Government borrowing through savings certificates has somewhat increased following a protracted decrease. The government borrowed BDT 23.69 billion from savings certificates during the first four months of the current fiscal year (July–October).

In comparison, net borrowing was negative by more than BDT 60 billion at the end of the preceding fiscal year. Savings certificate sales have been fewer than redemptions for the last three fiscal years, resulting in negative net sales. The total amount of the government’s outstanding savings certificate debt as of the end of October was BDT 3,408.68 billion.

To finance the budget deficit, the government sets borrowing targets from both domestic and foreign sources. In the current fiscal year, the target for net borrowing from savings certificates is BDT 125 billion. In the original budget of the previous fiscal year, the target was BDT 154 billion, which was later revised down to BDT 140 billion. However, redemptions exceeded sales. Net sales are calculated by deducting matured and prematurely encashed certificates from total sales.

For the current fiscal year, the government has set a borrowing target of BDT 1,040 billion from the banking system. As of December 12, the government had borrowed BDT 452.39 billion. In the original budget of the previous fiscal year, the bank borrowing target was BDT 1,375 billion, later revised to BDT 990 billion. Ultimately, the government borrowed BDT 723.72 billion.

Officials concerned said that due to comparatively higher interest rates and other factors, savings certificate sales once exceeded budget targets. To reduce government borrowing through savings certificates, interest rates were gradually lowered several times. While interest rates on treasury bills and bonds increased significantly, rates on savings certificates declined. As a result, sales of savings certificates have been falling over the past three fiscal years. On the other hand, individual investment in treasury bills and bonds has increased several fold.

However, in recent months, interest rates on bills and bonds have started to decline again, leading Bangladesh Bank officials to expect a potential rise in investment in savings certificates.

According to data from the National Savings Directorate, in fiscal year 2024–25, net sales of savings certificates fell by BDT 60.63 billion, reducing the government’s outstanding debt to BDT 3,384.99 billion. By October, it rose again to BDT 3,408.68 billion. Earlier, in fiscal year 2023–24, the outstanding amount declined by BDT 211.24 billion; in 2022–23, it fell by BDT 32.96 billion. In fiscal year 2021–22, the government borrowed a net BDT 199.16 billion from savings certificates, while in 2020–21, borrowing stood at BDT 419.60 billion.

Previously, it was possible to purchase large amounts of savings certificates under the same name. However, after the introduction of the “National Savings Scheme Online Management System” in 2019, this opportunity became limited. At that time, a Tax Identification Number (TIN) was made mandatory for purchasing savings certificates worth more than BDT 100,000. Later, changes were made to the interest rate determination method, under which rates are revised every six months. Under this system, the most recent revision in July reduced interest rates by 47 to 57 basis points.

Additionally, different interest rates now apply for investments above and below BDT 750,000.

By the end of last June, investment by individuals, corporate bodies, provident funds, and pension funds in treasury bills and bonds stood at BDT 1,141.59 billion, compared to just BDT 231.15 billion at the end of June 2023—an almost fivefold increase over two years.

Despite a significant decline in interest rates on treasury bills and bonds, returns of over 10 percent are still available. Moreover, income from these instruments is tax-free, repayment is guaranteed on maturity, and funds can be liquidated at any time by selling them in the secondary market.