Govt’s treasury bill borrowing up 4.3% in Nov

The government increased its borrowing through short-term treasury bills in November, issuing Tk 31,289.13 crore worth of the instruments, a 4.3 percent rise from October, according to data from Bangladesh Bank (BB).

Treasury bills are short-term loans that the government takes from banks and other financial institutions to meet immediate funding needs. They are sold through auctions conducted by the central bank and are considered one of the safest investment options in the financial system.

BB's Money Market Dynamics report shows that four such auctions were held in November. The average interest rates paid by the government stood at 9.99 percent for 91-day bills, 10.03 percent for 182-day bills, and 10.01 percent for 364-day bills.

The interest rate, known as the cut-off rate, is the highest rate the government agrees to pay in an auction and reflects demand for the bills as well as overall liquidity conditions in the banking system.

For the 91-day treasury bills, the cut-off rate fell during the first three weeks of November, reaching a low of 10.07 percent, before edging up to 10.14 percent in the final auction.

According to the BB report, the rate in the first auction of the month was 10 basis points lower than the previous one.

In the case of 182-day bills, the cut-off rate jumped by 30 basis points in the second week of the month but declined gradually in the remaining auctions.

By contrast, interest rates on 364-day treasury bills rose steadily throughout November, climbing from 9.99 percent to 10.25 percent by the final auction.