Govt issues Tk 2,357cr bonds to clear arrears of fertiliser importers

The Finance Division yesterday issued a further batch of special bonds worth Tk 2,357 crore to clear arrears to fertiliser importers.

The importers had opened letters of credit with banks to bring over fertilisers, the payment for which is long overdue from the government.

The bonds were issued for nine public and private banks: Agrani Bank, Bangladesh Krishi Bank, City Bank, Dhaka Bank, Exim Bank, Al Arafah Islami Bank, NRB Commercial Bank, Social Islami Bank Limited, and United Commercial Bank.

On January 4, the government issued the first batch of special bonds, worth Tk 3,016 crore, to clear arrears for fertiliser suppliers.

The Finance Division will gradually issue special bonds of about Tk 26,000 crore to clear arrears to independent power producers and fertiliser suppliers.

Of the amount, Tk 12,000 crore will be issued for fertiliser suppliers and Tk 14,000 crore will be issued for power producers.

The bonds, a debt instrument, will be used as loan repayments to 40 banks on behalf of power producers and fertiliser suppliers.

Including yesterday's bonds, the government has so far cleared Tk 10,967 crore, including Tk 5,594 crore for power producers and the rest for fertiliser suppliers.

The government's outstanding bills for fertiliser will be paid to the Bangladesh Chemical Industries Corporation, Bangladesh Agricultural Development Corporation, and private fertiliser importers, who have debt to 10 banks, most of which are state-owned.

On the other hand, as many as 100 independent power producers will be paid outstanding subsidy bills.

The bonds are being issued at the policy rate or repo rate of 8 percent.

The repo rate is the interest rate at which the central bank lends money to commercial banks.

These bonds will remain effective for three periods -- eight, nine and 10 years.

A Bangladesh Bank official said interest would be paid every six months as per the policy rate against the bonds.

Besides, the banks will be able to incorporate the bonds in their calculation of statutory liquidity ratio (SLR), which is the minimum percentage of deposits that a commercial bank must maintain.