Kazi Zahidul Hasan :
The government’s interest payment against its borrowing from the high yielding national savings certificates jumped by 44 per cent in the fiscal year 2016-17 due to an abrupt rise in the sales of savings certificates during the period.
During the fiscal, it had paid Tk 16,046 crore as interests for the borrowing, while the figure was Tk 11,151 crore in the previous fiscal year (2015-16), according to an official figure.
“The sales of national savings certificates hit record high last fiscal pushing up the government’s interest payment to this head. People continue to park up their funds in savings certificates due to lucrative interest rates pushing up their sales unexpectedly,” a senior Finance Ministry official told The New Nation yesterday.
The official said, “The government had borrowed the amount to meet up budget deficit. The borrowing was an internal debt, which is not a burden for the economy in the real sense because the debt repayments represent transfer form tax-payers”.
The figure shows, the government borrowed Tk 52,415 crore from the national savings schemes in the last fiscal year, while it’s borrowing from savings certificates stood at Tk 33,688 crore in the fiscal year 2015-16.
The total amount of borrowing was calculated from the net sales of savings certificates.
“The government earlier slashed interest rates on savings tools by up to two percentage points to reduce its borrowing. But people continue to bet their money on it due to poor rates on banks’ fixed deposits,” said the official, adding, “The government interest payment is expected to rise further unless the government cut the interest rates.”
“The interest rates of government’s savings tools are abnormal. Such rates are fuelling the government interest payment liability. It may cause an adverse economic impact at the end of the day,” Prof Dr Mustafizur Rahman, an economist, told The New Nation yesterday.
He said the government should bring down the interest rates on national savings certificates in line with those of bank deposits.
Banks now offers 4 to 5 per cent interest on various types of deposits.
“I don’t see any logic behind the government’s borrowing from high yielding savings tools when the money is available in banks at much cheaper rates,” added Prof Mustafiz.
The government now offers 11.52 per cent interest on the five-year family savings certificates while 11.76 per cent on the five-year pensioner savings schemes.
It offers 11.28 per cent interest on the three-year post office savings certificates, 11.28 per cent on Bangladesh Savings Certificates and 11.04 per cent interest on three-year profit-based savings certificates.
