Central bank sets up debt management dept
Siddique Islam | Friday, 13 March 2009
The central bank has set up Debt Management Department to handle public debt efficiently and boost the secondary securities market.
"The new department will act as an implementing agency of the public debt management," a senior official of the Bangladesh Bank (BB) told the FE Thursday, adding that the department would also monitor the performance of the primary dealer (PD) banks and non-banking financial institutions (NBFIs).
Earlier, the central bank selected nine PDs - eight banks and an NBFI - to handle government-approved securities in the secondary market.
The BB has issued an order Thursday mentioning the terms of reference of the new department, officials said.
"The department will also perform in line with the government's existing debt management strategy towards long-term borrowing to facilitate development activities," another BB official said.
Under the existing strategy, the government will increase borrowing for longer tenure by issuing different bonds instead of short-term borrowing through treasury bills (t-bills).
The government has already set a borrowing target of Tk 134.98 billion from the country's banking system to finance budget deficit in fiscal 2008-09.
In fiscal 2007-08, the government borrowed Tk 72.53 billion from banking system through issuing t-bills and bonds.
As a part of the strategy, the government has decided to borrow Tk 87.75 billion from banking system by issuing bonds of different tenures.
During the current fiscal, the government also set the target of short term borrowing worth Tk 47.25 billion through auction of three categories of T-bills.
Currently, three t-bills are being transacted through auctions to adjust the government borrowing from the banking system.
The t-bills have 91-day, 182-day and 364-day maturity periods.
On the other hand, four government bonds - 5-year, 10-year, 15-year and 20-year -are being traded in the markets.
The secondary market has developed gradually, but it is still hovering among banks and non-banking financial institutions and life insurance companies, a senior official of a PD bank said.
A total of Tk 70 billion worth of bonds and t-bills was traded in the secondary market during the first quarter of the current fiscal against Tk 15 billion of the corresponding period of the previous fiscal, according to the Primary Dealers Bangladesh Limited (PDBL) statistics.
"The transaction in secondary market is continuously registering an upward trend in attracting fresh investment in the risk free government securities," the official added.
Both t-bills and bonds sold worth Tk 50 billion in January last compared to Tk 15 billion in the same period of the previous year.
"The new department will act as an implementing agency of the public debt management," a senior official of the Bangladesh Bank (BB) told the FE Thursday, adding that the department would also monitor the performance of the primary dealer (PD) banks and non-banking financial institutions (NBFIs).
Earlier, the central bank selected nine PDs - eight banks and an NBFI - to handle government-approved securities in the secondary market.
The BB has issued an order Thursday mentioning the terms of reference of the new department, officials said.
"The department will also perform in line with the government's existing debt management strategy towards long-term borrowing to facilitate development activities," another BB official said.
Under the existing strategy, the government will increase borrowing for longer tenure by issuing different bonds instead of short-term borrowing through treasury bills (t-bills).
The government has already set a borrowing target of Tk 134.98 billion from the country's banking system to finance budget deficit in fiscal 2008-09.
In fiscal 2007-08, the government borrowed Tk 72.53 billion from banking system through issuing t-bills and bonds.
As a part of the strategy, the government has decided to borrow Tk 87.75 billion from banking system by issuing bonds of different tenures.
During the current fiscal, the government also set the target of short term borrowing worth Tk 47.25 billion through auction of three categories of T-bills.
Currently, three t-bills are being transacted through auctions to adjust the government borrowing from the banking system.
The t-bills have 91-day, 182-day and 364-day maturity periods.
On the other hand, four government bonds - 5-year, 10-year, 15-year and 20-year -are being traded in the markets.
The secondary market has developed gradually, but it is still hovering among banks and non-banking financial institutions and life insurance companies, a senior official of a PD bank said.
A total of Tk 70 billion worth of bonds and t-bills was traded in the secondary market during the first quarter of the current fiscal against Tk 15 billion of the corresponding period of the previous fiscal, according to the Primary Dealers Bangladesh Limited (PDBL) statistics.
"The transaction in secondary market is continuously registering an upward trend in attracting fresh investment in the risk free government securities," the official added.
Both t-bills and bonds sold worth Tk 50 billion in January last compared to Tk 15 billion in the same period of the previous year.