The Financial Express

Govt’s July-May net borrowing from savings tools up 8.0pc

| Updated: July 14, 2019 10:10:51

Evaly and Fianancial Express Evaly and Fianancial Express
Picture used for illustrative purpose Picture used for illustrative purpose

The government's net borrowing from state-owned savings instruments rose by about 8.0 per cent in the first 11 months of the just-concluded fiscal year compared to the corresponding period of the previous fiscal.

According to the Department of National Savings (DNS) data, net sales of savings tools in the July-May period of FY 2018-19 stood at Tk 467.31 billion, up from Tk 433.63 billion in the same period of FY 2017-18.

Sales of savings schemes have surged in recent years due to their higher yield rates, officials concerned said.

Net sales of savings certificates in last 11 months also surpassed the government's revised target set for the FY 2018-19.

The government revised the target of its net borrowing from savings instruments for FY 2018-19 upward to Tk 450 billion from Tk 261.97 billion.

Meanwhile, government's interest payments also increased by more than 22 per cent in the July-May period of the last fiscal year, the data showed.

The government spent Tk 224.51 billion on interest payments in the 11 months of FY 2018-19, up from Tk 183.60 billion in the same period of FY 2017-18, according to DNS statistics.

Amid growing sales of savings tools, the government has set a target of its net borrowing from instruments at Tk 270 billion for FY 2019-20.

Officials, however, said sales of the instruments might fall in the coming months due to an increase in source tax on profit gains.

The National Board of Revenue (NBR) has increased source tax on yield gains to 10 per cent from 5.0 per cent for all types of savings tools in the new fiscal year.

Savers also find themselves in difficulties to purchase savings tools online.

Under the online system, Taxpayer's Identification Number (TIN) has been made mandatory. Besides, a saver has to submit identity (ID) card if they want to buy savings certificates.

The government sells four types of savings instruments and yield rates are up to 11.76 per cent. It also sells different types of bonds to local and expatriate Bangladeshis.

An estimated 20 million investors are involved in this sector.

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