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directly, Tk 71,575 crore from commercial banks, and Tk 9,564 crore from non-bank sources.

As per the FY26 budget, borrowing targets from non-banking systems and foreign sources were set at Tk 21,000 crore and Tk 96,000 crore respectively.

Analysts note that borrowing directly from the central bank carries particular inflation risks. However, a structural factor has enabled the current pace of commercial bank borrowing: anaemic private sector credit demand.

Private sector credit growth fell to a decade-low of 6.03 percent in January and remained unchanged in February, BB data show. With few private borrowers, commercial banks have been willing to lend to the government instead.

“The government generally borrows through special treasury bills when its demand for funds increases,” said Md Ezazul Islam, director general of the Bangladesh Institute of Bank Management. “Weak revenue collection could also be driving the special auction.”

The government finances budget deficits and public expenditure by issuing treasury bills – short-term instruments – and bonds for longer tenors. These are sold through the central bank to commercial banks, financial institutions, and individual investors, and are considered low-risk investments.

With banking system borrowing already at the annual ceiling and the fiscal year not yet done, economists warn the trajectory raises fresh concerns about inflation, crowding out private investment, and longer-term fiscal sustainability.