In recent months, government borrowing from the banking system has accelerated significantly, pushing total outstanding loans beyond six lakh crore taka for the first time. While the early months of the current fiscal year reflected a relatively stable position, November and December saw a sharp rise in borrowing pressures. According to the latest data from Bangladesh Bank, this surge indicates a notable 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 banks, repaying more than it borrowed. Net repayments in this period amounted to 5.03 billion taka. However, this trend reversed in the last two months of the calendar year. From the beginning of the fiscal year to 4 January, the government borrowed approximately 60,000 crore taka from banks, bringing total bank debt to 6.10 lakh crore taka.
Each fiscal year, the government sets borrowing targets from both banks and national savings instruments to bridge the budget deficit. In the current fiscal year, the borrowing target from banks is 1.04 lakh crore taka, while borrowing from savings certificates is capped at 12,500 crore taka. By comparison, the previous fiscal year’s original budget set a bank borrowing target of 1.375 lakh crore taka, later revised down to 99,000 crore taka, with actual borrowing ultimately amounting to 72,372 crore taka.
A similar gap existed in the savings instrument sector. Last year, the target was 15,400 crore taka, but actual borrowing fell to just 6,063 crore taka. In the current fiscal year, reliance on savings instruments has increased again. Between July and October, borrowing from this sector rose by 2,369 crore taka, lifting total debt from savings certificates to 3.41 lakh crore taka.
Data from Bangladesh Bank shows that as of 4 January, government borrowing from the central bank reached 1,22,429 crore taka, up from 98,424 crore taka at the end of June, an increase of 24,006 crore taka over six months. Borrowing from commercial banks also increased to 4,88,232 crore taka, a rise of 35,751 crore taka over the same period.
The table below summarises the government’s bank borrowing position:
| Source of Borrowing | End-June Outstanding (crore taka) | Outstanding as of 4 Jan (crore taka) | Increase (crore taka) |
|---|---|---|---|
| Central Bank | 98,424 | 1,22,429 | 24,006 |
| Commercial Banks | 4,52,481 | 4,88,232 | 35,751 |
| Total | 5,50,905 | 6,10,661 | 59,756 |
Monthly trends indicate that government bank debt had declined to 5,50,502 crore taka by October. Within the next two months, it rose sharply, reaching 5,96,144 crore taka by mid-December, and has since increased further to the current level.
Senior officials at Bangladesh Bank attribute the surge to multiple factors. In early December, the government injected around 20,000 crore taka in capital into a newly consolidated Islamic bank formed through the merger of five institutions. At the same time, revenue collection has fallen short of expectations, while operational and development expenditures have increased. These factors combined have heightened the government’s dependence on bank financing, raising concerns over liquidity conditions and the impact on private sector credit.