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Government borrowing from domestic sources has been rising since this fiscal year.

In the first seven months of the fiscal year, net government borrowing from domestic sources, including the banking system, stood at Tk 80,251 crore, up from Tk 35,306 crore a year earlier, central bank data showed.

Of the total domestic borrowing during the seven-month period, Tk 73,035 crore was borrowed from the banking system.

As per the fiscal 2025-26’s budget, targets for government borrowing from the banking system, non-banking system and foreign sources have been set at Tk 104,000 crore, Tk 21,000 crore and Tk 96,000 crore respectively.

The government’s demand for funds is increasing due to a revenue shortfall, said Mohammed Nurul Amin, a former chairman of the Association of Bankers, Bangladesh, a former for banks’ chief executives and managing directors.

At the same time, it needs money to meet day-to-day expenditures, while the expected funding from the International Monetary Fund has yet to arrive.

Apart from remittance inflows, there is little positive news on the external front, he said.

As a result, the government may need to borrow even more in the coming months.

If the US-Israel war on Iran does not end soon, financial strain could emerge by June.

Funds are also being required for measures such as agricultural loan waivers and the introduction of various cards, said Amin, also the former managing director of Meghna Bank.

On the other hand, with credit growth in the private sector remaining weak, banks are feeling comfortable lending to the government.

Private sector credit growth hit a decade-low of 6.03 percent in January, data showed.

“This is not a positive sign for the economy, as production is not expanding,” Amin added.