Govt paid off debt with fresh debt!

Farhad Chowdhury : In the first six months (July-December) of the current financial year, the government is taking regular loans from various internal sources. Especially the trend of borrowing from treasury bills and bonds has increased a lot. But the government is paying the loan from one sector to another sector. Due to this, the net debt of the government has not increased much in six months.
According to the data, the government has repaid its debt through Treasury Bills and Bonds, Over Draft (OD), Government Deposits, Government Landing Fund as well as Debt Fund and Savings Bonds in the first six months of FY 2023-24. In the first six months of the current financial year, the internal net debt of the government stood at only Tk 455 crore, which was Tk 37,419 crore in the same period of the previous year. This information is available from the analysis of internal debt report of Bangladesh Bank.
According to the report, in the first six months of the current financial year (July-December), the government has repaid the OD loan taken from Bangladesh Bank to the tune of Tk 5,710 crore. The government did not take OD loans during the same period last year. Didn’t pay again. On the other hand, in these six months, the government has paid Tk 2,953 crore of treasury bills taken from banks. At the same time, the domestic sector has taken a loan of Tk 6,054 crore. As a result, the net debt of treasury bills in these six months stood at Tk 3,101 crores, which was Tk9,248 crores in the same period last year.
Meanwhile, in the first six months of the current financial year, the government has not paid any loan taken through bonds. On the contrary, in six months, through bonds, Tk3,588 crores were taken from the bank sector and Tk7,098 crores from the non-banking sector. As a result, the net debt from this sector stood at Tk10,687 crores in six months, which was Tk16,197 crores in the same period last year.
Analysis of the report also shows that during July-December of the financial year 2023-24, Tk 2,974 crore have been paid to the government deposit account. Government deposits are savings in accounts held by the government with commercial and semi-government institutions outside Bangladesh Bank. In the same period last year, it took a loan of Tk 4,803 crore from government deposits. Again, Tk 3,211 crores of government loan fund has been paid in these six months. However, during the same period last year, the sector took a net of Tk 747 crore.
In addition, the government has paid a net amount of Tk 6,630 million in the first six months of the current financial year. In the same period last year, its amount was Tk 3,106 crores. Apart from this, the government has taken a loan of Tk 4,626 crore from other sectors in six months.
At the end of last December, the debt status of the government from internal sources stood at Tk 8 lakh eight thousand 78 crores. A year ago i.e. in December 2022, it was Tk 717,719 crores. In one year, the debt from the domestic sector increased by Tk 90,359 crores. At the end of December 2023, the debt status of the government taken from banks stood at Tk 379,679 crores. And the status of loans taken from the non-bank sector stands at Tk 428,399 crores.
However, in the first six months of the current financial year, the debt has not increased much compared to the same period last year. In the first six months of the fiscal year 2023-24, the government’s net borrowing from domestic sources was only Tk 455 crore, which is Tk 36 thousand crore less than the same period of the previous fiscal year. In the first six months of the last financial year, the loan received was Tk 37,419 crores.
To meet the budget deficit in the financial year 2023-24, the government has set a target of taking a loan of Tk 155,395 crore from internal sources. Out of this, Tk 132,395 crores from the banking sector. Tk 23 thousand crores from other sources including savings certificates.
It is known that inflation has been on an upward trend since the beginning of the outgoing year. So, the economists were advising the government to stop borrowing from Bangladesh Bank. Because if the government borrowing from Bangladesh Bank increases during high inflation, it indirectly increases inflation. Because of this, Bangladesh Bank stopped lending to the government as an initiative to control inflation. However, this time the government increased borrowing from commercial banks. Taking loans from commercial banks and repaying them to the central bank. Therefore, the net debt of the government from the banking sector in the current financial year is much less than before.
According to the report of Bangladesh Bank, at the end of February 15, the total balance of the government’s bank debt stood at Tk 102,360 crore, which was Tk 393,778 crore at the end of June 30. According to this, in the first seven months and 15 days of the fiscal year, the amount of net bank debt of the government stood at Tk 8581 crores. However, from last July 1 to December 30, the government’s loan status from the banking system was in the negative trend of aboutTk6634 crores.
According to the report, the status of loans taken from commercial banks at this time stood at Tk 280,231 crores, which was Tk 236,138 crores at the end of last June 30. As a result, government debt from commercial banks has increased by Tk 44,093 crores. On the other hand, the bank loan taken from Bangladesh Bank at this time stands at Tk1 lakh 22 thousand 128 crores, which was Tk1 lakh 57 thousand 640 crores on June 30. As a result, the government’s debt from Bangladesh Bank has decreased by Tk 35,511 crores. And the whole of this loan has been paid with a loan from a commercial bank.