Dhaka, Nov 11 (V7N) — The government’s borrowing from the banking system has declined by Tk 503 crore during the first four months of the current fiscal year, as loan repayments outpaced fresh borrowing. The decrease reflects lower domestic borrowing needs amid strong revenue growth, increased foreign loan inflows, and reduced development spending.

According to Bangladesh Bank data, the government’s total outstanding bank loans stood at Tk 5,50,502 crore at the end of October, down from Tk 5,50,905 crore in June. While borrowing from the central bank increased slightly due to accounting adjustments, loans from commercial banks dropped significantly.

Officials said the rise in central bank borrowing was technical, not due to fresh money creation. The inclusion of new International Monetary Fund (IMF) funds increased the government’s recorded debt to the IMF by Tk 6,420 crore — from Tk 10,954 crore in June to Tk 17,374 crore in October. This increase was offset by declines in borrowing from other banks.

In the 2024–25 fiscal year, the government had set a borrowing target of Tk 1,04,000 crore from banks and Tk 12,500 crore from national savings certificates. Last year’s original target for bank borrowing was Tk 1,37,500 crore, later revised down to Tk 99,000 crore. Government officials expect this year’s actual borrowing to remain below the target due to constrained spending and robust non-bank financing.

Revenue collection reached Tk 91,005 crore in the first three months of the current fiscal year — a 20.45% increase compared to the same period last year. At the same time, borrowing from national savings certificates rose by Tk 1,946 crore, bringing total outstanding savings instruments to Tk 3,40,445 crore by the end of September. This marks a reversal of the declining trend seen over the past two fiscal years.

A Bangladesh Bank official said, “Development expenditure has been significantly reduced while revenue income is showing strong growth. Alongside that, the government is receiving substantial foreign assistance from the IMF and other agencies, reducing its reliance on domestic bank borrowing.”

In the last fiscal year, the government’s net borrowing from banks stood at Tk 72,372 crore — the lowest in four years and Tk 26,628 crore less than the revised target. The slowdown in development project implementation has been a major factor behind this reduced demand for funds.

Meanwhile, liquidity stress persists in the banking sector due to weak economic activity and the fragile condition of several banks. Private sector credit growth stood at only 6.29% in September, one of the lowest in recent years. To curb inflation, which eased to 8.17% in October after remaining in double digits for months, the central bank has maintained the key policy (repo) rate at 10%. Officials have indicated that the rate may be revised once inflation drops below 6%.

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