Government borrowing from savings certificates sale continues to rise

The government has borrowed Tk 74.55 billion, or more than 37 percent of the money it has targeted to take through the sales of savings certificates in order to cut 2020-21 budget deficit.

The net sale in August only was Tk 75.46 billion, or more than the net sale of July and August last year and the highest for a month in one and a half years.

Net sale of savings certificates is counted by subtracting the money repaid for previously sold certificates from the total sale.

The government had set a target of borrowing Tk 270 billion through sales of savings certificates in 2019-20 fiscal year, but revised it down to Tk 119.24 billion after sales dropped.

But the sudden jump in June following the beginning of the outbreak in Bangladesh led to sales of savings certificates worth Tk 144.28 billion in total in the last fiscal year.

The “abnormally high” sale of the savings certificates amid the coronavirus crisis has puzzled researchers Ahsan H Mansur and Zaid Bakht.

Bakht said he was not sure why the sale of savings certificates increased when the government has raised tax on interests and imposed other curbs amid the pandemic crisis that has increased the rates of joblessness and decline in income.

“Such a rise in the sale of savings certificates is really abnormal!” the BIDS researcher told bdnews24.com on Friday after the Department of National Savings published the latest data on Thursday.

Mansur, the executive director of Policy Research Institute, said he believed the huge increase in remittance inflow played a role in the rise in savings certificates sale.

“Besides this, the people are investing in the savings certificates because these still offer more interests than other saving schemes do,” he added.