The government is set to raise its borrowing target from savings instruments by 82 per cent for the next fiscal year (FY) 2014-15 to finance its increased budget deficit, officials said.
The finance ministry is considering fixing the net borrowing target from the state-owned savings tools at Tk 90.60 billion for the upcoming budget compared to the current FY's target at Tk 49.71 billion.
The Internal Resources Division (IRD) recently submitted a proposal to the finance ministry in this regard, an official said adding the IRD in its proposal had recommended the gross sales target at Tk 265.00 billion for the next fiscal year.
The experts and officials, however, said the government was planning to borrow more from the domestic investment sources to meet its growing budgetary expenditures, anticipating a less-than-expected level of revenue earnings in the next fiscal year.
Although the government's budget deficit has been remaining within 5.0 per cent of the gross domestic product (GDP) over the years, the finance minister at a pre-budget discussion recently expressed his doubt about budget deficit for the next fiscal year.
Citing the prevailing low growth in the government's overall revenue collections, the officials said it would be a difficult task for the government to significantly increase its revenue income in the next fiscal year.
The government's overall revenue collection during the July-March period fell short of target by 80 Tk billion, the National Board of Revenue (NBR) figure showed.
In the first three quarters of the current FY, the board collected an aggregate amount of Tk 787.33 billion against its target of Tk 867.01 billion. To achieve the target, the NBR will have to collect Tk 463 billion in the last quarter (April-June) of the fiscal year 2013-14, the figures showed.
"The government's ongoing revenue collection is not very satisfactory, and it is not certain about the next fiscal year's collection. The government would require borrowing funds both from internal and external sources," said former caretaker government finance adviser Mirza Azizul Islam.
Keeping this in view, the government might need to enhance its borrowing from savings schemes, he observed.
Mirza Azizul Islam also observed that although the possible enhanced borrowing from savings tools would help in reducing inflationary pressure to some extent, it would raise the government's debt liability.
A senior official of the Department of National Savings (DNS) said as there was sufficient liquidity in the country's banks, they were not attracting the prospective savers with various offers.
They would be able to achieve the sales target of savings certificates in the next fiscal year, he said.
Following lower encashment by the savers, the net sales of savings certificates registered a higher growth during the July- March period in FY 2013-14.
Already the investment in the state-run savings tools has reached Tk 74.60 billion in the first nine months of the fiscal year.
The official said most of the three-year savings instruments had matured in the fiscal year 2012-13. The other schemes, including the five-year ones, would mature in next fiscal year 2014-15.
The big rise in the net sales of savings certificates during the July-March period of the current fiscal year was registered after a continuous sluggish trend over the last couple of FYs.
The net sale was only Tk 6.92 billion in the July-March period of FY 2012-13.
Auto-reinvestment facility for some savings instruments is another cause for such a development, he added.
The savings tools' monthly net sales volume was Tk 12.15 billion in March of the ongoing fiscal year. The figure was only Tk 1.49 billion in March in FY 2012-13.
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