Govt's net borrowing marks 44pc rise in 2008-09 fiscal
Monday, 10 August 2009
S M Jahangir
The government's net borrowing from the public marked a 44 per cent rise in the fiscal year (FY) 2008-09 over the previous fiscal following the relaxation of a tax provision, official sources said.
Such a steep rise in the borrowing also pushed the government's overall liability significantly up for servicing its internal debt in the last fiscal.
Official data showed the government's borrowing through savings instruments crossed Tk 36.33 billion in the FY 2008-09 against Tk 25.18 billion in the previous fiscal.
Besides, the net borrowing from the system also exceeded the target by around Tk 8.48 billion. The government had fixed its next borrowing target from sales of state-run savings certificates/bonds at Tk 27.85 billion, the figures showed.
On the other hand, the government's payment of interest for serving such a big volume of debt also marked a 25 per cent increase in the last fiscal over the previous fiscal, official figures revealed.
The government had to count interest to the tune of Tk 70.61 billion against its borrowing from savings certificates in the FY 2008-09 while the amount was Tk 56.31 billion in the FY 2007-08.
Officials also attributed such a sharp increase in the official borrowing to the relaxation of the income-tax provision and other conditions for the investors.
"General investors pumped an increased volume of money into the state-run savings tools following an enhancement of the tax-exempt ceiling on interest gains from their investments," said an official.
The National Board of Revenue (NBR) had raised the tax exemption ceiling on interest earnings from the savings certificates to Tk 150,000 in October 2007 following strong criticism and opposition from various quarters including the investors.
Earlier, the NBR imposed a 10 per cent tax at source from July 1, 2007 on minimum interest of Tk 25,000 to be gained from the government's existing savings certificates and other investment bonds.
The imposition of such tax had not only resulted in a huge withdrawal of investment from the system, but it also affected the normal investment growth under the savings tools, official sources said.
Yet another official provision, under which the investors would not require to make any declaration about their previous investment while buying the savings instruments, also lured individuals to invest more in the system, said an official.
"Both the revised provisions has helped reverse the previous declining trend in the sales of savings instruments," the official said, adding that the withdrawal of investment from the system by the inventors also declined significantly.
Citing statistics, the official said the overall sales of savings certificates reached Tk 160.35 billion in the FY 2008-09 while the amount was Tk 141.05 billion in the previous fiscal.
Taking the prevailing investment trend into account, officials of the National Savings Directorate also hinted at the possibility of a further increase in sales of savings tools in the months ahead.
The government's net borrowing from the public marked a 44 per cent rise in the fiscal year (FY) 2008-09 over the previous fiscal following the relaxation of a tax provision, official sources said.
Such a steep rise in the borrowing also pushed the government's overall liability significantly up for servicing its internal debt in the last fiscal.
Official data showed the government's borrowing through savings instruments crossed Tk 36.33 billion in the FY 2008-09 against Tk 25.18 billion in the previous fiscal.
Besides, the net borrowing from the system also exceeded the target by around Tk 8.48 billion. The government had fixed its next borrowing target from sales of state-run savings certificates/bonds at Tk 27.85 billion, the figures showed.
On the other hand, the government's payment of interest for serving such a big volume of debt also marked a 25 per cent increase in the last fiscal over the previous fiscal, official figures revealed.
The government had to count interest to the tune of Tk 70.61 billion against its borrowing from savings certificates in the FY 2008-09 while the amount was Tk 56.31 billion in the FY 2007-08.
Officials also attributed such a sharp increase in the official borrowing to the relaxation of the income-tax provision and other conditions for the investors.
"General investors pumped an increased volume of money into the state-run savings tools following an enhancement of the tax-exempt ceiling on interest gains from their investments," said an official.
The National Board of Revenue (NBR) had raised the tax exemption ceiling on interest earnings from the savings certificates to Tk 150,000 in October 2007 following strong criticism and opposition from various quarters including the investors.
Earlier, the NBR imposed a 10 per cent tax at source from July 1, 2007 on minimum interest of Tk 25,000 to be gained from the government's existing savings certificates and other investment bonds.
The imposition of such tax had not only resulted in a huge withdrawal of investment from the system, but it also affected the normal investment growth under the savings tools, official sources said.
Yet another official provision, under which the investors would not require to make any declaration about their previous investment while buying the savings instruments, also lured individuals to invest more in the system, said an official.
"Both the revised provisions has helped reverse the previous declining trend in the sales of savings instruments," the official said, adding that the withdrawal of investment from the system by the inventors also declined significantly.
Citing statistics, the official said the overall sales of savings certificates reached Tk 160.35 billion in the FY 2008-09 while the amount was Tk 141.05 billion in the previous fiscal.
Taking the prevailing investment trend into account, officials of the National Savings Directorate also hinted at the possibility of a further increase in sales of savings tools in the months ahead.