Economy
Tk 15k Crore Govt Loan from Banks
Prior this year, the government refunded more than what it had borrowed from the banks. as of sudden, the government has raised borrowing from the banking sector. In the previous month, the government has taken a loan of Tk 13 thousand 481 crores from the banking sector.
According to the sources of Bangladesh Bank (BB), in late September, the government’s net debt from banks increased by 12 thousand 526 crores to 2 lakh 82 thousand 712 crores. A month ago at the end of August, the amount of this loan was 2 lakh 69 thousand 230 crores. That is, in one month the government took a loan from the bank of 13 thousand 418 crores.
But the government’s debt is now towards the central bank. Increased demand for loans from central banks rather than borrowing from commercial banks. In the 3 months of the current financial year, the government has taken a loan of Tk 16,833 crore from the central bank. At the same time, the government’s debt to commercial banks decreased by Tk 4,307 crore. As a result, the government’s net debt has increased by Tk 12,526 crore.
Regarding the increase in debt, the former caretaker government’s financial advisor economist AB Mirza Azizul Islam told that the government’s expenditure has increased. As the income is less than the expenditure, now they are borrowing from the bank to meet the demand for additional money. However, the amount of bank loans taken by the government in 3 months is not more than their target. So there is no reason to worry about this loan.
After reviewing the data of Bangladesh Bank, it was found that in the first 2 months of the current (2022-23) financial year, the government did not take debts from the banking sector but instead paid them. In the two months till last August, the government’s net debt from banks decreased by Tk 955 crore to Tk 2 lakh 69 thousand 230 crores. Although at the end of June, the amount was 2 lakh 70 thousand 185 crores.
The government is setting a target that the bank will take a bank loan of Tk 1 lakh 6 thousand 334 crore to meet the budget deficit of the current fiscal year 2022-23. This amount is 29 thousand 882 crores more than the target for the current financial year. In the budget of the previous financial year, the target was to borrow 76 thousand 452 crores from the banking system. It has set a target of taking a loan of 35 thousand crore takas from savings accounts in the current financial year.
According to the data of the National Savings Directorate, savings bonds worth Tk 14,538 crore have been deposited or sold in the first 2 months (July-August) of the current fiscal year 2022-23. Out of this, principal and profit have been paid to the tune of 14 thousand 136 crores. After paying the principal and profit of savings bonds, the government’s net debt in this sector stands at Tk 401 crore.
In the meantime, regardless the fall in foreign exchange reserves, the central bank increased dollar sales. Bangladesh Bank is selling dollars to banks at Tk 97. Last Thursday sold 13 million dollars to several banks. In total, the sales volume of the current financial year so far has stood at 4 billion dollars. Against this, as much as 38 thousand crore takas have come out of the market. Last financial year 762 million 17 million dollars were sold. Thus, as a result of the sale of dollars, the foreign exchange reserves, which rose above 48 billion dollars, fell to 36 billion dollars.
It is known that due to various reasons including the instability of the food and energy markets due to the impact of the Russia-Ukraine war, the government aimed more at cost reduction in the beginning. Hence, the 1st month of the financial year also saw good growth in revenue and foreign grants and loans increased. Due to the effect of these two, the government has taken fewer loans from the bank. But now some projects have started. Again, due to the effect of the Russia-Ukraine war, food and fuel prices have increased in the world market. As a result, the government has to spend more money on food and fuel imports than before. However, the rate at which the cost of money has increased, the income does not increase at that rate and the bank has to take a loan. So the government is leaning on bank loans.
The International Monetary Fund (IMF) has urged Bangladesh to maintain a tight monetary policy to contain inflation, while stressing that monetary tightening alone will not be enough to restore economic stability.
Inflation in Bangladesh rose to 8 per cent in September, according to the IMF. The Washington-based lender has called for broader reforms in the financial sector, stronger revenue mobilisation and improvements in overall economic management to address the country’s persistent economic challenges.
Sonali Jain-Chandra, deputy director of the IMF’s Asia and Pacific Department, made the remarks in response to a question at a news conference on the economic outlook for Asia and the Pacific, held on the sidelines of the IMF and World Bank Group annual meetings in Bangkok, Thailand.
Asked whether tight monetary policy alone would be sufficient to tackle inflationary pressures that have persisted for more than three and a half years, Jain-Chandra said maintaining a restrictive monetary stance was important, but needed to be accompanied by other reforms.
Bangladesh is currently facing challenges in three key areas: revenue mobilisation, the financial sector and inflation, she said.
The IMF also expressed concern over the fragile state of Bangladesh’s financial sector, saying a credible reform strategy was needed to strengthen the sector’s capacity and ensure stability.
The fund also highlighted the country’s persistently weak revenue collection. Bangladesh’s tax-to-GDP ratio has declined over time and currently stands at around 7 per cent, placing it among the lowest in the world, according to the IMF.
The IMF stressed the need for a coordinated effort to increase revenue collection, saying higher government revenues were essential to finance development expenditure and strengthen the financial sector.
It called for necessary reforms to the revenue system and effective measures to improve the government’s capacity to generate income.
Talks Under Way on New IMF Programme
Meanwhile, discussions are continuing on a potential new lending programme for Bangladesh.
Jain-Chandra said Bangladeshi authorities approached the IMF in May for support under a new programme after deciding not to draw further instalments under the previous arrangement.
In response to the request, an IMF mission visited Dhaka in July to discuss various aspects of Bangladesh’s economic reform agenda.
According to Jain-Chandra, the reform issues discussed during the visit were closely aligned with the recommendations outlined in the IMF’s Article IV consultation for Bangladesh earlier this year.
