Government Borrowing Outside Scheduled Calendar
The government of Bangladesh has borrowed a total of Tk10,000 crore outside the scheduled October-December 2025 treasury bill and bond calendar, according to officials from Bangladesh Bank. This off-calendar borrowing is likely due to the recent Tk20,000 crore capital injection into Sammilito Islami Bank, which created a short-term liquidity need.
Reasons Behind Off-Calendar Borrowing
A senior Bangladesh Bank official stated that the government has borrowed off-calendar to manage the funds from the capital injection. "Treasury bills and bonds are being used to manage these funds," he added. Supporting this view, a treasury head at a private bank noted that with most government projects currently on hold, the move was primarily a fund-management measure.
Impact on the Economy
Another central bank official mentioned that Bangladesh Bank is closely monitoring the situation to ensure it does not trigger inflation. Professor Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD), said it is normal for the government to supply funds in one area while borrowing in another. However, he cautioned that the scale of borrowing from the banking sector should not create distortions that could disadvantage private borrowers.
Ensuring Fair Access to Loans
Professor Rahman emphasized the importance of ensuring fair access to loans for private borrowers. "As demand for private-sector loans rises, care must be taken to ensure fair access," he noted. This is crucial to prevent any potential negative impacts on the economy and to ensure that the borrowing does not hinder the growth of private businesses.
Recent Borrowing Activities
On December 10, the government raised Tk5,000 crore through a 91-day treasury bill auction conducted outside the calendar. Additionally, at the end of November, another Tk5,000 crore was raised through a five-year treasury bond auction with an interest rate of 10.55%. This brings the total off-calendar borrowing for the October-December quarter to Tk10,000 crore.
Conclusion
In conclusion, the government’s off-calendar borrowing is a measure to manage the short-term liquidity need created by the capital injection into Sammilito Islami Bank. While this move is intended to manage funds, it is essential to ensure that it does not trigger inflation or create distortions in the banking sector. By closely monitoring the situation and ensuring fair access to loans, the government can minimize the potential risks and maintain a stable economy.
