Government Borrows Another 50 Billion Taka to Pay Salaries of Public Employees

❐ Staff Reporter

The government is once again resorting to loans to pay the October salaries of government officials and employees and the previous three months’ arrears according to the new pay scale. This time, a new loan of Tk 5,000 crore is being taken from the banking sector to meet the demand. This brings the total amount of government loans taken from the banking sector through treasury bills and bonds in the current month of October to Tk 60,300 crore.

Bangladesh Bank has called for a 14-day special treasury bill auction on Wednesday, October 28, as part of raising funds for new loans.

According to the central bank, the government’s net borrowing from the banking sector in the first three months of the current 2026-27 fiscal year (July-September) stood at Tk 24,245 crore. Of this, Tk 23,227 crore was borrowed from commercial banks.

According to the new pay scale, government officials and employees are expected to pay their October salaries along with the arrears of salary increases for the previous three months starting November 1. The amount of loans taken this month has been increased to cover this additional expenditure.

To meet short-term financing needs, the government usually borrows from banks through treasury bills with maturities of 91, 182 and 364 days. However, when there is a temporary shortfall between revenue and expenditure, money is raised through special treasury bills with a maturity of 14 days. There has been no need to issue such special bills in recent times.

However, government officials and employees will be paid according to the new pay scale next Sunday (November 1). As additional funds are needed for this, a special treasury bill auction has been called.

According to Bangladesh Bank data, the government has borrowed Tk 55,300 crore from the banking sector through treasury bills and bonds as of October 27. If another Tk 5,000 crore is collected in the new auction, the total loan withdrawal this month will be Tk 60,300 crore. This will be the highest loan withdrawal in a month since the current government took office.

Earlier, in July of the current 2026-27 fiscal year, loans of Tk 56,000 crore were taken from the banking sector, Tk 50,000 crore in August, and Tk 41,500 crore in September.

However, a large portion of these loans were used to repay or refinance previous Treasury bills and bonds upon maturity. As a result, the amount of loans raised through auctions and the government’s actual or net debt are not the same.

According to Bangladesh Bank, the government’s net borrowing from the banking sector in the first three months of the current fiscal year was Tk 24,245 crore. Of this, Tk 23,227 crore was borrowed from commercial banks. Bangladesh Bank provided the remaining funds.

Meanwhile, as the government’s demand for loans increases, the interest rate on treasury bills is also increasing. On October 5, the yield on the 91-day treasury bill was 8.13 percent. On October 26, it increased to 8.55 percent. However, the amount of surplus liquidity in the banking sector at the end of August was Tk 4 lakh 42 thousand crore.

Bangladesh Bank Executive Director and Spokesperson Arif Hossain Khan said, “The government is having to borrow additional money from the banking sector as revenue collection is not as expected. It is the responsibility of the central bank to provide funds through treasury bills and bonds as per the government’s needs.”

He further said that a target of Tk 32,000 crore of Sharia-based Sukuk issuance has been set for the current fiscal year to reduce the government’s debt dependence on the banking sector.

In the current fiscal year, the budget deficit of Tk 938,000 crore has been estimated at Tk 243,000 crore. Of this, the target is to borrow Tk 112,000 crore from the banking sector. In the last fiscal year, the government’s borrowing from the banking sector was Tk 134,571 crore.

On the other hand, the National Board of Revenue (NBR) has been given a revenue collection target of Tk 6 lakh 4 thousand crore in the current fiscal year. But in the first two months of the fiscal year, there was a revenue collection deficit of Tk 25 thousand 491 crore. The government’s debt dependency is increasing as the expected revenue is not collected in the following months as well.

In this situation, economists consider the issuance of special treasury bills to pay the salaries of government officials and employees to be worrisome for the economy.

It is worth noting that in the new pay scale, the minimum basic salary of government employees has been increased from Tk 8,250 to Tk 20,000 and the maximum basic salary has been increased from Tk 78,000 to Tk 1,56,000.

Currently, there are about 2.4 million government officials and employees in the civil and defense sectors in the country. In addition, the number of pensioners is about 925,000. The budget for the current fiscal year has allocated 131,284 crore taka for salaries, allowances and pensions.

It is estimated that the government’s annual expenditure will increase by about 1 lakh 5 thousand crore taka if the new pay scale is fully implemented step by step.