As the liquidity position in the public accounts is maintaining a rising trend, the government has planned to keep suspended its bank borrowing through both treasury bills or T-bills and bonds until today (August 31).
On August 24, Bangladesh Bank informed all the scheduled banks and non-banking financial institutions (NBFIs) about the latest government decision on the suspension of the auctions.
The surplus liquidity in government accounts soared to Tk 110 billion as of August 22 from Tk 60 billion on August 16, according to the central bank.
"All banks and NBFIs have been conveyed the decisions on the advice of the finance ministry," said a senior central bank's official.
In line with the government's decision, the central bank cancelled a scheduled auction for Bangladesh Government Treasury Bonds (BGTBs), generally known as bonds, on August 24.
BB also halted another auction for treasury bills (T-bills) on August 26.
Sources said higher revenue collection along with the lower implementation of ADP (annual development programme) has pushed up the position on the government's surplus cash balance in recent days.
"Higher sales of national savings certificates (NSCs) have also pushed down the borrowings from the country's banking system by the government to meet the budget deficit," said a central bank official familiar with the debt-management activities.
However, bankers said there will be a little impact on the market if one or two auctions are cancelled.
The tax-revenue collection rose to Tk 2.61 trillion in the outgoing fiscal year (FY), 2020-21, from Tk 2.18 trillion a year before.
The advance tax at the import stage of major revenue-generating items was one of the major reasons behind the higher revenue growth in the outgoing fiscal year.
Meanwhile, the government has already set a lower borrowing target from the banking system to meet partly the budget deficit in FY'22. Its borrowing is set to amount to Tk 764.52 billion in FY'22 from the Tk 797.49billion revised target in the last FY, according to the budget documents.
Under the arrangement, the government will borrow Tk 516 billion through issuing long-term BGTBs and the remaining Tk 248.52 billion through T-bills.
Currently, three T-bills are being transacted through auctions to adjust government borrowings from the banking system. The T-bills have 91-day, 182-day and 364-day maturity periods.
Furthermore, five government bonds with tenures of 02, 05, 10, 15 and 20 years are traded on the money market.
