The government's net borrowing through national savings instruments continued to decline during the first quarter of the current fiscal mainly due to substantial encashment of savings certificates on maturity by the institutional investors.
The government's interest payment on savings instruments has also significantly gone up due to the increased withdrawal of investment, official sources said.
The latest official figures showed that the government's net borrowing from the system fell by 33.60 per cent during the July-August period of the 2005-06 fiscal over the corresponding period of last fiscal.
The gross sale of the savings instruments, however, maintained a steady growth during the first two months of the current fiscal over that of the corresponding period of last fiscal.
According to sources, the governmnet's net borrowing from the sale of savings tools fell to Tk 3.56 billion during the months of July and August, 2005 compared to that of Tk 5.36 billion in the corresponding period of 2004.
Such a sharp fall in the net borrowing was mainly because the savers withdrew their investments amounting to Tk 17.97 billion as against the total sale of savings certificates amounting to Tk 21.53 billion by the government during the last July-August period.
During the July-August period of 2004, savings certificates worth about Tk 11.54 billion was encashed by the investors as against the total sale of the same at Tk 16.90 billion, official sources mentioned.
Citing examples, an official said the government borrowed a net amount of Tk 644.30 million only through the sale of its tri-monthly profit oriented savings certificates during the first two months of the current fiscal.
The government paid a sum of Tk 8.36 billion as interest against its borrowing through saving certificates during the fist two months of 2005-06 fiscal. The amount of interest paid on the same was Tk 5.99 billion during the corresponding period of the last fiscal.
Officials said because of restrictions, institutional investors cannot re-invest their funds in savings instruments following the maturity of the existing savings certificates.
Earlier, the government put an embargo on the institutional investment in the savings schemes in a bid to diverting such investment to the country's stock markets.
They also indicated that the government's net borrowing from the non-banking sources would come down again in the current fiscal if the current rate of withdrawal persisted.
They also said the governmnet's net borrowing from the system registered a 33 per cent decline in the last fiscal over that of the fiscal 2003-04.
The net sale of the savings instruments reached as low as Tk 27 billion in the last fiscal compared to that of Tk 36.06 billion in the FY 2003-04.
The gross sale of savings instruments, however, crossed a Tk 100 billion mark in the FY 2004-05 fiscal, they pointed out.
Responding to a question, they said even after the frequent readjustments of interest rates by the government, general investors still consider savings instruments as safe and profitable investment avenues.