Although the government had been borrowing more than the target through savings certificates in the last couple of years, sales of the savings instruments have decreased in the current fiscal year.
In September of the current fiscal year, sales of the savings tools amounted to Tk8,722 crore, which is Tk2,627 crore, or 23.14% less than previous September.
The government borrowed Tk766 crore from savings certificates in October that is Tk2,825 crore in September. Net sales of the savings tools, therefore, fell 72.87%.
Meanwhile, the government's bank borrowing has increased.
The government reduced interest rates on all savings schemes worth more than Tk15 lakh by about 1% in September.
According to officials, the interest cut is one of the key reasons contributing to the fall in the sales. At the same time, the government is borrowing more from the low-interest banking system this fiscal than in the previous one to meet the budget deficit.
The government set a target of more than Tk1 lakh crore for savings instruments sales this year.
According to Bangladesh Bank data, total savings certificates sales in the first four months of this fiscal year was Tk35,328 crore, which is 28.34% of the fiscal target.
In the fiscal year, the government borrowing target from net savings certificates sales is Tk32,000 crore.
Ahsan H Mansur, executive director of Policy Research Institute of Bangladesh, said there are limits and restrictions on investing in savings certificates. Besides, there are jail and penalties if instrument purchases are not disclosed. Therefore, the investment in savings certificates is decreasing.
He said the fall in the sales is positive for the government since the interest rates on savings certificates are much higher than banks. Earlier, many people used to buy the instruments anonymously. With the restrictions in place, borrowing from the savings certificate has come down.
Despite a reluctance to take money from the banking sector, the government has borrowed Tk16,387 crore from the banking sector in the five months of the current financial year.
Regarding the increasing bank borrowing by the government, a senior Bangladesh Bank official said the government's bank borrowing was less than the target even in last year since the pandemic impeded development spending. Now the government has increased its bank borrowing as the virus situation improved.
He added the government had taken more than the target through treasury bills in the first two actions in December. Because recently the government had to pay some major bills. In addition, it will have to pay several more bills in the new year. Therefore, the government's bank borrowing will increase further in the coming months.