Written by The Banking Post
Government borrowing from the banking system has dropped sharply in the opening weeks of the current fiscal year as sluggish development spending reduced the need for fresh funds.
Between July and August 18, the government borrowed Tk 4,703 crore from banks, down 77 percent from Tk 20,180 crore during the same period last year, according to Bangladesh Bank data.
Of the amount, Tk 6,495 crore was taken from the central bank through ways and means advances, while Tk 1,792 crore was repaid to scheduled banks. The national budget set a borrowing target of Tk 104,000 crore for FY2025-26.
Government borrowing from banks amounted to Tk 72,372 crore in FY2024-25, down from Tk 94,282 crore the previous year.
Analysts say weak implementation of the Annual Development Programme (ADP) is curbing the demand for funds. “Development project implementations are progressing very slowly, mainly because the interim government is being extremely cautious, thoroughly reviewing projects to assess their necessity and appropriate cost,” said M Masrur Reaz, chairman of the Policy Exchange of Bangladesh.
ADP spending plunged to a historic low last year, with only 68 percent of the revised Tk 2.26 trillion allocation executed—the weakest performance since FY1976-77. Ministries and divisions spent Tk 1,534.52 billion, leaving a large chunk unutilised.
The slowdown has extended into the new fiscal year. In July, ADP implementation fell to a seven-year low, with just Tk 1,644 crore disbursed—only 0.69 percent of the Tk 2.39 trillion allocation. Twelve ministries and divisions did not spend a single taka.
Meanwhile, the government borrowed Tk 7,179 crore from non-bank sources such as financial institutions, insurers and individual investors in the first seven weeks of FY2025-26. That pushed total domestic borrowing to Tk 11,882 crore, excluding net sales of national savings certificates.
The government typically raises funds through treasury bills and bonds to meet its budgetary needs.
