Govt saving certificate borrowing sharply declines in Q1 of FY23

Business Desk :
The government saving certificates borrowing fell significantly in the July-September quarter (Q1) of FY23 as a result of low sales and hefty repayments.
According to the most recent data from Bangladesh Bank, the government’s net borrowing from the sale of savings certificates was Tk330 crore in Q1 FY23 compared to Tk8,558 crore in the same period of FY22.
That indicates a decrease in government borrowing from this sector of more than Tk8,228 crore from the same time last year.
The government borrowed Tk21,511 crore from savings certificates in the first three months of the current fiscal and repaid Tk21,180 crore in prior loans, according to the central bank data.
Whereas in the last fiscal year 2021-22, the government took a loan of Tk26,605 crores from savings certificates and paid back Tk18,047 crore.
However, what is left over after paying the interest and principal of the savings certificate sold earlier is called the net sale of savings certificates.
The proceeds from the sale are deposited in the government treasury and used by the government to implement state development.
In return, the savings certificate customers have to pay profits every month.
In economic terms, the net sale of savings certificates is considered a loan or government’s internal borrowing.
Did inflation hit hard?
According to economists and bankers, rising inflation has caused people’s expenses to rise while the overall trend in savings, including savings certificates and bank deposits, has fallen.
Asked about the collapse in the sale of savings certificates and its impact, Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, told that earlier that it is a good sign that the government’s net borrowing from savings certificates is falling as it has to pay high interest and it would be better if the government takes loans from banks at lower interest.
The rate at which inflation in the country is increasing has increased the consumption of the middle class and reduced the amount of savings, he added.
Earlier, people used to buy savings certificates by resorting to forgery which is regulated now.