Dhaka, May 19 -- The government's reliance on borrowing a substantial amount of funds from the Bangladesh Bank has intensified due to the liquidity crunch faced by commercial banks, hindering their ability to meet the state's financing requirements. In the current fiscal year, from July 1 to May 10, the government has borrowed Tk 67,906 crore from the central bank, a significant increase compared to Tk 31,403 crore borrowed in the previous fiscal year. However, this practice of borrowing from the central bank, which injects money into the market, can have adverse effects on inflation and the balance of payments (BoP).

The injection of funds has led to a rise in the volume of notes and coins in circulation. Consequently, the initial borro...