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Today: Jun 14, 2024

Bank borrowing, on schedule, pays back the BB.

1 min read

Key points:

  • The government continues to borrow from scheduled banks and repay the central bank, leading to a liquidity crisis and impacting private sector credit growth.
  • The government borrowed Tk 27,952 crore from scheduled banks in the July to December 27 period of FY24, and repaid Tk 35,798 crore of loans taken from the central bank.

The government’s borrowing from scheduled banks is negatively affecting private sector credit growth, leading to a decline in this indicator.

The revenue deficit of the government has increased, leading to borrowing from banks to meet the budget deficit.

The tightening of monetary policy by the central bank has resulted in a liquidity crisis in the banking sector.

The central bank’s challenge is to curb high inflation while ensuring liquidity in the economy.

The government borrowing target from the banking system for FY24 is Tk 1,32,000 crore to cover the budget deficit.

The private sector’s growth is already slow, and the government should consider this while borrowing from banks.