Saving tools are one of the main options of the government to collect money from investors; it can control monetary flow by adjusting the interest rate on saving tools. Unexpectedly, the net sales of saving tools, especially national saving certificates, recorded a fall of staggering 62.72 per cent compared to that in the last fiscal. As a result, according to experts, the government bagged Tk 2,522.63 crores less from the single sector in August. This shortfall is likely to compel the government to increase borrowing heavily from the commercial banks.
Though the government targeted to borrow less from commercial banks and it did not borrow until the end of April, as of May 15, it took Tk 7, 998 crores from the source. The immediate dampening effects of the high borrowing driven by the trend of decreasing sales of savings tools has already concerned the country’s financial analysts and bankers.Due to the default loan crisis in the banking sector, almost all the commercial banks are in dire shortage of money. The increasing rate of govt. borrowing will worsen this liquidity crisis and affect the flourishing of the private sector which is called the growth generating sector in the economy. The decreasing sales of savings certificates will lead to the slow pace of the country’s progress and mount sufferings of people high by shooting up inflation in the long run.
As reported, the rising tax on interest from investment on savings tools and strict rules and regulations imposed by the government for purchasing are the main reasons why sales of the savings instruments is falling. This trend will leave multifarious negative impacts on the economy and people’s lives if not addressed properly and in time. More importantly, this will largely hinder the government’s objective to grow at a high rate to achieve a respected position in the comity of nations.
The government should manage the liquidity crunch by making monetary policy adjustments, including addressing those factors that are affecting sales of savings tools, consolidating efforts to increase FDI and addressing the banking crisis.