MD MEHEDI HASAN

The government is planning to borrow an extra Tk 5,000 crore on top of its regular borrowing from the financial sector this month as the ruling BNP goes about implementing its election pledges amid low revenue mobilisation.

In the first eight months of the fiscal year, the National Board of Revenue fell short of its collection target by 28 percent, leaving a gap of Tk 71,472 crore, shows provisional data.

Generally, the government borrows funds to finance budget deficits and public expenses by issuing treasury bills (short-term) and bonds (long-term). These debt instruments are sold through the central bank to commercial banks, financial institutions and individual investors, acting as a low-risk investment tool.

As part of its election pledge, the new BNP-led government has introduced several cards and waived off farm loans, which are generating additional demand for funds, said Bangladesh Bank (BB) officials involved with the proceedings. They spoke on the condition of anonymity to speak candidly on the issue.

Subsequently, the BB will hold a special auction of Tk 5,000 crore worth of 91-day treasury bills on April 1.

In the latest auctions, the government borrowed Tk 3,417 crore through 91-day treasury bills, Tk 2,382 crore through 182-day bills and Tk 2,046 crore through 364-day bills, BB data showed.

The rate stood at 9.78 percent for 91-day treasury bills, 9.97 percent for 182-day bills and 10 percent for 364-day bills.

The government generally borrows through special treasury bills when its demand for fund increases, said Md. Ezazul Islam, director general of the Bangladesh Institute of Bank Management.

Another reason for the special auction could be the underwhelming revenue collection, he said.

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