Government borrowing from the banking system has accelerated sharply in recent months, pushing total outstanding loans beyond the six lakh crore taka mark for the first time. Although the early months of the current fiscal year showed a relatively comfortable position, the situation changed markedly in November and December as financing pressures intensified. The latest figures indicate a significant shift in the government’s cash management and fiscal financing strategy.
During the first four months of the fiscal year, the government was a net payer to the banking system, repaying more than it borrowed. Net repayments during this period amounted to 5.03 billion taka. This trend, however, reversed decisively in the final two months of the calendar year. From the start of the fiscal year to 4 January, the government borrowed close to 600 billion taka from banks, taking total outstanding bank loans to 6.10 trillion taka.
Each year, the government sets borrowing targets from both the banking system and national savings instruments to bridge its budget deficit. For the current fiscal year, the target for bank borrowing has been fixed at 1.04 trillion taka, while borrowing from savings certificates has been capped at 125 billion taka. By comparison, the original budget for the previous fiscal year projected bank borrowing of 1.375 trillion taka, later revised down to 990 billion taka. Actual borrowing ultimately stood at 723.72 billion taka, well below the revised ceiling.
A similar divergence was evident in savings instruments. Although the target for savings certificate borrowing last fiscal year was 154 billion taka, net government borrowing from this source fell to just 60.63 billion taka. In the current fiscal year, however, reliance on savings instruments has begun to rise again. Between July and October, outstanding liabilities in this segment increased by 23.69 billion taka, lifting total savings-related government debt to 3.41 trillion taka.
According to data from Bangladesh Bank, outstanding government borrowing from the central bank reached 1.224 trillion taka as of 4 January, up from 984.24 billion taka at the end of June. This represents an increase of more than 240 billion taka in just six months. At the same time, borrowing from commercial banks climbed to 4.882 trillion taka, an increase of 357.51 billion taka over the same period.
The following table summarises the government’s bank borrowing position:
| Source of borrowing | End-June outstanding (billion taka) | Outstanding as of 4 January (billion taka) | Increase |
|---|---|---|---|
| Central bank | 984.24 | 1,224.29 | 240.06 |
| Commercial banks | 4,524.81 | 4,882.32 | 357.51 |
| Total | 5,509.05 | 6,106.61 | 597.56 |
An examination of monthly trends shows that government bank borrowing had fallen to 5.505 trillion taka by October. Within the next two months, it rose sharply, reaching 5.961 trillion taka by mid-December before climbing further to its current level.
Senior central bank officials attribute this surge to several factors. In early December, the government injected around 200 billion taka in capital into a newly consolidated Islamic bank formed through the merger of five institutions. At the same time, revenue collection has lagged behind expectations, while both operational and development expenditures have increased. These pressures have combined to heighten the government’s dependence on bank financing, raising fresh concerns about liquidity conditions and the broader impact on private sector credit.