Sale of savings tools falls by 62.72pc

Govt bank borrowing to meet budget

Anisul Islam Noor

19 October, 2019 12:00 AM printer

The government bank borrowing is likely to be higher in the current fiscal as the net sales of national savings certificates (NSC) fell by 62.72 compared to that in the last fiscal, experts assume.

The NSC sale fell by 62.72 percent which suggests a Tk 2,522.63 crore less earning form a single sector in August.

In the budget for FY’20, the revenue collection target was set at Tk3,77,810 crore, leaving the deficit at Tk1,45,380 crore.

To meet the deficit, the government planned to borrow Tk63,848 crore from overseas sources and the rest Tk77,363 crore from domestic sources mainly from banks and saving certificates.

Of the amount from the domestic sources, Tk27,000 crore will come from National Savings Schemes, and Tk3,000 crore from non-bank sources.

Former bureaucrat and adviser of the caretaker government A. B. Mirza Azizul Islam told daily sun in this situation the government dependency on bank borrowing will increase.

He said the revenue collection target in July-August period was not achieved as the export-import business slightly fell.

The government should emphasise special effort for FDI to bring diversification in exporting goods and service to attack foreign investor. 

However, the rising tax on interest from investment on savings tools might be the reason for the fall in NSC sales in August.

The NSC sales also dropped by 57 percent in July, the first month of the current fiscal year, said a Bangladesh Bank high official.

Talking to daily sun, Pubali Bank Managing Director and CEO Md Abdul Halim Chowdhury said the sales of NSCs dropped significantly in the July and August of the current fiscal year due to strict rules and regulation imposed by the government for purchasing saving tools. In the Finance Bill-2019, the government increased the tax at source on savings instruments to 10 percent.

A few days later, the government slashed the tax at source on interest from investment in NSC worth up to Tk5 lakh to 5 percent from 10 percent with effect from

August 28.

The savings instruments over Tk5 lakh will incur 10 percent tax at source.

According to the new rules imposed by the government, investors purchasing saving tools should submit E-tin certificate and national identity card.

If the amount of money is more than one lakh, they must pay the money through bank check.