Bangladesh’s government borrowing surged to Tk 595.16 billion in the first four months of the current fiscal year, largely to cover debt repayments to the central bank, according to a report by Bangladesh Bank.

Of this amount, Tk 391.07 billion was allocated to repay central bank debts, leaving net borrowing at Tk 204.09 billion during July-October. In contrast, last year’s net bank borrowing was a deficit of Tk 31.82 billion for the same period.

Officials attribute this borrowing spike to declining revenue collection, exacerbated by economic uncertainty and recent severe floods affecting parts of the country. Revenue mobilization by the National Board of Revenue (NBR) fell by 6.07 percent year-on-year, with Tk 709.02 billion collected in the first quarter, missing the target of Tk 964.99 billion. Despite the decline, officials remain hopeful for a rebound in the second quarter.

To manage inflation, the government primarily borrowed from commercial banks rather than requesting fresh funds from the central bank. The government’s borrowing facilities from Bangladesh Bank include Tk 120 billion via ways-and-means advances (WMAs) and up to Tk 120 billion through an overdraft facility, used for day-to-day spending.

In light of the reduced implementation of the Annual Development Programme (ADP) and restrained spending due to political unrest, officials anticipate revising the bank-borrowing target in the coming months. ADP spending hit a 15-year low in the first quarter, with Tk 132.15 billion (4.75 percent of the total ADP) spent.

For fiscal year 2024-25, the government aims to borrow Tk 1.37 trillion, an increase from the previous year’s Tk 1.32 trillion target, according to budget documents.

To meet this, Tk 726.82 billion will be raised through long-term bonds, and Tk 648.18 billion through treasury bills with maturities ranging from 14 to 364 days. The bonds, with tenures of 2, 5, 10, 15, and 20 years, have attracted investment from commercial banks due to their safety and relatively favorable returns.