Bank debt target likely at Tk 880b

The government is likely to set its bank borrowing target at Tk 880 billion to partly finance the budget deficit for fiscal year 2020-21.
A senior official familiar with the public-debt management said on Wednesday the government will borrow the money from all banks by issuing Treasury Bills and Bangladesh Government Treasury Bonds to close budget gap, defined as the difference between overall expenditure and revenue and other receipts.
The government's budgetary expenditure may rise as the implementation of different development projects, particularly in the infrastructure sector, along with increasing allocations for the health sector to prevent the spread of Covid-19 for the FY '21, the official explained.
"Falling trend in sales of national savings certificates and lower revenue collection have already pushed up the government borrowing from the country's banking system," the official said.
Talking to the FE, a senior official of the Bangladesh Bank (BB) said the government borrowed nearly Tk 750 billion from the banks by issuing T-bills and bonds until June 08 to plug budget imbalance.
The government has already exceeded its revised bank borrowing target fixed at Tk 729.51 billion.
Earlier, the government had lifted its bank borrowing target by more than 54 per cent from the original goal of Tk 473.64 billion for the outgoing fiscal year.
"Expenditure, particularly in the health sector, has increased significantly to curb the spread of deadly coronavirus across the country," the central banker said while explaining higher bank borrowing of the government.
The government is set to make a net borrowing of nearly Tk 142 billion from the country's banking system in June, the last month of the FY '20.
The government may take up to Tk 260 billion as gross borrowing from the banking system in June 2020 by issuing T-bills and bonds, according to the auction calendar, issued by the central bank recently.
The government's net bank borrowing may reach Tk 141.80 billion in a single month (June), after deducting Tk 118.20 billion against the government securities that would be mature in the month.
Such a calendar includes the schedule and amount of T-bills and bonds to be issued through the auction for raising funds from the market.
Currently, three T-bills are being transacted through auctions to adjust government borrowings from the banking system. The T-bills have 91-day, 182-day and 364-day maturity periods.
Five government bonds with tenures of 02, 05, 10, 15 and 20 years respectively are traded on the money market.
Besides, the government is eligible for borrowing Tk 120 billion through using the ways and means advances (WMAs) along with the overdraft (OD) drawing facilities from the central bank on the same ground.
Under the existing rules, the government is empowered to borrow a maximum of Tk 60 billion from the central bank's WMA facility without issuing any securities.
After availing the WMAs facility, the government may use OD drawing facility from the central bank as well in case its negative account balance crosses Tk 60 billion.

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