IFC retreats from ‘Taka bond’ proposal

The World Bank Group member International Financial Corporation (IFC) has reconsidered the floating of the $1 billion worth of 'Taka bond” within a year of proposing it.

The IFC had proposed the issuance of the bond, similar to the Rupee bond set up for India, at the World Bank-IMF Spring Meeting in Washington DC last April.

Bangladesh’s Finance Minister AMA Muhith responded positively to the proposal at the conference.

The Bangladesh government then formally gave final approval to the issue of the bonds at the World Bank-IMF Annual Meeting in Peru last October.

The IFC informed Bangladesh it had a rethink on the proposal at the World Bank-IMF Annual Meeting in Washington, DC this month.

The IFC will no longer be issuing the $1 billion taka bond they had proposed last year,” Muhith told bdnews24.com.

“We haven’t been particularly enthusiastic about the issue either,” he said. “Right now, our forex reserves stand at $32 billion. We are more concerned with how we can invest that money.”

Finance Secretary Mahbub Ahmed, who had been part of the Bangladesh delegation to the WB-IMF annual meeting, told bdnews24.com: “The IFC has not been able to raise funds. This is why they have reconsidered the decision.”

Bangladesh had previously made ‘dollar bonds’ available to expatriates, but the IFC proposal would have been the first ‘taka bonds’ in the country.

The IFC had proposed raising $1 billion from the international market and releasing it in Bangladesh in taka form.

Bangladesh had previously agreed to the proposal in the hope of increased investment in the country, Muhith told bdnews24.com.

Last year, the finance minister said the bonds would be attractive to Bangladeshi expatriates.

“Foreign banks offer zero interest on deposits. But there will be 4-5 percent interest on taka bonds. Our expatriates will benefit if they investment their money in bonds instead of depositing that in banks,” he had said.