The sale of savings certificates has increased despite a cut in interest rates, adding to the government’s debt burden.
Published : 03 Apr 2016, 12:59 AM
In the first eight months (July-February) of the current fiscal year, people bought savings certificates worth Tk 332 billion, which is 25 percent more than the same period last fiscal.
The net sales increased by around Tk 200 billion.
Net sales are calculated by deducting the liquidated amount of previously sold certificates from the total sales of saving certificates at a given time.
On the other hand, the money that is left after paying the capital and interest to the citizens is considered as government’s debt for which it has to pay interests.
So the government now has to pay a huge amount of interest on the Tk 200 billion savings certificates sold in July-February period.
This is leading to a rise in the government’s debt, BIDS researcher Zaid Bakht says.
“All other avenues of investment for general people are almost shut. Banks are giving seven to eight percent interest on deposits. The condition of the share market is also getting worse,” he said.
After the cut in interest rates last year, a five-year term family savings scheme of Tk 100,000 now yields a monthly return of Tk 912. Earlier the same investment used to fetch Tk 1,070 per month.
The government’s borrowing from savings certificates crossed the fiscal target by Tk 50 billion in the first eight months.
According to the Department of National Savings, the government borrowed Tk 198.9 billion from savings certificates in the July-February period.
The target for borrowing from this sector had been fixed at Tk 150 billion in the budget for the current 2015-16 fiscal.
Exceeding the target for borrowing from savings certificates is not a new trend in Bangladesh.
The government had planned to borrow Tk 90.56 billion from the sector in 2014-15 fiscal year, but the borrowing eventually exceeded three times the target – Tk 287.73 billion.
In February, the citizens bought a record highest amount of savings certificates -- Tk 51 billion. The amount was Tk 50.69 billion in January.