against long-term bonds.
An official of Bangladesh Bank said that the central bank is on a contractionary policy to control the flow of money in the market to control inflation. Again, due to the sale of dollars, money is coming out of the market. There is also a strain on cash in the banking sector. In such a reality, commercial banks are not showing much interest in giving long-term loans to the government. Due to this, short-term treasury bills are being auctioned and loans are being given to the government.
According to the report of the Central Bank, last Thursday 33 banks and financial institutions took Tk 12,652 crore liquidity facility from Bangladesh Bank. The previous day it was about Tk 20,657 crores. Last financial year also, the government took a record loan of Tk 122,980 crore from the banking system. Of this, the central bank directly provided Tk 97,684 crore, which was printed in new rupees. And the rest was taken from commercial banks.
Meanwhile, this time the target of taking loan from savings card is only Tk 18 thousand crores. According to the information of the Directorate of National Savings Papers, the government did not receive any loan from the sale of savings bonds in the first six months of the current financial year (July-February). On the contrary, during this period, the net sales amount was negative Tk 8,892 crores. In other words, more than Tk 8,892 crore have been redeemed in these six months.