The government borrowed Tk 289.52 billion from banks during the first two months of the fiscal year 2024-25 to finance the budget deficit. After repaying Tk 182.49 billion to the central bank, the net borrowing for July-August stood at Tk 107 billion.

Officials attribute part of the borrowing to budget deficits from the previous regime. The Ministry of Finance issued treasury bills and bonds to commercial banks, avoiding money printing by the central bank—a strategy to reduce inflationary pressure.

Additionally, the government borrowed Tk 40 billion through the ways-and-means advances (WMAs) facility, which allows borrowing up to Tk 120 billion from the central bank without issuing securities. An overdraft facility of the same amount is also available for day-to-day expenditures.

The government’s bank-borrowing target for FY 2024-25 is set at Tk 1375 billion, with plans to raise Tk 726.82 billion through long-term bonds and Tk 648.18 billion via treasury bills. However, higher government borrowing from commercial banks may reduce private sector credit availability, potentially impacting economic growth.

By the end of FY 2023-24, net bank borrowing reached Tk 942.82 billion, lower than that year’s revised target of Tk 1559.35 billion.