Bid meant to reduce domestic debt by replacing previous schemes offering higher interest rates
By Mehtab Haider
ISLAMABAD: The federal government has decided to launch short-term investment certificate in a bid to replace old scheme such as Defense Saving Certificate offering higher interest rates of 17 to 18 per cent with new schemes offering low interest rates to reduce domestic debt obligations, The News has learnt.
Pakistan’s fiscal situation has also been worsening owing to debt stocks maturity of Defense Savings Certificates (DSC) with 17 to 18 per cent interest rates which was obtained by the last PML (N) government back in 1997 and 1998 and after ten years these DSC matured in year 2007 and 2008.
The government has decided to launch short-term investment certificate by the next month in order to lure investments, which the National Savings Schemes have given back to investors after maturity of DSC.
There is also plan in the pipeline to launch Shariah compliant dollar denominated investments for Non Resident Pakistanis (NRPs) to attract investments from Gulf and other Muslim countries.
“Now we are replacing the old debt stocks by launching new schemes in order to attract more investments during the current fiscal year,” Director General Central Directorate of National Savings (CDNS) Zafar Sheikh told The News in an exclusive talk here on Wednesday.
Zafar Sheikh, who earlier performed in the State Bank of Pakistan (SBP) on reserve management and later on in the Debt Office of Finance Ministry, said that the CDNS paid back Rs 171 billion to investors after maturity of various savings schemes especially Defense Savings Certificate in first two months (July and August) of the current fiscal year.
The government, he said, is all set to allow disabled persons of the country to benefit from highest ever 15 per cent per moth profit on their investment in Behbood Saving Certificates and Finance Minister Syed Naveed Qamar will take up this issue after his arrival from the USA.
Explaining the upward revision in profit rate on national saving schemes effective from October 1, 2008, Mr. Sheikh said that profit rates on Pensioners Benefit Account have been increased from 12.5 per cent to 15 per cent, Behbood Saving Certificates 12.5 per cent to 15 per cent, Saving Accounts from 8.5 per cent to 9 per cent, Regular Income Certificates from 11.8 per cent to 13.32 per cent, Special Saving Certificates/Accounts 11 per cent and 12.5 per cent to 13 per cent.
The upward revision in the profit rates on national saving schemes, he said, would benefit the pensioners, senior citizens and widows the most.
He said the new increased profit rates would be applicable on investment made in these schemes on or after October 1, 2008, however, existing investors can also avail higher profits upon deduction of negligible one per cent service charge. Investors having their investment in schemes more than four years can convert their amounts in to higher profit scheme without payment of service charges.
Zafar M. Sheikh further informed that Central Directorate of National Savings has paid back Rs.171 billion investments that were attracted on 17 per cent to 18 per cent profit in the past and after payment of such huge amount the organization is even than able to retain Rs.20 billion funds. CDNS is replacing expensive investment with low cost investment through introducing changes in profit rates on national saving schemes.
He said the government has jacked up the budgetary target from Rs80 billion to Rs150 billion for the current fiscal year. The borrowing from the State Bank of Pakistan is 2 per cent more expansive than the funds given by the CDNS.
The government, he said, has allocated Rs500 million budgetary provision for computerization of this crucial organization and in this regard the CDNS has appointed qualified Director for IT. The CDNS has decided to computerize 36 important branches in Islamabad, Karachi, Faisalabad, Lahore and Peshawar at first phase out of total 376 branches all over the country. All the branches will be computerized by 2010, he added.
Source: The News, Thursday, September 25, 2008