Government’s borrowing from the sales of national savings certificates remained buoyant in the first month of the fiscal year 2018-2019 in line with the trend of the last fiscal year as the rate of return from the instruments remained high.As per the data of the Directorate of National Savings, government’s borrowing from the NSCs stood at Tk 5,035 crore in July of the FY19.
Government’s net borrowing from the savings certificates was Tk 46,530.30 crore in the fiscal year 2017-2018 against its initial target that was revised upward to Tk 44,000 crore.
The net sale of NSCs was Tk 5,053 crore in July of the last fiscal year.
Government after the budget approval has already announced that it will not cut interest rate of NSCs before the national election likely to be held by the end of December this year.
‘Whatever changes may come in the interest rate of savings certificates it will come into force after the next general election,’ said finance minister AMA Muhith.
Besides the announcement from the government, high interest rates of NSCs compared with fixed deposit rates of banks was another reason behind the high sales of the saving tools, officials of central bank said.
Investors were in an apprehension that the deposit rates of the banks might decline further in the coming days as banks were in a move to cut deposit rate to 6 per cent to implement a decision of the government high-ups, they said.
The officials also said that the implementation of the single digit deposit and lending rate would affect the savers and that’s why they preferred making investments on the NSCs rather than keeping money in the banks.
Deposit rates in the banks hover around 3 to 8 per cent for different period of time, as per central bank data.
On the other hand, the rates offered by the NSCs are between 11.04 per cent and 11.76 per cent, helping the government to lure investments to the tools.
The government in the budget for 2018-2019 announced that it would collect Tk 29,197 crore through the sales of national savings certificates and other non-bank sources.
Borrowing from the NSCs was Tk 33,688.60 crore in the fiscal 2015-2016 and Tk 52,417.48 crore in fiscal 2016-2017.
Government in the fiscal year allocated Tk 51,000 crore for the repayment of interest while the amount was Tk 41,000 crore last year.
As government’s fund collection from NSC sales were on the rise so did the allocation for interest payment.
Government’s outstanding NSC sales increased to Tk 2,42,2.26 crore at the end of June this fiscal year from Tk 1,96,289.76 crore as of June last year.
Source: New Age.
