Dhaka: The government is poised to borrow an additional Tk 5,000 crore through another special auction this month, raising the total borrowing via special auctions in April to Tk 10,000 crore. Bangladesh Bank has announced plans to conduct a special auction for 91-day Treasury bills on April 8, in response to the government’s increased funding requirements.
According to United News of Bangladesh, a senior official from Bangladesh Bank confirmed the necessity of this move due to a surge in the government’s demand for funds, driven by a shortfall in revenue collection compared to targets. The official highlighted that bank borrowing has become the primary means for financing various social safety net programs and development projects, including the “Family Card” initiative.
Central bank officials indicate that the timing of the borrowing is favorable, as the banking sector currently holds excess liquidity, with banks parking approximately Tk 11,500 crore through the Standing Deposit Facility. The banking system has also experienced an influx of Taka due to Bangladesh Bank’s consistent purchase of Dollars from commercial banks since the year’s start.
With regular Treasury bill auctions typically scheduled every Sunday, the decision to hold special auctions signifies an urgent need for liquidity in the national exchequer. Bangladesh Bank’s projections for the April-June quarter reveal plans to raise Tk 1.10 lakh crore through short-term Treasury bills, including Tk 44,000 crore via 91-day bills, Tk 36,000 crore via 182-day bills, and Tk 30,000 crore via 364-day bills. The government also aims to collect Tk 39,000 crore through medium- and long-term Treasury bonds.
Officials from the Debt Management Department have clarified that not all of this borrowing will be net, as a portion will be allocated to repay or renew maturing bills and bonds. Market insiders note that with private sector credit growth declining to 6.03 percent, banks are increasingly viewing government securities as a secure investment for their idle cash.