TDS Desk:

The country will need some Tk 5,824 billion as deficit financing in the next two fiscals where the domestic bond market is under focus of development to meet the need.

Of the total amount, some Tk 2785 billion will be needed for the next 2025-26 fiscal while some Tk 3039 billion will be needed for 2026-27 fiscal, according to an official document of the Finance Ministry.

In the running 2024-25 fiscal the deficit financing is estimated at Tk 2559 billion.

The document said that Government of Bangladesh remains committed to sustaining a prudent fiscal policy while efficiently financing its development projects.

In the medium-term, the government’s approach to deficit financing and debt management aims to secure its financing needs and meet its payment obligations at the lowest possible cost, consistent with a prudent degree of risk.

A central focus of this strategy is the development of a vibrant bond market, providing a stable and efficient funding source for the government, the document said.

Through disciplined fiscal management, the government seeks to bolster investor confidence, deepen the capital market, and support the nation’s overall economic growth.

As per the document, Tk 940 billion will come from foreign sources for 2025-26 fiscal according to the projection while Tk 800 billion for 2026-27 fiscal. The estimation for the running fiscal is Tk 950 billion.

From the internal sources of financing, the government has estimated to gather Tk 1609 billion for the running fiscal, while Tk 1845 billion for the next 2025-26 fiscal and Tk 2239 billion for 2026-27 fiscal.

In the running fiscal, the government has estimated to collect Tk 1275 billion from banking sector, Tk 334 billion from non-banking sector, Tk 254 billion from savings certificates and Tk 80 billion from other sectors.

The projection for the 2025-26 fiscal is Tk 1679 billion from banking sector, Tk 166 billion from non-banking sector, Tk 105 billion from savings certificates and Tk 61 billion from other sectors.

In 2026-27 fiscal, the government would collect Tk 1847 billion from banking sector, Tk 302 billion from non-banking sector, Tk 323 billion from savings certificates and Tk 69 billion from other sectors.

The document mentioned that the historical trend and medium-term projection on deficit financing in Bangladesh from FY22 to FY27 indicates a planned increase in total net financing, rising from Tk 1,831.2 billion in FY22 to Tk 3,039 billion in FY27.

While total net financing as a percentage of GDP starts at 4.6 percent in FY22 and falls to 4.4 percent in FY27, indicating a path towards fiscal consolidation, the sources of financing show distinct trends.

External net financing decreases as a percentage of GDP, from 1.7 percent in FY22 to 1.1 percent in FY27, indicating a declining dependence on external sources.

In contrast, domestic net financing exhibits a growing emphasis on domestic sources, particularly through marketable securities. It rises from 2.9 percent of GDP in FY22 to 3.2 percent of GDP in FY27, suggesting a shift towards promoting the bond market and strengthening the capital market.

However, fluctuations in non-bank financing are observed during the period. These variations primarily stem from the government’s deliberate efforts to reduce financing from high-cost National Savings Certificates (NSCs), resulting in reforms in the NSCs system.

By diversifying its funding sources, including non- bank instruments, the government aims to achieve a more balanced and sustainable financing mix while controlling financing costs and risks.