Govt borrowing thru savings tools 145pc up in last fiscal

The government's net borrowing from state-run savings instruments increased by over 145 per cent to Tk 287.32 billion in the last fiscal year (2014-15) compared to that of the previous fiscal, official sources said.  
Officials concerned have attributed the higher rates of yield -- up to 13.45 per cent in some cases before May 23 -- to such a significant rise.
According to Department of National Savings (DNS) data, the government's net borrowing from savings tools increased to Tk 287.32 billion during the July-June period of the fiscal year (FY) 2014-15 from Tk 117.07 billion during the corresponding period of the FY 2013-14.
A significant rise in the government's borrowing from savings tools pushed up its debt-servicing liability during the period mentioned above, the officials said.
The payment of profit to buyers of savings tools stood at Tk 98.19 billion in the last fiscal year which was Tk 77.93 billion in the previous fiscal.
Besides, gross sales amounted to Tk 426.59 billion while encashment to Tk 139.27 billion in the last fiscal year.  
The most selling savings instrument was family savings certificates. The total sale of the same stood at Tk 140.53 billion, the DNS data showed.  
A senior official said reduction of rates of interest on term deposits with commercial banks helped raise overall investment in state-run savings instruments in the last FY.
Many depositors encashed their term deposits with banks and purchased savings certificates instead during the period under review, he said.
Because of such higher sales, the government set the target of borrowing from this sector at Tk 210 billion in the revised budget. The original target was set at Tk 90.56 billion in the FY 2014-15.
He, however, said sales have slightly declined in recent months because of the cut in yield rates on savings certificates in May last.
The DNS data showed that sales of savings instruments came down to Tk 21.70 billion in June from Tk 24.33 billion in May and Tk 29.57 billion in April in the fiscal year (FY) 2014-15.
The official said following reduction in the rates of yield, a section of investors got discouraged to invest in DNS instruments. So, sales have now declined to some extent, he added.
"But sales will not come down drastically as the return on investment in savings tools is still higher than that of term-deposits," the official said.
The rates of returns on family savings certificates declined from 13.45 per cent to 11.52 per cent, followed by five-year Bangladesh savings certificates from 13.19 per cent to 11.28 per cent, three-month savings certificates from 12.59 per cent to 11.04 per cent, pensioner savings certificates from 13.19 per cent to 11.76 per cent and post office savings certificates from 13.24 per cent to 11.28 per cent.
Besides, social security premium (SSP) has been withdrawn which was 0.99 per cent on every savings certificate after maturity. The net borrowing of savings certificates and investment bonds amounted to Tk 7.72 billion in the FY 2012-13.    
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