Govt's net borrowing target likely at Tk 320 billion

The government is set to enhance, by over 50 percent, the net borrowing target from National Savings Schemes to Tk 320 billion in the new fiscal year, up from the current fiscal's Tk 200 billion, sources said.

In the new budget for the fiscal year 2021-22, the government is lowering dependence on bank borrowing, while enhancing borrowing from savings instruments and foreign sources for nearly 6.2 percent deficit financing.

Earlier this month, the government revised the net browning target for the outgoing fiscal year at Tk 300 billion from the original Tk 200 billion after a massive spike in sales of savings instruments.

Officials said the government had launched the online database system for selling the savings instruments in February 2020 and later implemented this countrywide in July last year.

As part of the efforts to monitor beneficiaries of lucrative saving certificate yields the government in the current fiscal year made taxpayer's identification number (TIN), depositing money through bank cheque, and national identity card mandatory for buyers.

Following making the documents mandatory for buying the savings instruments, the sale of the certificates faced a blow at the preliminary stage. However, the savers got accustomed to the new system in  the meantime and the sales picked up.

Due to the upward trend in sales of the instruments, the government, while revising the budget for the current fiscal year, set the new target of net borrowing at Tk 300 billion. A senior finance ministry official said on Tuesday that the selling of savings instruments is now monitored online to avert any misuse of the facility and to ensure that the benefit goes to the targeted people.

He said until March of the current fiscal year, the net borrowing against the savings certificate sales reached Tk 332 billion; in March alone, the savings directorate sold certificates worth Tk 107 billion.

The rate of return from savings certificates is over 11 percent, while the same is around 4.0 percent in the banking system, the official also said.

Therefore, he said, savers prefer to invest in savings instruments instead of keeping idle money in banks.

The sales of savings instruments in the coming fiscal year will rise further, he predicted.

In the last fiscal year (2019-20), the government borrowed only Tk 119 billion by selling savings certificates.