Central bank suspends buying back govt securities
FE Report | Monday, 9 June 2008
The Bangladesh Bank (BB) has temporarily suspended buying back the government securities following rise in current expenditures before closing of the current fiscal.
"We have suspended the buying back of government securities due to non availability of surplus funds," a BB senior official told the FE Sunday.
He also said the central bank had accepted offers for the government approved securities from the commercial banks and non-banking financial institutions (NBFIs) until such time when there was a surplus in the balance of the government account.
"The government has already borrowed Tk 5.0 billion from the central bank to meet its expenditures," the official said, adding that the central bank has meantime informed the commercial banks of the decision not to accept any more offers.
On May 7 last, the central bank started buying back government securities aiming to inject fresh funds into the money market as a special arrangement to keep the inter-bank money market stable.
The BB accepted offers of the government approved securities worth Tk 25.06 billion from banks and NBFIs since May 7 last, officials said.
Treasury officials of the commercial banks, however, expected that the flow of fresh liquidity would increase in the banking system by the end of this month.
"We are hopeful about increase of fresh funds in the inter-bank call money market that would also help to temporarily ease the pressures on the market," a senior treasury official of a private commercial bank told the FE.
The call rate is hovering between 8.0 per cent and 20 per cent in recent days.
He also said that his bank also sought funds from the central bank through selling of the government securities but the BB informed that they have stopped buying back for the time being due to shortage of fund.
Meanwhile, the increase in overall expenditure during the first nine months of the fiscal 2007-08 reflects both higher current and annual development progaramme (ADP) expenditures, rising by 57 per cent and 33.3 per cent respectively over the same period of the previous fiscal, according to Bangladesh Bank Quarterly for January-March 2008.
"We have suspended the buying back of government securities due to non availability of surplus funds," a BB senior official told the FE Sunday.
He also said the central bank had accepted offers for the government approved securities from the commercial banks and non-banking financial institutions (NBFIs) until such time when there was a surplus in the balance of the government account.
"The government has already borrowed Tk 5.0 billion from the central bank to meet its expenditures," the official said, adding that the central bank has meantime informed the commercial banks of the decision not to accept any more offers.
On May 7 last, the central bank started buying back government securities aiming to inject fresh funds into the money market as a special arrangement to keep the inter-bank money market stable.
The BB accepted offers of the government approved securities worth Tk 25.06 billion from banks and NBFIs since May 7 last, officials said.
Treasury officials of the commercial banks, however, expected that the flow of fresh liquidity would increase in the banking system by the end of this month.
"We are hopeful about increase of fresh funds in the inter-bank call money market that would also help to temporarily ease the pressures on the market," a senior treasury official of a private commercial bank told the FE.
The call rate is hovering between 8.0 per cent and 20 per cent in recent days.
He also said that his bank also sought funds from the central bank through selling of the government securities but the BB informed that they have stopped buying back for the time being due to shortage of fund.
Meanwhile, the increase in overall expenditure during the first nine months of the fiscal 2007-08 reflects both higher current and annual development progaramme (ADP) expenditures, rising by 57 per cent and 33.3 per cent respectively over the same period of the previous fiscal, according to Bangladesh Bank Quarterly for January-March 2008.