Short-term borrowing ramps up
Bangladesh Bank (BB) is set to hold a special auction of 91-day treasury bills worth Tk5,000 crore on 8 April, taking the total raised through such auctions this month to Tk10,000 crore.
A senior central bank official told the media on 5 April that the move is aimed at meeting the government’s growing financing requirements.
Bankers say the government is increasingly relying on the banking sector to manage revenue shortfalls and rising expenditure pressures.
At the same time, excess liquidity in the financial system has created room for such borrowing.
A senior official at a private sector bank noted that around Tk11,500 crore had been parked in the standing deposit facility (reverse repo) by the end of last month, reflecting surplus funds in the system available for market mobilisation.
Since the beginning of the fiscal year, BB has also been purchasing US dollars from commercial banks through auctions, further injecting liquidity into the banking system.
Another banker highlighted that the government had turned to off-calendar borrowing in the October-December quarter, raising roughly Tk10,000 crore to meet urgent funding needs.
Such off-calendar issuances typically reflect immediate financing requirements for programmes such as social safety nets.
For the April-June quarter, the government plans to borrow Tk1.10 lakh crore in short-term funds through treasury bills.
This includes Tk44,000 crore in 91-day bills, Tk36,000 crore in 182-day bills, and Tk30,000 crore in 364-day bills, to be auctioned across 12 weekly sessions.
In addition, the government aims to raise another Tk39,000 crore through treasury bonds of medium and long-term tenures.
Officials from the central bank’s Debt Management Department said the auction schedule is aligned with the government’s financing needs.
They emphasised that this borrowing does not constitute net new debt, as maturing bills and bonds are routinely rolled over through fresh issuances.
Private sector credit growth remains subdued at 6.03%, reflecting weak investment demand.
With limited lending opportunities, banks are increasingly investing in government securities, which are considered risk-free.
The central bank’s latest auction plan underlines the government’s reliance on short-term market borrowing to manage fiscal pressures.
Analysts say that while this approach provides immediate liquidity for public spending, prolonged dependence on treasury bill auctions could constrain credit flow to the private sector.
Bankers also cautioned that, given ongoing revenue shortfalls and global economic uncertainties, careful monitoring will be needed to maintain financial stability.
Treasury bill and bond auctions are likely to remain key instruments for managing liquidity over the coming months, particularly to support social programmes and infrastructure projects requiring substantial funding.
