The Bangladesh Bank (BB) withdrew the amount between June 25 and July 2, 2006. The central bank withdrew Tk 2608 crore alone yesterday. The BB withdrew Tk 1700 crore on June 29, Tk 2950 crore on June 28, Tk 1976 crore on June 27, Tk 2216 crore on June 26 and Tk 2147 crore on June 25.

A high official of BB said usually the government borrowings from commercial banks increase at the fag end of a financial year. "High government borrowings lead to inflation," the official clarified.

The BB however is also mopping up the amount from the banking channels to curb the inflation.

Sources said the government borrowings reached only around Tk 800 crore in July-May period in the just concluding fiscal year but the borrowings rose to Tk 4919 crore on June 21, 2006.

The government in its revised budget for the last fiscal year estimated to borrow Tk 4911 crore but the borrowings crossed the target on June 21. Banking sources said the amount of borrowings may reach Tk 7000 crore.

The huge borrowing is the result of the government's failure to achieve revenue collection target and attract foreign aid.

Besides, the pace of development expenditure of the government has increased, which creates extra pressure on inflation. The government in the last date of the fiscal 2004-05 also borrowed more than Tk 4000 crore to meet the expenditure.

The inflation rose to 7.46 percent in April 2006, which was 6.17 percent in March 2006. The inflation rate of the latest months (May and June) is yet to be calculated by the Bangladesh Bureau of Statistics, but sources said the rate will increase further during the period.