The government is going to withhold a move to introduce premium and investment bonds in euro and pound sterling as it finds the new instruments unnecessary when adequate foreign currency is in hand, officials said.
Four bonds were supposed to be launched by the National Savings Directorate. Of them two are euro premium bond and euro investment bond and the rest two are pound sterling premium bond and pound sterling investment bond.
The Internal Resources Division (IRD) sought opinion recently from the Finance Division sending draft of rules of the proposed bonds. The Finance Division recently gave its opinion where it termed launching of the proposed bonds unnecessary.
The Finance Division in this case referred opinion of central bank which suggested not to float any new bond now and for making treasury bill and bonds attractive to non-resident Bangladeshis (NRBs).
The central bank in this case has taken into consideration the state of rate of interest of loans in international market, country's foreign currency reserve, exchange rate of taka with foreign currencies, and comparing proposed bonds with marketable treasury securities.
Officials said the government had initiated the move to launch euro and pound sterling bonds back in 2012 when the money market was facing liquidity shortage after the stock market debacle. That time selling of savings instruments had also declined significantly.
Besides, the flow of foreign currency against investment target was inadequate during the time alongside lower amount of foreign currency reserve. As a result the government was facing problem to arrange adequate foreign currency against needs.
The government had then decided to issue the four bonds to bring diversification in meeting source of deficit financing.
The Finance Division in its opinion said the financial strength of the country had started changing since fiscal year 2012-13. The sale of national savings instruments had increased significantly since then which supplied adequate fund to the government.
Besides, the foreign currency reserve has increased significantly in the recent years alongside low cost foreign loans have become available to meet foreign currency needs.
The government is providing state guarantee to collect necessary loans for implementation of large sized priority projects. Besides, due to digitisation of buying and selling of treasury securities those have become attractive to NRBs.
The Finance Division also quoting some data said NRBs show less interest to buy US dollar premium and investment bonds. Under this scenario there is no necessity of launching such non-marketable bonds.
It also said in case of necessity of deficit financing of foreign currency, necessary preparation is there to float sovereign bond. Finance secretary Mahbub Ahmed could not be reached for a comment on this issue despite several attempts.
Earlier, regarding delay in floating sovereign bond he told the FE "There is no dearth of foreign funds rather our reserve of foreign currency is quiet well. Besides, process is ongoing to float one billion dollar worth Taka bond. We did not cancel the decision to float sovereign bond, but there is no hurry for the same."
© 2024 - All Rights with The Financial Express
