The government registered higher repayments against its domestic borrowing in the first two months of the current fiscal year as development spending fell to a record low, official data shows.
Total domestic repayments of about Tk37,414 crore were made in the July-August period of fiscal year 2025-26, while total domestic borrowing amounted to roughly Tk36,795 crore at the same time. As such, net repayments of Tk619 crore were made at the time.
The turnaround was driven by a net repayment of Tk 9,792.8 crore to the banking system even as net borrowing from non-banking sources stood at Tk 9,173.2 crore during the period, according to a report by Bangladesh Bank on Thursday.
However, this shift coincided with a collapse in development expenditure, shows data of the Implementation Monitoring and Evaluation Division (IMED).
IMED figures indicate that just Tk5,715 crore was spent under the Annual Development Programme (ADP) during the first two months of the current fiscal year, notching a record low implementation rate of 2.39 per cent.
Domestic borrowing from the banking system consists of financing from the central bank as well as scheduled banks in the country, mainly through advances, overdrafts and the issuance of treasury bills and bonds, it said.
Net borrowing from non-banking sources during the July–August period increased by Tk9,173.2 crore, contributing 43.7 percent of this year’s targeted annual national budget.
In the same period of the previous fiscal year, net non-bank borrowing stood at some Tk11,619 crore, or roughly 49.7 percent of the target.
Non-banking borrowing comprises savings schemes of the Department of National Savings and treasury bills and bonds held by non-bank institutions, insurance companies and individual investors.
During the July-August period, the government borrowed Tk7,601 crore from non-banks and individuals through the issuance of treasury bills and bonds, the report said.
Over the same period, sales of national savings schemes stood at Tk15,776 crore, while principal repayments amounted to Tk14,204 crore.
In the corresponding period of FY25, net borrowing through national savings schemes amounted to about Tk4,224 crore.
The report also detailed movements in state-backed Islamic securities.
Investments in the BGIIB fund by Islamic banks declined to Tk685 crore during July-August period, while borrowing from the fund increased to Tk 1,610 crore. As such, Islamic banks’ net balances in the BGIIB fund rose by Tk 924.7 crore.
The BGIIB, or Bangladesh Government Islamic Investment Bond, was initiated in 2004 to facilitate liquidity management for Shariah-based Islamic banks and windows not participating in the conventional money market.
Similarly, the Bangladesh Government Investment Sukuk (BGIS) Bond, introduced in December 2020 to support Shariah-based development financing, continued to expand.
The government has so far issued six Sukuk bonds under Ijarah and Istisna’a modes, and the outstanding amount of BGIS increased to Tk24,000 crore by the end of August.
