The government has backtracked from issuing sovereign bonds mainly due to possible slower economic growth this fiscal and attractiveness of the US bonds.
The government committee concerned said the US bonds have already attracted many global buyers and it might lead to poor demand at this time for the Bangladesh bonds in the global market.
The government in its previous term wanted to mobilise at least US$500 million by selling its sovereign bonds to meet scarcity of foreign currency.
A senior official at the Cash and Debt Management Committee, (CDMC) of the finance ministry told the FE Thursday that the government was not interested now in issuing the sovereign bonds.
He said the economic growth is likely to slow to 6.5 per cent this fiscal year against the previous official projection of 7.2 per cent.
He said slower economic growth prospect does not create adequate demand for bonds in the global market.
He also said restive politics during the October-December period last year had given globally a negative image of the country.
"Actually, we want to launch our maiden bond on a solid foundation and the situation for that is not favourable now," he said.
Finance Minister AMA Muhith during his last term said the next government will issue sovereign bonds.
However, the government committee formed to launch the bonds, will not be dissolved, officials said.
The members of the committee include representatives from the Bangladesh Bank, the National Savings Directorate, the Policy Research Institute, the finance ministry and the managing director of the Sonali Bank.
"The committee will continue as usual," he said.
CDMC sources said the committee will take the move only after receiving any instruction from the higher authorities.
They also said Bangladesh has now nearly US$ 20 billion worth of foreign exchange reserve.
"Our reserve right at this moment is commendable and there is no shortage of foreign currency," said another official at the CDMC.
But they said Bangladesh might face scarcity of foreign currency once the inflow of remittances falls.
They said the current account balance during the last July-February period remained almost stagnant at US$2020 million.
Earlier, the Bangladesh government for the first time in its history decided to sell sovereign bonds in the international stock market to get US$ 500 million to cope with the then acute shortage of foreign currencies in 2012.
The government was forced to take the decision of collecting money by selling bonds though it would have cost higher interest rates in terms of foreign currency. Generally, sovereign bonds are issued for five or ten-year term.
The committee, formed to launch the bonds, had moved ahead in launching the bonds.
The country's major foreign banks had supported the government's initiative to issue sovereign bonds and they even presented papers on the issue to the government.
Four foreign banks, including the Standard Chartered, the Citibank NA and the HSBC, made their presentation to the government committee on floating of the sovereign bonds.
