Government bank-borrowing debt deepens with the aggregate sum borrowed from the domestic banking sources far overshot the upwardly revised target to hit Tk 1.68 trillion in the past fiscal year.
To meet budget shortfall, the government had initially set a bank-borrowing target at Tk 1.04 trillion for the fiscal year 2025-2026 but less-than-expected level of revenue mobilisation prompted it to raise the target to Tk 1.18 trillion in the middle of the fiscal.
But the growing fund appetite of the government because of poor revenue collection and higher operational expenses surpassed the target by a large margin by the end of the fiscal year, latest statistics show.
According to the monetary survey by Bangladesh Bank (BB), the government borrowed Tk 1.68 trillion from the banking sector in the FY'26-some Tk 500 billion above the upwardly revised target.
Central bankers and money-market experts say the pressure of bank borrowing was heavily felt from the last quarter of the FY'26 following the USA-Iran crisis in particular as gas-and fuel-oil prices mounted due to supply-chain disruptions.
The war in the Middle East prompted the government to increase its borrowing from the banks to finance the growing volume of subsidies, which is largely reflected in the bank-borrowing scenario of the government, according to them.
Seeking anonymity, a BB official said the government bank-borrowing-dependency got enhanced hugely in the past fiscal due mainly to widening revenue shortfalls amid higher operational expenses.
"And the pressure will mount further in the coming days as the government is set to implement a new pay scale for government service- holders," he said,
According to the data from the National Board of Revenue (NBR), the agency collected a total of Tk 4.15 trillion in revenue in FY26, and it was Tk 875.27-billion of the revised target of Tk 5.03 trillion.
In the fiscal budget for 2025-26, the government kept aside Tk 60 billion as subsidy for the import of liquefied natural gas (LNG). However, at the end of the year, the subsidy had multiplied to Tk166 billion.
Chairman of Policy Exchange Bangladesh Dr M. Masrur Reaz says it is indicated that the fiscal consolidation is immediately needed, which is not happening.
He observes that the bank-borrowing projection has become extremely unpredictable because of the revenue collection which is also not predictable.
The economist says the commercial banks may get short-term benefits amid plummeting private-sector-credit growth. But the private-sector- credit demand is expected to increase in the coming days under this elected government.
"If it (private credit growth) happens and the current trend of government bank borrowing continues, it will definitely lead to crowding-out effect," he predicts.
Mr. Masrur was suggesting that the government should make the budgetary expenses more realistic, based on revenue-mobilisation trend, to avert such funding mismatch.
