The government revised its auction calendar on Monday keeping an option for borrowing Tk 20 billion more for financing budget deficit ahead of the December general elections, officials said.
Under the revised calendar, the net borrowing from the banking system is set to reach Tk 30.42 billion by the end of this month, compared with Tk 10.42 billion earlier.
The government may borrow the additional amount of money from the market by the end of November through issuing bonds, the officials added.
"We've revised the auction calendar in line with the Ministry of Finance (MoF) advice," a senior official of the Bangladesh Bank (BB) told the FE.
The revised calendar will come into effect from today (Tuesday), said the official.
"The government has revised its auction calendar to meet immediate cash requirements ahead of the upcoming national polls," a senior official familiar with the government debt-management activities told the FE.
The 11th national election is scheduled to be held on December 30.
"Collected revenue from tax fairs will take time for depositing with the government accounts," the official said while explaining the necessity for revising the calendar.
The National Board of Revenue (NBR) received Tk 18.99 billion as income tax in the last six days from tax-fairs. The week-long fairs concluded on Monday.
The government's bank borrowing trend for December will be finalised in the next meeting of Cash and Debt Management Technical Committee (CDMTC) by the end of this month.
"The committee will finalise the amount of such borrowing reviewing the overall economic situation," the official added.
The government bank borrowing may increase further in December ahead of the elections, the official hinted.
Senior treasury officials of commercial banks, however, did not see immediate impact of the extra bank borrowing on the market.
"The demand for local currency may pick up in the market if the existing upward trend in government bank borrowing continues," a treasury official of a leading private commercial bank (PCB) told the FE.
The weighted average rate (WAR) on call money rose to 3.60 per cent on Sunday from 3.50 per cent of the previous working day, the BB data showed.
The finance ministry had set a bank-borrowing target of Tk 420.29 billion for fiscal year 2019 to finance the budget deficit.
Under the proposed bank borrowing, the government will borrow Tk 239.65 billion issuing long-term bonds while the remaining Tk 180.64 billion through treasury bills (T-bills).
Currently, four T-bills are being transacted through auctions to adjust the government's borrowing from the banking system.
The T-bills have 14-day, 91-day, 182-day and 364-day maturity periods.
Also, five government bonds with tenures of two, five, 10, 15 and 20 years respectively are traded on the market.