The government has significantly raised its net bank borrowing target to help partly finance the budget deficit for the next fiscal year (FY) 2015-16.
The bank borrowing target rose by more than 23 per cent to Tk 385.23 billion for the FY 16 compared to the original target Tk 312.21 billion for the outgoing fiscal, according to the proposed budget document.
Besides, the government revised its bank borrowing target to Tk 317.14 billion from the original target Tk 312.21 billion to meet the growing demand for the government expenditures of the outgoing fiscal year ending June 30.
"If we can increase disbursement from the huge pipeline of foreign assistance, we will be able to reduce our dependence on domestic borrowing," Finance Minister Abul Maal Abdul Muhith said in his budget speech Thursday.
"We'll continue our efforts to this end so that foreign aid utilisation rate increases in the next year," the finance minister noted.
Under the proposed arrangement, Tk 241.82 billion will be borrowed from the country's banking system by issuing long-term Bangladesh Government Treasury Bonds (BGTBs) while the remaining Tk 143.41 billion through auction of short-term treasury bills (T-bills).
However, the government's net bank borrowing is still at the negative level worth Tk 4.24 billion as on May 19 due mainly to abnormal growth of the savings certificate sales.
The government repaid Tk 4.24 billion more than fresh borrowing from the banking system during the same period. The payment amount was Tk 518.50 million in the same period of the previous fiscal, according to the latest statistics of the Bangladesh Bank (BB).
Currently, three T-bills are being transacted through auctions to adjust the government's borrowing from the banking system. The T-bills have 91-day, 182-day and 364-day maturity periods.
Furthermore, five government bonds with duration of two, five, 10, 15 and 20 years respectively are being traded in the market.
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