Sales of government savings certificates have dropped sharply in recent months, reflecting the combined impact of an economic slowdown, shrinking household incomes, and implementation of the International Monetary Fund (IMF) conditions.
In August last year, customers invested or purchased savings certificates worth Tk2,036 crore, but in August this year, sales plunged to just Tk289 crore – a fall of Tk1,785 crore or 87.67%, according to Bangladesh Bank data.
Compared with July, August sales slumped by 78.42%. Overall, net sales for the July-August period were down 62.78% year-on-year.
In addition, the government has deliberately limited new sales to meet IMF requirements, further suppressing investment despite savings certificates being viewed as one of the safest investment options.
Under the IMF’s $4.7 billion loan program, the government must ensure that no more than 25% of its fiscal deficit is financed through savings instruments.
It also requires aligning returns on savings certificates with market-based rates. Consequently, yields are now linked to the average six-month Treasury bill rate, which has declined in recent months, discouraging new buyers.
Despite the downturn, savings certificates continue to serve as an important social security tool, particularly for retirees who rely on the interest income to cover household expenses.
In July, gross sales of savings certificates stood at Tk7,916 crore, while Tk6,622 crore was paid out in maturities and interest, leaving net sales at Tk1,293 crore.
By August, that figure had plunged to Tk289 crore. The total outstanding balance of savings certificates fell to Tk3.40 lakh crore at the end of August, compared with Tk3.51 lakh crore a year earlier.
Decline in savings certificate sales has also reduced the government’s borrowing from this source, prompting greater reliance on the banking system – further tightening liquidity in banks.
The government had set a borrowing target of Tk104,000 crore from banks for FY26.
However, due to higher revenue collection and restrained spending, it has begun repaying previous debts instead.
In FY25, net bank borrowing stood at Tk72,372 crore – the lowest in four years and Tk26,628 crore below the revised target.
Over the past three fiscal years, reliance on savings certificates has dropped significantly.
Borrowing targets from this source have been cut from Tk35,000 crore in FY23 to just Tk12,500 crore in the current fiscal, reflecting a strategic shift away from traditional domestic borrowing.
Interestingly, during the first two months of FY26, the government repaid more than it borrowed, resulting in a net reduction of Tk2,517 crore in total bank debt.
