The government’s outstanding loan from the banking sector, including the Bangladesh Bank, surged to Tk 4,39,335 crore (Tk4.39 trillion) by April 22 this year, compared to Tk 3,93,774 crore at the end of the previous fiscal year.

Recent data from the Bangladesh Bank revealed that the government’s outstanding loans from commercial banks alone surpassed Tk 3 lakh crore in April, up from Tk 2,39,615 crore as of June 30, 2023.

In the fiscal year 2023-24, net bank borrowing—calculated as the amount borrowed from banks minus that repaid to the Bangladesh Bank—amounted to Tk 45,557 crore.

This figure represents 34.40 percent of the total borrowing target for the current fiscal year, primarily due to sluggish revenue collection. By comparison, net bank borrowing was Tk 78,237 crore during the same period of the previous fiscal year.

In fiscal year 2023-24, the government aimed to borrow Tk 132,395 crore from the banking sector to bridge the deficit in its budget.

This borrowing strategy was necessitated by increased expenditures alongside poor revenue collection and a decline in foreign direct investments, according to experts.

Data from the National Board of Revenue (NBR) revealed that the revenue authority fell short of its target by Tk 21,879 crore in the first nine months of FY24.

The Centre for Policy Dialogue (CPD), a prominent think tank in Bangladesh, projected a revenue shortfall of Tk 82,000 crore by the end of the fiscal year 2023-24 due to this shortfall.
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Additionally, net foreign direct investment (FDI) inflows into Bangladesh during the July-January period of the 2023-24 fiscal year declined by 9.81 percent compared to the same period in the previous fiscal year (2022-2023).

According to Bangladesh Bank (BB) data, net foreign direct investment (FDI) inflows in the first seven months of the current fiscal year 2023-24 amounted to $901 million, down from $999 million during the same period a year earlier.

Experts noted that due to significant inflationary pressure, the government is now relying entirely on commercial banks for borrowing, as the central bank has ceased providing fresh funds.

They anticipate that government borrowing from banks will escalate in the remaining two months of the fiscal year, as government expenditure typically rises during the May-June period.

From July 1 to April 22 this fiscal year, government loans from commercial banks totaled Tk 65,432 crore. However, the government repaid Tk 19,875 crore over the last 10 months, which contrasts with its typical trend of borrowing.

In the same period of the previous fiscal year, the government had borrowed Tk 72,904 crore from the central bank. By the end of fiscal year 2022-23, the government’s total borrowing reached a record Tk 98,000 crore, widely believed to have fueled inflation.

Ahsan H. Mansur, Executive Director of the Policy Research Institute of Bangladesh, expressed concern over the government’s reliance on borrowing from commercial banks, warning that it could crowd out private investment in the economy.