Govt to bank more on savings tools to finance big budget
Wednesday, 3 June 2009
S M Jahangir
The government is set to considerably raise the target of borrowings through savings instruments in the fiscal year (FY) 2009-10 for financing increased budgetary expenditures, official sources said.
"The government's target of net borrowings through state-run savings tools is expected to be nearly Tk 6.0 billion higher than that of the current fiscal," a finance ministry official told the FE Tuesday.
With the possible enhancement, the target of total official borrowings from sales of savings certificates and bonds could hit Tk 34 billion (3,400 crore) for the upcoming fiscal, the official hinted.
In the current fiscal year the government's target of borrowings from its existing savings
tools is Tk 27.85 billion, official sources said.
They also attributed the increased target of borrowings to the government's requirement of additional funds for financing a much bigger budget of the next fiscal year, as has already been indicated by Finance Minister AMA Muhith.
"The government will require to borrow increased volumes of funds both from the internal and external sources for financing its next budget, especially for widening its social safety-net, developing infrastructure and meeting its different election pledges," said an official.
Besides, it will also need additional resources for implementing the proposed national pay scale and raising the allocations for subsidy in the agriculture sector and for the stimulus package for helping local export sectors to cope with the ongoing global financial meltdown, he mentioned.
Against this backdrop, the size of the next budget could be as high as Tk 1100 billion against the current year's original budget of around Tk 990 billion, the official said.
The government has already earmarked Tk 305 billion for its Annual Development Programme (ADP) for the FY 2009-10, up by Tk 49 billion from the original outlay of the current ADP, he added.
"To finance its increased budgetary expenditures, the government is looking to increase its borrowings from savings tools and side by side from donors and local banking sources," said an official.
The official further said a sustained growth in sales of state-run savings instruments over the months has encouraged the government to raise its target of borrowings from the system.
After showing a declining trend for months, the government's borrowings from savings tools registered a significant rise in recent times following the relaxation of a tax provision and other conditions for the investors.
Investors have started to pump funds into the government's savings tools again to a greater extent with the government enhancing the tax-exemption ceiling of interest income from savings tools to Tk 150,000 from Tk 25,000 previously.
Citing figures, official sources said the government's net borrowing through savings instruments had almost doubled to Tk 24.27 billion during the July-April period of this fiscal compared to the corresponding period of last fiscal.
They also indicated that the net official borrowing from the system could exceed Tk 30 billion by the end of this fiscal.
Responding to a question, an official said the next budget is unlikely to see any major revision in the sales target of savings tools, set by the government for the current fiscal.
The government is set to considerably raise the target of borrowings through savings instruments in the fiscal year (FY) 2009-10 for financing increased budgetary expenditures, official sources said.
"The government's target of net borrowings through state-run savings tools is expected to be nearly Tk 6.0 billion higher than that of the current fiscal," a finance ministry official told the FE Tuesday.
With the possible enhancement, the target of total official borrowings from sales of savings certificates and bonds could hit Tk 34 billion (3,400 crore) for the upcoming fiscal, the official hinted.
In the current fiscal year the government's target of borrowings from its existing savings
tools is Tk 27.85 billion, official sources said.
They also attributed the increased target of borrowings to the government's requirement of additional funds for financing a much bigger budget of the next fiscal year, as has already been indicated by Finance Minister AMA Muhith.
"The government will require to borrow increased volumes of funds both from the internal and external sources for financing its next budget, especially for widening its social safety-net, developing infrastructure and meeting its different election pledges," said an official.
Besides, it will also need additional resources for implementing the proposed national pay scale and raising the allocations for subsidy in the agriculture sector and for the stimulus package for helping local export sectors to cope with the ongoing global financial meltdown, he mentioned.
Against this backdrop, the size of the next budget could be as high as Tk 1100 billion against the current year's original budget of around Tk 990 billion, the official said.
The government has already earmarked Tk 305 billion for its Annual Development Programme (ADP) for the FY 2009-10, up by Tk 49 billion from the original outlay of the current ADP, he added.
"To finance its increased budgetary expenditures, the government is looking to increase its borrowings from savings tools and side by side from donors and local banking sources," said an official.
The official further said a sustained growth in sales of state-run savings instruments over the months has encouraged the government to raise its target of borrowings from the system.
After showing a declining trend for months, the government's borrowings from savings tools registered a significant rise in recent times following the relaxation of a tax provision and other conditions for the investors.
Investors have started to pump funds into the government's savings tools again to a greater extent with the government enhancing the tax-exemption ceiling of interest income from savings tools to Tk 150,000 from Tk 25,000 previously.
Citing figures, official sources said the government's net borrowing through savings instruments had almost doubled to Tk 24.27 billion during the July-April period of this fiscal compared to the corresponding period of last fiscal.
They also indicated that the net official borrowing from the system could exceed Tk 30 billion by the end of this fiscal.
Responding to a question, an official said the next budget is unlikely to see any major revision in the sales target of savings tools, set by the government for the current fiscal.