Govt to borrow Tk 1.6 trillion from domestic sources in FY25

Representational image of national budget

The government has planned to borrow Tk 1.609 trillion from domestic sources, including banks and savings certificates, as there is a deficit of Tk 2.56 trillion in the proposed budget for the fiscal year 2024-25. 

The remaining Tk 951 million will be collected from foreign sources of financing, according to the proposed budget.

In his budget speech, finance minister Abul Hassan Mahmood Ali said, “Our prudent and pragmatic macroeconomic policy has kept our debt management relatively riskfree, as mentioned in the reports of International Monetary Fund.” 

He also noted that the deficit and borrowing remained sustainable in the overall budget, despite the increase in expenditure for loan and interest payment due to the depreciation of foreign currency over the past two years. 

The deficit in the next fiscal is expected to be around 4.6 per cent of the GDP, while it was 5.2 per cent in the outgoing fiscal. 

Alongside foreign debts, the government borrows a huge sum of money from different domestic sources to finance the budget deficits.

According to the finance ministry, the domestic loans were Tk 787 billion in the 2019-20 fiscal year, while the current fiscal has a domestic loan target of Tk 1.55 trillion. Such a rapid surge in domestic loans is unprecedented in Bangladesh.

As per latest data, the government has so far borrowed Tk 705 billion from the banking sector as of May, while it has a plan to collect Tk 620 billion more through treasury bills and bonds in the current month.

Besides, its collection from the non-banking sector, mainly through savings certificates, is supposed to amount to Tk 230 billion.