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In other words, 36.28 percent of the government’s goal of obtaining savings certificate loans to cover the budget deficit was met in two months.
Ahsan H. Mansoor and Zayed Bakht, two economists, say that government debt in the sector is also increasing as sales of savings certificates have increased ‘abnormally’ amid the coronavirus epidemic.
According to data released by the National Savings Department on Thursday for two months (July-August), during this period net savings certificates worth Rs 8,455.05 million Tk have been sold. This figure is more than double the same period of the last fiscal year 2019-20.
During July-August of the last financial year, net savings certificates worth Tk 3,612.36 million rupees were sold.
In the first month of the current financial year, net savings certificates worth Tk 3,544.06 million rupees were sold in July. And net sales in August were Rs 3,848.61 crore, which is the highest in a month and a half.
Previously, in March 2019, net savings certificates were sold for a value of 4,130.61 million Tk. And in August last year, the amount of this sale was 1,499.69 million rupees.
As can be seen, net sales of savings certificates in August have increased by 150 percent compared to August last year.
A total of Tk 14,426.35 crore was sold throughout the 2019-20 fiscal year.
What remains after the interest-principal payment of the previously sold savings certificate is called a net sale. The money is deposited into the government treasury and the government uses it to implement state programs. In return, savings certificate customers must pay interest every month. For this reason, in economic terms, net sales of savings certificates are considered ‘loans’ or ‘borrowings’ from the government.
The coronavirus epidemic has brought an economic crisis to people’s lives. Savings certificate sales are on the rise despite rising income tax rates and various restrictions. Economists are not sure why.
Zayed Bakht, a researcher at the Bangladesh Institute for Development Studies (BIDS), told bdnews24.com: “The increase in the sale of savings certificates is really unusual. After June, more sales from July-August! I’m surprised. I can’t find any reason. “
Ahsan H. Mansoor, executive director of the Policy Research Institute (PRI), told bdnews24.com: “Where do people get money from in these tough times? I don’t get it.”
However, there are two possible reasons for this, he said, adding: “People may be buying savings certificates with a portion of remittances sent by expatriates. They used to buy it, but now this number has increased due to the increased flow of money. remittances.
“Also, since the interest rate on savings certificates is higher than any other savings scheme, everyone here is investing.”
Savings certificate sales have exploded in recent years due to lower interest rates on bank deposits and a prolonged recession in the capital market. The government’s debt burden was also increasing abnormally.
To reduce the selling pressure, the withholding rate on earnings from savings certificates was increased from 5% to 10% from July 1 of last year. Also, TIN (Tax Identification Number) is required to purchase savings certificates worth more than one lakh of rupees.
In addition, the sale of savings certificates began to decline as a result of the adoption of some stricter measures, including the condition of not selling savings certificates if you do not have a bank account. But now it grows again.
To cover the budget deficit, the government had set a goal of borrowing Tk 26,000 crore of savings certificates in fiscal year 2019-20. Sales were down to Tk 11,924 crore in the middle of the year.
But due to the abnormal sales in June, the government borrowing of savings certificates stood at Tk 14,426.35 crore at the end of the financial year.
Analysis of the Department of Savings data shows that the sale of savings certificates came to a standstill last April after the Kovid-19 epidemic began to affect Bangladesh. In that month, a total of savings certificates of 61 crore 8 lakh taka were sold. The interest paid is almost double the amount of Tk 1,263.55 crore. Net sales were negative at Tk 621.06 crore.
In other words, clients were paid in interest 621 crore 7 lakh more than the number of savings certificates sold in April.
In May, savings certificates worth Tk 3,226.90 million rupees were sold. 2,696 crore 8 lakh was paid as interest. Net sales were 430 crore 23 lakh rupees.
In fiscal year 2018-19, the government borrowed Tk 49,939.49 crore from savings certificates. In the previous year, 46,530 crore 30 lakh rupees were needed. And in the 2016-17 fiscal year, the government borrowed Tk 52,416.48 crore of savings certificates, which is the highest in the country’s history.
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