The government is set to slash its bank borrowing target by more than 18 per cent for the ongoing fiscal year (FY), 2015-16, mainly due to lower implementation of the Annual Development Programme (ADP).
The Ministry of Finance (MoF) has already downsized the government's bank borrowing target to Tk 315 billion from the original Tk 385.23 billion, according to a confidential projection.
The projection was recently placed at a fiscal coordination council meeting at Bangladesh Secretariat with Finance Minister A M A Muhith in the chair, a senior government official told the FE.
"The issue may be discussed at the cash and debt management committee's next meeting, scheduled to be held on April 26," the official hinted on Thursday.
He also said the government is revising the bank borrowing target for this fiscal because of lower implementation of ADP and higher sale of its savings instruments in the recent months.
The ADP implementation rate came down to 41 per cent in the July-March period of FY 16 from 43 per cent in the same period of the previous fiscal.
The government has already slashed ADP allocation by 6.18 per cent to Tk 910 billion from the original Tk 970-billion outlay amid slower pace in project implementation.
Higher net sale of national savings directorate (NSD) certificates has also contributed to slashing the government's original bank borrowing target for this fiscal, according to the official.
On the other hand, the government's net borrowing through NSD certificates rose by 8.79 per cent to Tk 198.90 billion during the July-February period of FY 16.
The figure was Tk 182.83 billion in the same period of FY 15, official figure showed.
The government had set a net borrowing target of Tk 150 billion issuing NSD certificates to partly fund the budget deficit for the current fiscal, according to the budget documents.
Talking to the FE, another official said better yield on the savings instruments than bank deposits is encouraging the small savers to invest more in the risk-free instruments.
Currently, the average interest rate on deposit, offered by the commercial banks, is around 6.0 per cent, while the rate for the savings instruments is on an average 11 per cent.
The official also said declining trend in the prices of commodities, including petroleum products, in the global market has also contributed to lower bank borrowing by the government.
Meanwhile, the government paid Tk 53.44 billion more than that of fresh borrowing from the banking system until April 11 in FY 16, according to the Bangladesh Bank's (BB) latest confidential report.
The payment was Tk 102.96 billion in the same period of the previous fiscal, the BB data showed.
The government's borrowing from the banking system will increase in the next two months of this fiscal to meet its higher development expenditure, the official added.
He also said the implementation of development projects normally boosts up during the May-June period of every fiscal.
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 two, five, 10, 15 and 20 years are traded in the money market.
© 2024 - All Rights with The Financial Express
