During the budget presentation for the next fiscal year, Finance Minister AHM Mustafa Kamal may propose a loan target of Tk20,000 crore from savings certificates
The government looks set for a lower borrowing from savings tools to meet the budget deficit in the upcoming fiscal year as it received a low response from the sector during the current fiscal year.
During the budget presentation for the next fiscal year, Finance Minister AHM Mustafa Kamal may propose a loan target of Tk25,000 crore from non-banking sources, including Tk20,000 crore from savings instruments and Tk5,000 crore from other non-banking systems, according to ministry insiders.
The national budget for the fiscal year 2020-21 is going to be presented in the parliament only four days later, on June 11.
For the current fiscal year (2019-20), the government targeted Tk30,000 crore in loans from non-banking sources, of which Tk27,000 crore was expected from national savings schemes.
But it had to cut the target to Tk11,924 crore in the revised budget for savings tools. The total target from non-banking sources was reduced to Tk14,924 crore.
Ahsan H Mansur, executive director of Policy Research Institute – a private think tank, told The Business Standard that in the current fiscal year the government did not get as much loan as it had targeted from this sector.
From this fiscal year, the government tightened the investment process on savings schemes, he also said.
From July 1 last year, the government brought popular four kinds of savings schemes under automation and made e-TIN mandatory for investment in them.
A tax burden for over Tk5 lakh in investment was also put in place. Besides, the investment ceiling was set at Tk50 lakh for a person while that for a pensioner at Tk1 crore.
After that, people lost interest in investing on national savings certificates. In the first seven months in the present fiscal year, the government got net Tk7,673 crore in loan from the sector.
However, the figure was Tk30,996 crore in the last fiscal year.
Shamsunnahar Begum, director general of the Directorate of the National Savings, said a committee was trying to include two other schemes – postal term deposit and savings deposit – into the individual investment limit of Tk50 lakh.
Recently, the government has reduced the investment limit for postal savings tools to Tk20 lakh from Tk60 lakh.
In the current fiscal year, the government issued a circular about a cut in the profit rate of national savings schemes. However, it did not do that on the occasion of the Mujib Year.
So, the profit rate for the national savings schemes is still around 11 percent while the bank deposit interest rate is maximum 6 percent.
Like in other least developed countries, the government in Bangladesh sets a deficit budget and borrows from internal and external sectors to meet the fiscal deficit.