The finance ministry on Wednesday introduced a 14-day treasury bill alongside the existing eight types of treasury bonds and T-bills in a bid to manage the government’s short-term cash requirement.
The cash and debt management committee, a high-powered government committee, at its quarterly meeting in June, this year made a decision that the ministry would use the short-term bill when the government faces cash shortage amounting to more than Tk 1,000 crore for seven days in a row.
A BB official told New Age on Wednesday that the government was now facing a short-term cash crisis as it would have to repay Tk 1,970 crore to the banks this month in line with auction calendar against its previous lending.
Under the circumstances, the government account faced a cash shortage of Tk 1,280 crore on Wednesday, he said.
‘The government will be able to take loan from the central bank directly by using its two components — ways, means, and advances, and overdraft. But, such type of initiative will increase the fresh money circulation to the market which ultimately hit the inflation’, he said.
The government is now allowed to borrow a maximum amount of Tk 8,000 crore from the central bank bypassing the auction calendar by using the two instruments.
The government usually uses the two instruments when it faces severe cash crisis. But, the government has now no option to borrow from the scheduled banks to manage its cash crisis avoiding the auction calendar.
The BB official said that14-day T-bill would not be included in the auction calendar although the existing eight types of T-bills and bonds were included in the calendar.
The government now takes loans from the scheduled banks using three T-bills — 91-day, 182-day and 364-day — and five T-bonds — 2-year, 5-year, 10-year, 15-year and 20-year.
The latest short-term T-bill will meet the government’s demand to manage its cash crisis by taking loan from the scheduled banks.
The government took loan amounting to Tk 300 crore by issuing 14-day T-bill on Wednesday, the BB official said.
The government will use the 14-day T-bill when it faces short-term cash crisis, he said.
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