Government borrowing from banks has dropped sharply in the first weeks of the current fiscal year amid sluggish development spending and cautious project implementation.

Between July and August 18, the government borrowed Tk 47.03 billion from the banking system, a 77% decrease compared with Tk 201.80 billion in the same period last year, according to Bangladesh Bank data.

Of the total, Tk 64.95 billion was taken from the central bank through ways and means advances to cover short-term cash flow gaps, while Tk 17.92 billion was repaid to scheduled banks. The budget for the current fiscal year sets a borrowing target of Tk 1040 billion.

Economist M Masrur Reaz, chairman of the Policy Exchange of Bangladesh, said project implementation is moving slowly as the interim government carefully reviews costs and necessity. “The government is preoccupied with other issues and is not prioritising project implementation at the moment,” he said.

Development expenditure fell to 68% of the revised Annual Development Programme (ADP) in FY 2024-25 — the weakest performance since 1976-77. In July, ADP execution slipped to a seven-year low, with Tk 16.44 billion disbursed, just 0.69% of the year’s Tk 2.39 lakh crore allocation. Twelve ministries and divisions did not spend any funds.

While bank borrowing slowed, the government raised Tk 71.79 billion from non-bank sources, taking total domestic borrowing to Tk 118.82 billion by mid-August.