Written by The Banking Post
The government mobilised Tk 50 billion in a single day through a special treasury bill auction, underscoring its increasing dependence on bank borrowing to finance the budget deficit.
The auction, held on Wednesday, saw yields edge up to 9.88 per cent from 9.78 per cent earlier, reflecting tighter liquidity conditions and heightened demand for funds.
“The yield on the T-bills increased due to the special auction,” said a treasury official, adding that borrowing from the banking system is likely to rise further in the final quarter of FY2025–26.
Officials attributed the move partly to mounting fiscal pressures driven by global uncertainties, particularly ongoing tensions in the Middle East that are pushing up government expenditure.
Another official involved in debt management said the government opted for the additional borrowing to meet immediate financing needs at relatively lower cost, noting that T-bill yields still remain below the central bank’s policy (repo) rate of 10 per cent.
Bangladesh relies on treasury bills as a key instrument for short-term borrowing, with maturities ranging from 14 days to one year. These are complemented by longer-term government bonds with tenures of up to 20 years.
Market participants say the latest move signals a likely uptick in government borrowing from banks in the coming months, as fiscal pressures persist.
