The government is weighing an International Finance Corporation (IFC) proposal to float a local currency bond worth US$1.0 billion on the global market to help boost private sector investment.
Officials of the Ministry of Finance (MoF) said Friday the private-sector lending arm of the World Bank Group would start the process of taking the Bangladeshi currency bond onto the international market for the first time after getting formal consent from the government.
Last month, the IFC placed before Finance Minister AMA Muhith its plan to float the Taka Bond on the international market for the non-resident Bangladeshis (NRBs) to subscribe.
The officials said the IFC will lend the billion-dollar fund to the Bangladeshi private companies and enterprises for expanding their businesses.
"We have received a formal offer letter from the IFC recently. Then we have requested the Finance Division to review the offer," a senior ERD official told the FE.
He said the Finance Division is expected to give its opinion as soon as possible.
Meanwhile, the finance minister, Mr Muhith, has already welcomed the IFC move. "It's a good news that they [IFC] are considering issuing Bangladesh bonds," he told reporters while participating in the World Bank-International Monetary Fund (IMF) annual meeting in Washington last month.
"This is a very important development for Bangladesh."
A MoF official said the IFC is likely to follow the model of Indian currency bond which was floated internationally in October 2013.
The proceeds of the $1.0 billion-rupee bonds were used by IFC to finance private-sector investment in India.
The initial subscription, repayment of the principal and coupon were in dollars but tied to the dollar-rupee exchange rates, he said.
Under the process, the bond proceeds from US dollar were converted to rupees on the domestic exchange market and the rupees were used for investment in India.
The MoF official said Bangladesh's Taka Bond is also expected to be listed on the London Stock Exchange.
The programme will be launched once the government formally gives consent to the proposal, the official said, adding that the central bank and the Finance Division will work together on the plan.
The ERD official said the risk of the exchange rate involved will be borne by the IFC.
Currently, Bangladesh government has had several bonds on the local market to borrow from the financial institutions and the public to bankroll the country's budget deficit.
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Finance Div exploring IFC proposal on Taka bond
FHM Humayan Kabir | Published: May 16, 2015 00:00:00 | Updated: November 30, 2026 06:01:00
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