The government could draw only Tk8bn from saving instruments, which was simply half of target after revise, says an official report.
According to the report the instruments released by the government were less attractive to the people than banks’ deposit schemes and stock market.
This failure of saving instruments led the government to heavily borrow from the banking sector.
Finance Ministry’s cash and management committee unveiled this provisionary report on domestic borrowing and cash position during the just concluded fiscal year 2012-13.
Borrowing target from saving instruments was revised to Tk16.16bn from Tk74bn in the fiscal.
A finance official cited people’s tendency to keep money in hand rather than investing in saving schemes during political turmoil and election year as one of reasons behind the failure.
Besides, the instruments were less attractive to the people, he said.
“We proposed to increase interest rate and offer tax rebate at sources. The proposals were taken into account,” the official alleged.
In the current context, there are more likeliness to get more profit investing in stock market and participating in banks’ deposit schemes than buying government saving instruments.
“Without making lucrative offers, the government could not increase raising fund from saving instruments,” Mustafa K Mujeri, Director General of Bangladesh Institute of Development Studies (BIDS).
He criticised the government’s dependence on bank borrowing to meet fiscal expenditures as it shrinks private sector investment and rises inflation.
In the fiscal, the non-bank borrowing target was Tk105bn, including Tk74bn from saving instruments. After revise, the target was cut to Tk47bn and till June 23, the government’s non-bank borrowing totalled Tk39bn or 83% of the revised target.
In the budget, borrowing target from banking sector was announced Tk230bn. After revise, the government raised it to Tk285bn. But at the end of fiscal, bank borrowing stood at Tk252bn or 88% of revised target.
Thus, the total borrowing target from domestic sectors- bank and non-bank- was Tk332bn after revising the budget figure of Tk335bn. At the end of fiscal, total borrowing stood at Tk291bn or 88% of the revised target, the report says.
“It is not comfortable that the government could not reach its borrowing target,” said a finance division official who is also a member of Cash and Debt Management Committee.
It may be mentioned that the collection of money from treasury bills was 100% of target in the fiscal and that from bond even crossed the target. The target from treasury bills was Tk61bn, and after revise, Tk93bn while target from bonds was Tk184bn which was revised to Tk207bn and Tk212bn was collected.
