The government has slashed its bank borrowing target by more than 3.0 per cent to Tk 820 billion for the current fiscal year, compelled by lower implementation of the annual development programme (ADP).
The original target was Tk 849.80 billion, officials said.
"We've already been informed about the downward revision of the government's bank borrowing target," a senior official of the Bangladesh Bank told the FE on Thursday.
He also said the auction calendar for the month of February has been formulated in the line with the government's revised bank borrowing target for FY 2021.
An official familiar with the government's debt management activities said the government may further cut its bank borrowing target within March or April, considering the execution of the development projects along with the trend in revenue collection.
He said the authorities revised its bank borrowing target for this fiscal because of lower implementation of the ADP and higher sales of its savings instruments in recent months.
During July-December period of FY'21, the government executed only 24 per cent of the ADP in the aftermath of the Covid-19 pandemic, according to data of the state-run Implementation Monitoring and Evaluation Division (IMED). It was 26.6 per cent in the same period of the last fiscal.
Higher net sales of national savings certificates also contributed to the slashing of the government's original banking borrowing target for this fiscal, the official explained.
The government's net borrowing through sales of savings tools jumped by 277.07 per cent to Tk 204.87 billion during the first half (H1) of this fiscal year from Tk 55.33billion in the same period of FY'20, according to the official data.
An insignificant borrowing from the banking system by issuing treasury bills (T-bills) and bonds also prompted the government to cutback on the target.
The government's net bank debt stood at Tk 210 billion as of February 02 as it was awash with around Tk 190 billion in excess liquidity in its accounts, another central banker said.
The Finance Ministry has set the net bank borrowing target at more than Tk 19 billion for the month of February to meet, in part, the budget deficit, according to the auction calendar issued by the central bank recently.
The government may take out up to Tk 140 billion in gross borrowing from the banking system this month by issuing T-bills and bonds.
The government's net bank borrowing may reach Tk 19.50 billion in February) after deducting Tk 120.50 billion against the government securities that would be matured in the month, said officials.
"The government should expedite implementation of ADP for achieving its budget expenditures, which will help revamp the overall economic activities," a senior executive of a leading private bank told the FE.
The government had set a higher borrowing target from the banking system to partly finance the budget deficit in FY'21.
Its original target was Tk 849.80 billion in the current fiscal, up from Tk 473.64 billion a year ago, according to the budget documents.
Currently, three T-bills are being transacted through auctions to adjust government borrowing from the banking system. The T-bills have 91-day, 182-day and 364-day maturity periods.
Furthermore, five government bonds with tenures of 02, 05, 10, 15 and 20 years are traded in the money market.