Govt takes up long-term borrowing strategy
Thursday, 8 July 2010
Siddique Islam
The government has changed its debt management strategy, focusing more on long-term borrowing to facilitate development activities, officials said.
Under the strategy, the government will increase borrowing for longer tenure by issuing different bonds instead of short-term borrowing through treasury bills (T-bills).
"The government is now maintaining such a strategy that might help it pursue development programmes and bring dynamism in the country's bond market," a senior government official, who is familiar with the government borrowing strategy, told the FE Tuesday.
The central bank has issued a circular, effective from Sunday last, asking all commercial banks and non-banking financial institutions (NBFIs) to follow the new calendar of T-bills auctions from July 2010 and bond auctions for the first six months of fiscal 2010-2011 (FY11).
"We've issued the new auction calendar in line with the cash and debt management committee's advice to the commercial banks and NBFIs with indicative figures of the government borrowing during the period," a senior official of the Bangladesh Bank (BB) said.
He also said the monthly auction calendar of T-bills has been introduced for the first time aiming to manage the government bank borrowing effectively.
A high powered committee on cash and debt management, headed by the finance secretary, is now working on separation of cash management from that of the public debt management.
During FY11, the government will borrow a total of Tk 156.80 billion from the commercial banks and financial institutions through issuing T-bills and bonds.
As part of the strategy, the government has decided to borrow Tk 125.70 billion from the banking system by issuing bonds, while Tk 31.10 billion will be borrowed through auction of three categories of T-bills.
The government has changed its debt management strategy, focusing more on long-term borrowing to facilitate development activities, officials said.
Under the strategy, the government will increase borrowing for longer tenure by issuing different bonds instead of short-term borrowing through treasury bills (T-bills).
"The government is now maintaining such a strategy that might help it pursue development programmes and bring dynamism in the country's bond market," a senior government official, who is familiar with the government borrowing strategy, told the FE Tuesday.
The central bank has issued a circular, effective from Sunday last, asking all commercial banks and non-banking financial institutions (NBFIs) to follow the new calendar of T-bills auctions from July 2010 and bond auctions for the first six months of fiscal 2010-2011 (FY11).
"We've issued the new auction calendar in line with the cash and debt management committee's advice to the commercial banks and NBFIs with indicative figures of the government borrowing during the period," a senior official of the Bangladesh Bank (BB) said.
He also said the monthly auction calendar of T-bills has been introduced for the first time aiming to manage the government bank borrowing effectively.
A high powered committee on cash and debt management, headed by the finance secretary, is now working on separation of cash management from that of the public debt management.
During FY11, the government will borrow a total of Tk 156.80 billion from the commercial banks and financial institutions through issuing T-bills and bonds.
As part of the strategy, the government has decided to borrow Tk 125.70 billion from the banking system by issuing bonds, while Tk 31.10 billion will be borrowed through auction of three categories of T-bills.