Padma bridge will get the proceeds of taka bond

The government will spend the proceeds of the taka bond on big projects such as the Padma bridge, said Finance Minister AMA Muhith yesterday.

Deciding how the money from the bond will be used is a big task, but the Padma bridge project will definitely be one of the beneficiaries of the proceeds of the taka bond, he said.

Muhith's comments came in a press conference on the World Bank-International Monetary Fund annual meeting and the United Nations General Assembly.

The taka bond will be issued in the international market in about six months, he said.

The taka is set to make its debut in the international bond market after the government recently gave approval to the International Finance Corporation's proposal for an offshore bond worth $1 billion, equivalent to Tk 7,800 crore.

Alongside the taka bond, the government has taken an initiative to create a sovereign wealth fund, which will also be formed using its own resources in dollar terms.

The proceeds from both the bonds will be used in big projects, Muhith said.

MA Mannan, state minister for finance and planning; Mahbub Ahmed, finance secretary; and Mesbah Uddin Ahmed, secretary of the Economic Relations Division, also spoke at the press conference. The ERD secretary said the funds raised from the taka bond will also be used by the private sector. Earlier in April, the IFC, the private sector arm of the World Bank Group, floated the idea of issuing the “taka bond” in the international market in a bid to raise funds for local use.

Muhith also presented a detailed description of the meetings he attended in the sidelines of the UN General Assembly meeting in New York and the WB-IMF annual conference in Peru. The president and a senior vice-president of the WB will visit Bangladesh soon to see first-hand the progress the country has made in various sectors.

Bangladesh's economic and social progresses were lauded in the various events held on the sidelines of the annual meeting in Peru, he said.

The government has sought $500 million in budget support from the WB and detailed discussions were held on it.

However, the WB said they have plans to start the credit line with $250 million, and it will be continued from year to year.

To avail the budget support, Bangladesh will have to set a timeframe for implementing the reform programmes including energy pricing issues.

He also spoke of his meeting with Indian Finance Minister Arun Jaitley, in which they discussed the connectivity issue between Bangladesh, India, Bhutan and Nepal.

Muhith said he told the Indian finance minister to construct a short road between Bangladesh and Bhutan so that trade between the two countries can be increased.

About the issue of transit fees, he said Bangladesh will fix it in line with international practices. The WB and IMF used to make very low growth forecasts for the Bangladesh economy, but in recent times they have upped the forecasts, Muhith said.

“I think growth will absolutely reach 7 percent this year. This is a good year for the economy, as there is no political unrest in the country.” The economic forces have come to the fore, so the political disturbances will automatically be rejected by the people, he said.

“This is a big lesson for those who do naughty politics.”

Replying to a query about the pay commission, Muhith said the grades of the staff will automatically change in the new pay scale, which, he thinks, is better than the existing one.

The order for the new pay scale will be issued by the end of this month or the first week of next month, the finance secretary said.