bdnews24.com :
The International Monetary Fund, or IMF, has urged the Bangladesh government to reduce its reliance on National Savings Certificates.
The financial organisation said the certificates were a high-cost way to cover part of the government’s debt in a report on Bangladesh’s consultation with the IMF Executive Board on May 26.
“Directors recommended that better focussed and less costly alternatives should be considered that achieve the government’s social policy goals without distorting financial markets,” the report said.
The debt burden due to Bangladesh’s National Savings Certificates has been a matter of concern for the government.
On May 21 Finance Minister AMA Muhith announced a cut in interest rates on savings certificates to restrict the purchase.
“Generally, the rate is 1 or 2 percentage points more than the rates of interest on bank deposits. But the difference is more than 4 percentage points now.
“Investment will increase if it continues. The government’s future debts will rise.
That’s why we are taking the decision to review it,” he said.
The announcement of the planned decrease in the interest rate has spurred a rush to buy the certificates before their rates of return drop.
The latest review of the savings certificate interest rate comes about two years after it was reduced by 2 percent on May 10, 2015.
Even after the first cut, a five-year family savings scheme of Tk 100,000 yields a monthly return of Tk 912. Previously the same investment had returned Tk 1,070 per month.
The International Monetary Fund, or IMF, has urged the Bangladesh government to reduce its reliance on National Savings Certificates.
The financial organisation said the certificates were a high-cost way to cover part of the government’s debt in a report on Bangladesh’s consultation with the IMF Executive Board on May 26.
“Directors recommended that better focussed and less costly alternatives should be considered that achieve the government’s social policy goals without distorting financial markets,” the report said.
The debt burden due to Bangladesh’s National Savings Certificates has been a matter of concern for the government.
On May 21 Finance Minister AMA Muhith announced a cut in interest rates on savings certificates to restrict the purchase.
“Generally, the rate is 1 or 2 percentage points more than the rates of interest on bank deposits. But the difference is more than 4 percentage points now.
“Investment will increase if it continues. The government’s future debts will rise.
That’s why we are taking the decision to review it,” he said.
The announcement of the planned decrease in the interest rate has spurred a rush to buy the certificates before their rates of return drop.
The latest review of the savings certificate interest rate comes about two years after it was reduced by 2 percent on May 10, 2015.
Even after the first cut, a five-year family savings scheme of Tk 100,000 yields a monthly return of Tk 912. Previously the same investment had returned Tk 1,070 per month.
