The government's net borrowing from the country's banking system is set to be negative in October, as it is scheduled to repay more than Tk 10 billion from surplus, officials said.
The Ministry of Finance has set the net negative bank borrowing target at Tk 13.93 billion for the next month, according to the auction calendar issued by the Bangladesh Bank (BB) on Sunday.
According to the calendar, the government may take up to Tk 98 billion as gross borrowing from the banking system in October by issuing treasury bills (T-bills) and bonds.
The auction calendar gives the schedule and the amount of T-bills and bonds, to be issued through auction for raising funds from the market to partly meet the government's budget deficit.
The government's net bank borrowing is set to be negative at Tk 13.93 billion by the end of October, after deducting Tk 111.93 billion as maturity amount of the government securities from the gross borrowing amount, according to the central bank officials.
The latest move came against the backdrop of the government's holding adequate liquidity in the recent days, they explained.
The government was holding around Tk 15 billion excess liquidity in its accounts as on September 26.
"It's a seasonal impact," a senior official told the FE.
He also said such trend of the government's bank borrowing may continue until this November, but it may pick up from December.
"We've taken the measure to keep the government's bank borrowing within the target by the end of the current fiscal year (FY), 2019-20," the official explained.
Senior bankers said the government's negative bank borrowing will slightly improve liquidity situation in the market.
"Such negative bank borrowing means the government will inject Tk 13.91 billion in the market next month," a senior treasury official of a leading private commercial bank (PCB) told the FE.
The government has already set higher borrowing target from the banking system to partly finance the budget deficit in FY 20.
Its bank borrowing is set to be Tk 473.64 billion in the fiscal, up from Tk 308.95 billion in the previous year, according to the budget documents.
Under the arrangement, the government will borrow Tk 280.94 billion by issuing long-term bonds, while the remaining Tk 192.70 billion will come from T-bills.
Currently, four T-bills are being transacted through auctions to adjust the government's borrowing from the banking system. The T-bills have 14-day, 91-day, 182-day and 364-day maturity periods.
Five government bonds, with the tenure of 02, 05, 10, 15 and 20 years respectively, are also traded on the money market.
