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Govt borrows Tk 30,571 crore more than target from banks in FY26

Published : Monday, 3 August, 2026 at 9:14 PM

Observer Online Report

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The government borrowed Tk 1.34 lakh crore from the banking sector in the outgoing fiscal year 2025-26, exceeding its target by Tk 30,571 crore, as lower-than-expected revenue collection forced it to rely more on bank financing, according to an updated report of Bangladesh Bank.

The government had set a target of borrowing Tk 1.04 lakh crore from banks during FY25-26. However, it ended up taking Tk 1,34,571 crore in loans, which was 29.4 per cent higher than the target.

The Bangladesh Bank report showed that the government did not take any new loans from the central bank through money printing during the fiscal year. Instead, it repaid Tk 4,372 crore of previous borrowings.

The outstanding government loans from the central bank stood at Tk 98,424 crore on June 30, 2025, which declined to Tk 94,053 crore on June 30, 2026. Although the government borrowed more than Tk 5,000 crore from the central bank between the beginning of the fiscal year and April, it later repaid the loans, reducing the year-end balance.

Most of the repayment of central bank loans was financed through fresh borrowing from commercial banks, meaning the government borrowed from commercial lenders to repay previous central bank loans.

Borrowing from the central bank is considered high-powered money, as it increases money supply in the economy and may contribute to higher inflation. This prompted the government to reduce its reliance on central bank financing.

However, weaker revenue collection pushed the government towards greater dependence on bank loans. Economists said excessive government borrowing from banks reduces credit availability for the private sector and contributes to higher interest rates, affecting private investment and business activities.

The government’s reliance on bank borrowing has continued into the current fiscal year as revenue collection remains sluggish. In the first 13 days of FY26-27, the government borrowed Tk 9,209 crore from the banking system. Of this, a portion came from the central bank, while Tk 3,795 crore was borrowed from commercial banks.

Former Bangladesh Bank chief economist Dr Mustafa K Mujeri said the government usually plans expenditure based on projected revenue collection in the budget, but lower-than-expected revenue forced it to borrow more from banks to meet its spending requirements.

-HIS

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Editor : Iqbal Sobhan Chowdhury

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