In July and August of the fiscal year 2024-25, the Bangladeshi government borrowed Tk 289.52 billion from banks, primarily for deficit financing, but its net borrowing totaled Tk 107 billion after repayments. This borrowing partly addressed deficits from the previous government. The funds were mainly sourced from commercial banks via treasury bills and bonds, while Tk 182.49 billion was repaid to the central bank.
Officials highlight that borrowing from commercial banks, rather than printing money, helps control inflation. Additionally, the government utilized Tk 40 billion under the ways-and-means advances (WMAs) facility to finance day-to-day expenses, with a borrowing limit of Tk 120 billion.
While higher government borrowing may reduce the flow of credit to the private sector, banks prefer investing in government securities due to better returns and safety, especially given lower private sector credit demand. This trend could affect the GDP growth rate, although a reduction in government borrowing may occur if development projects slow down.
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