ISLAMABAD: The Finance Ministry has said that income support levy announced in the Federal Budget for the fiscal 2013-14 resulted in higher encashment from the National Saving Schemes (NSS).
“This levy discouraged the people from keeping their savings in NSS,” said an official source at Ministry of Finance while talking to this scribe here, adding that the withdrawal of the minimum threshold of withholding tax on profits in some saving schemes was another reason for higher encashment from NSS.
The NSS receive net receipts saw a decline of 50.9 % in previous quarter of the fiscal year, compared to the same period last year. “This does not capture the recovery, following the upward adjustment in profit rates in October 2013 and January 2014,” the source said, adding that the rise in return on NSS that allowed for a healthy increase in gross mobilization, was more than offset by large volumes of encashment. Likewise, the source added that the stock of public external debt and liabilities increased to $ 0.6 billion in previous quarter of fiscal year than the decline of $4.5billion decline in the same period last year.
“Although principal repayments increased by 25.3 %, yet debt stock still increased on the back of $ 1.7 billion inflows from the International Monetary Fund (IMF) Fund under the Extended Fund Facility (EFF), and increase in loan disbursement from the International Financial Institutions (IFIs),” the source added. Furthermore, the source added that the country also incurred $ 173 million revaluation losses in this period because of the depreciation of the US Dollar against major currencies and now external debt & liabilities stock was expected to record a significant increase on account of the Eurobonds and program loan disbursements from the IFIs.
It is pertinent to note here that National Saving Organization was set up in 1873 when the Government Savings Bank Act, 1873 was promulgated. Later a National Savings Bureau was established in 1943- 44 as an attached department of the Ministry of Finance of the undivided then Government. At the time of Independence an organization with the name of ‘Pakistan savings Central Bureau’ was created and the Savings work was entrusted to it by the Government of Pakistan, but this Bureau had its own peculiarities.
Interestingly, till December, 1971, the National Savings Organization functioned as a Publicity organization and its activities were merely promotional in nature, in early 1972, the scope of its activities was enlarged as the Central Directorate started selling II-Rupee Prize Bonds, and subsequently engaged in the operations of other savings schemes. This resulted in considerable expansion of the National Savings Organization. At present, this Organization has a total sanctioned strength of 3377 employees in various grades and its main component