Investments in savings bonds have declined further, with the net investment reaching a negative Tk1,040 crore in October, the fourth month of the current fiscal year 2023-24.

During the first two months (July-August) of FY24, savings certificates net investment increased, surpassing the figures from the corresponding period in FY23 by a staggering 14 times.

According to Bangladesh Bank data, in July and August FY24, net sales stood at Tk3,250 crore and Tk2,312 crore respectively. In these two months, more savings certificates were purchased than redeemed.

However, September, the third month of the fiscal year, witnessed a sharp decline in sales. Investment in the sector reached a negative Tk148 crore in September.

In September and October, government’s repayment of interest-principal of savings bonds sold in the previous year took the investment figure to further negative.

The net sale of savings certificates is what remains after paying the interest and principal on the savings certificate sold previously. For this reason, in economic terms, the net sale of savings bonds is considered a ‘debt’ or ‘borrowing’ of the government.

“Savings of people’s safest investment, savings certificates, fell due to the reduction in interest rates and various austerity measures. That is why the net sales were negative,” said Ahsan H Mansur, executive director of the Policy Research Institute (PRI).

To meet the budget deficit, the government had set a target of borrowing Tk35,000 crore from Savings Certificates in the budget of the last FY23.

The government was not getting the desired loan from this sector due to various types of austerity, a reduction in interest rates, and an increase in inflation, which led to a decrease in sales. As a result, the revised budget reduced the target to Tk20,000 crore in last fiscal year.

At the end of the financial year, the government did not get any loan from the savings certificate and Tk3,296 crore have been paid from the exchequer or by taking loans from the banking system for interest-principal repayment and repayment of savings bonds sold earlier.

In the current FY24, the government is planning to take a loan of Tk18,000 crore by selling savings certificates.