The IMF has remained in regular contact with Bangladeshi authorities since the July visit, she said.
Jain-Chandra added that the fund remained closely engaged with the authorities and was ready to support Bangladesh in initiating the reforms needed to address its economic challenges.
The International Monetary Fund (IMF) has projected that Bangladesh’s gross domestic product (GDP) will grow by 3.2 per cent in the 2026-27 fiscal year, while average inflation could rise to 10.9 per cent, signalling mounting pressure on the country’s economy.
The projections were outlined in the IMF’s World Economic Outlook (WEO) report, released on Tuesday.
The latest growth forecast marks a significant downward revision from the 4.3 per cent projected by the IMF in April. The fund had subsequently forecast growth of 3.5 per cent in July before lowering its estimate further to 3.2 per cent.
The IMF has also sharply revised its inflation outlook for Bangladesh. In April, it projected average inflation of 6 per cent for the 2026-27 fiscal year. The latest estimate raises that figure to 10.9 per cent.
The combination of slower economic growth and persistently high inflation points to continued pressure on Bangladesh’s macroeconomic stability.
Bangladesh growth outlook trails other forecasts
The IMF’s latest growth projection for Bangladesh is lower than those of other major international development institutions.
The World Bank has forecast GDP growth of 3.4 per cent for Bangladesh in the 2026-27 fiscal year, while the Asian Development Bank (ADB) has projected growth of 4 per cent.
According to the IMF, Bangladesh’s economy grew by 3.6 per cent in the 2025-26 fiscal year, following growth of 3.5 per cent in the preceding fiscal year.
India, Bhutan expected to grow faster
The IMF has projected stronger economic growth in neighbouring countries, with India’s economy expected to expand by 7 per cent and Bhutan’s by 6.9 per cent in the relevant fiscal year.
The contrasting forecasts highlight the challenges facing Bangladesh as it seeks to restore economic momentum while tackling persistent inflation.
The IMF’s latest projections come as the annual meetings of the IMF and the World Bank Group are underway in Bangkok, Thailand.
Bangladesh’s economic situation, reform programmes and efforts to secure financing from development partners are among the key issues receiving attention during the meetings.
The World Bank supports the Bangladesh government’s policies to address the country’s current economic challenges, restore stability and implement medium- and long-term development plans, Finance Minister Amir Khasru Mahmud Chowdhury said on Tuesday.
He said the global lender was broadly aligned with Bangladesh’s economic programmes and policy priorities and would continue to support the country’s economic recovery and future development.
The finance minister made the remarks while speaking to journalists after a meeting with a World Bank managing director in Bangkok, Thailand, on October 13.
Amir Khasru said Bangladesh’s economy was facing significant challenges when the current government took office. Alongside dealing with the financial and economic burdens inherited from the previous period, the country was also having to navigate global economic disruptions caused by ongoing wars and geopolitical tensions.
He said the World Bank understood the realities facing Bangladesh and supported the government’s policy approach to overcoming the economic difficulties.
“The World Bank is aligned with the programmes and policy direction we have set to restore economic stability and ensure future development,” the minister said, adding that both sides would continue working together.
He said the World Bank was willing and prepared to provide the assistance Bangladesh needed.
No decision yet on proposed $10 billion in additional assistance
Clarifying reports that Bangladesh had sought an additional $10 billion in assistance from the World Bank, the finance minister said no final decision had been made.
He said discussions with the lender were ongoing and that possible proposals would be reviewed in light of those discussions. The process could take several months to complete, he added.
“No decision is being made at this stage. I have seen several inaccurate reports here and there. This is a discussion, and there will be follow-up based on these talks. It is a process that will continue over the next few months,” he said.
The minister stressed that the ongoing discussions should not be interpreted as a final agreement. Rather, they were intended to establish a basis for determining the next steps and considering possible decisions.
Further discussions would also take place in Dhaka, he said.
Expressing satisfaction with the progress of the talks, Amir Khasru said Bangladesh was in a favourable position to establish a framework for future cooperation.
He reiterated that the government’s economic policies, programmes and medium- and long-term development plans were broadly aligned with the World Bank’s position.
Government’s economic agenda aligned with BNP manifesto
The finance minister also said the World Bank’s position was consistent with the government’s economic plans and the Bangladesh Nationalist Party’s (BNP) election manifesto.
He said discussions were underway on how to address the country’s economic challenges and achieve the government’s development objectives.
According to the minister, the government has submitted a written proposal outlining a framework for partnership with the World Bank. Discussions on the proposed framework will continue.
He said the World Bank had provided various recommendations and suggestions, while Bangladesh had also presented its own proposals and recommendations.
Further discussions would be based on these submissions, he added.
Government optimistic about inflation and GDP targets
Asked about forecasts by the World Bank and the Asian Development Bank (ADB) on inflation and gross domestic product (GDP) growth, and how they compared with the government’s targets, the finance minister said the government did not intend to dispute the projections made by other institutions.
He said the institutions had prepared their forecasts based on their own calculations and analyses, adding that the country’s economic performance would become clearer as progress on key indicators was assessed over time.
“We do not want to dispute anyone’s projections. They have made their estimates based on their own calculations. We are carrying out our work, and they are doing theirs. What matters most is that the cooperation we need continues,” he said.
The minister expressed optimism that the government would be able to meet the inflation targets set out in the national budget.
He said the government was working to restore economic stability through continued engagement with the World Bank, implementation of its economic policies and progress on medium- and long-term development plans.
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