Dev bonds for overseas workers soon

KATHMANDU, May 27: Nepalis working aboard will soon be able to invest their earning in infrastructure development bonds, enjoying sound interest return of 9 to 10 percent and also contributing to development of much-needed infrastructure.



Ministry of Finance (MoF) has endorsed procedures for the issuance of the bonds that Nepal Rastra Bank (NRB) mooted recently. "The central bank will soon make all arrangements for the issue," said an official at MoF. [break]



Under the program, NRB will issue the bonds worth Rs 7 billion to Nepalis in foreign employment. The MoF has approved interest rates of 9 to 10 percent as annual return to the investors.



"The exact rate of return and the tenure of the bonds will be worked out and announced by the central bank," the source told myrepublica.com.



The bonds are being issued as a part of the government´s budgetary program, aimed at mobilizing domestic borrowing from the new source from the next fiscal. The program aims to address concerns that remittances are just fueling consumption, and are not being used in productive sectors.



The government is hopeful that the option of bonds will open new avenues for the workers to productively invest their incomes. And because the rate of return will remain unchanged throughout its tenure, it will also guarantee predictable returns for them.



"Such bonds can be purchased only by workers working abroad. From this arrangement, the remittances can be used for infrastructure development and the remittance itself remains free of additional charges while transferring to Nepal," Finance Minister Surendra Pandey had said in the budget statement.



The issue will be done by fixing pegged exchange rates and Nepali embassies in South Korea, Malaysia, the United Arab Emirates, Saudi Arabia and Qatar will facilitate the purchase of bonds, as cited in the budget statement for the current fiscal.



Even though the fund will be used for financing infrastructure development, the government has not yet worked out specific projects for investing it so far.



"The fund would be used via NRB and we will work out projects for investments based on long-term economic and development needs of the country," said the source.



Nepal received remittances worth Rs 18 billion on an average every month in 2009/10. So the government is confident that all of the issue will be subscribed.

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