The government has targeted higher borrowing from the country's banking system to partly finance the budget deficit for the fiscal year, 2019-2020.
The borrowing is set to jump by more than 53 per cent to Tk 473.64 billion for the FY' 20 from Tk 308.95 billion in FY'19, according to the budget document.
Under the arrangement, the government will borrow Tk 280.94 billion issuing long-term bonds while the remaining Tk 192.70 billion through treasury bills (T-bills).
The government has already slashed its bank borrowing target to Tk 308.95 billion for the FY'19 from the original target of Tk 420.29 billion, the document showed.
Senior bankers, however, expressed concern over such higher bank borrowing of the government, saying that it might adversely affect the money market if the entire amount is borrowed from banks.
"Definitely, we will urge the central bank to devolve the major portion of borrowing amount on its own accounts, which would help boost money supply in the market," Syed Mahbubur Rahman, chairman of the Association of Bankers, Bangladesh (ABB), told the FE.
Currently, four T-bills are being transacted through auctions to adjust the government's borrowings from the banking system. The T-bills have 14-day, 91-day, 182-day and 364-day maturity periods.
Furthermore, five government bonds with tenures of two, five, 10, 15 and 20 years respectively are traded in the market.
The government projected lower target of borrowing from non-banking sources, particularly national savings schemes, to meet its budget deficit, in part.
By selling savings instruments, the government is set to borrow Tk 270 billion in the FY'20 from Tk 450 billion in the revised budget of FY'19, according to the proposed budget.
The original target of such borrowing was Tk 261.97 billion for the FY'19.
© 2024 - All Rights with The Financial Express
