Government’s internal debt manager will allow Non Resident Nepalis (NRN) to purchase the upcoming issue of foreign employment bonds to counter earlier lukewarm response from migrant workers.
Due to the failure of the last two batches of foreign employment bonds to be fully subscribed, Nepal Rastra Bank (NRB) and Ministry of Finance have begun looking for other avenues to push the sales of foreign employment bonds.“We will soon be issuing these bonds and this time to propel sales, we are revising many features and conditions, and allowing NRNs to purchase these bonds is only one of the changes that we have envisioned,” informed an official at NRB’s Public Debt Management department.
Despite attractive coupon rates, the last two releases of foreign employment bonds were not successful as the designated bond agents in foreign countries were able to sell only a meagre portion of the total issue. Not only will the bond be sold to NRNs too but it will also be sold in all countries where Nepalis reside instead of limiting the sale to five popular migrant destinations.Earlier, the bonds were sold in only South Korea, Malaysia, Qatar, Saudi Arabia and the United Arab Emirates through designated agents. Likewise, the central bank will also allow the purchase of the bonds in Nepali currency instead of only foreign currency.
“We are hopeful that by expanding the target group and changing the mode of payment, subscription rate will definitely go up,” informed the official. The limited targeting had excluded migrants in India and those residing in OECD countries who have higher incomes than those working in Gulf countries and Malaysia.The listless reception of the issue in the last two years has even made the central bank tone down the issue this fiscal year to Rs one billion. Last fiscal year, NRB had issued foreign employment bonds worth Rs 5 billion of which only Rs 4 million worth of bonds were sold despite an attractive coupon rate of 10.5 per cent per annum. The central bank had even extended the purchase period by 10 days.
The fiscal year before that too, the agents were able to sell only Rs 4.6 million worth of the first issue of foreign employment bonds in Nepal of the total issue worth Rs 1 billion.Meanwhile, as the end of the current fiscal year is nearing, central bank’s public debt department is in an overdrive.The government has so far issued about Rs 17 billion worth of debt including treasury bills, development bonds, national saving bonds and citizen saving bonds. It plans to raise Rs 37.41 billion through internal borrowing this fiscal year to meet its budget deficit.
NRB had recently opened the issue of the three-year Development Bond 2072 ‘Nga’ worth Rs four billion at 8.5 per cent interest rate. Seventy per cent of the bond could be applied through bidding and rest at face value. It closed today.
Published on: 4 June 2012 | The Himalayan Time
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