The government has failed to achieve net borrowing from savings certificates for the fourth consecutive year. Instead, repayments due to maturity and early encashment have exceeded new sales, putting additional pressure on public finances and limiting this source's contribution to financing the budget deficit.
One key reason behind the decline in savings certificate purchases is reduced household capacity to save, as high inflation has eroded disposable income. As a result, many people are unable to invest in these instruments.
Traditionally, savings certificates have been a key financial support tool for middle- and lower-income families, offering a source of steady returns and emergency funds for expenses such as medical treatment and household needs.
Government data indicates that not only have new purchases declined, but many investors are also encashing previously purchased savings certificates to cope with rising living costs.
According to the Ministry of Finance, the target for the 2025-26 fiscal year is to borrow Tk 12,500 crore through savings certificates. However, in the first eight months of the current fiscal year (July-February), net sales stood at a negative Tk 555 crore, meaning repayments exceeded new sales during this period.
The National Savings Department recently sent a letter to Internal Resources Department (IRD) and National Board of Revenue (NBR) Secretary Abdur Rahman Khan informing him of this information. The letter, signed by the director general of the department, Rawshan Ara Begum, presents an updated picture of investment until February.
According to the data, a total of Tk 6,407 crore worth of savings certificates were sold through banks, savings departments and post offices in February of the current fiscal year. At the same time, Tk 7,571 crore worth of previously purchased savings certificates were repaid.
As a result, net sales in February alone were negative by Tk 1,165 crore. That is, repayments were more than sales.
Although a total of Tk 61,313 crore worth of savings certificates were sold in the eight months from July to February, Tk 61,868 crore had to be repaid. This brought net sales to Tk 555 crore.
Net sales in savings certificates were negative in the previous three fiscal years as well. In the 2024-25 fiscal year, net sales were negative at Tk 6,63 crore. In the 2023-24 fiscal year, it stood at Tk 17,999 crore.
The government received positive net loans from this sector in the last fiscal year 2021-22. Against the target of 32,000 crore taka that year, the government took a net loan of 20,260 crore taka.
As investment in savings certificates increases, the government's debt also increases. The government has to pay comparatively higher interest against this debt. As a result, initiatives have been taken to reduce debt from this sector since the time of the Awami League government to reduce interest expenses. Various steps were also taken, including reducing the profit rate.
Although new sales have decreased somewhat, the government's expenditure on profit is still very high due to the redemption of previous savings certificates.
IRD Secretary Abdur Rahman Khan said that the government has to pay high interest on both savings certificates and treasury bills and bonds. A total of said Tk 122,000 crore has been allocated for loan interest payments in the budget for the fiscal year 2025-26, of which a large part will be spent on paying interest on savings certificates and treasury bills and bonds.
When the government receives less money from savings certificates, it has to borrow from alternative sources. Bank loans have become the easiest way. In recent times, the government has had to borrow a large amount from the central bank to meet urgent needs.
The pace of bank borrowing by the new government has increased significantly. The current government has borrowed Tk 44,500 crore from the banking system in just 52 days of assuming power. Due to the rapid increase in borrowing, the government has already exceeded the borrowing target set in the budget for the current fiscal year.
