After the political upheaval in August last year, due to various reasons including uncertainty in business and trade, the government’s bank debt has increased significantly from July to January 22 of the current fiscal year.

According to the central bank, the government’s net bank debt as of January 22 of the current fiscal year was Tk 15,759 crore. It was negative Tk 7,783 crore in the same period of the previous fiscal year. However, the government’s borrowing from banks has increased at a slower pace compared to the target for the current fiscal year. The borrowing target for the current fiscal year has been set at Tk 1,375 billion.

According to Bangladesh Bank, the government borrowed about Tk 74,420 crore from commercial banks from July to January 22 of the current fiscal year. At the same time, more than Tk 58,661 crore was repaid to the central bank. The government usually borrows from the banking system through treasury bills and bonds.

Economists and concerned people say that until the 2023-24 fiscal year, the government borrowed directly from the central bank. This is increasing inflation. After that, the central bank stopped this loan facility.

Private sector lending has declined. In November last year, private sector credit growth was 7.66 percent. This is the lowest since May 2021, when it was 7.55 percent.

Banks are left with money because private sector entrepreneurs are not interested in taking loans. Therefore, banks are investing in government treasury bills and bonds.