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Government to Raise Tk 50 Billion with Sukuk Bonds

Economic Tag: Govt.

In response to hefty interest payments on growing debts, the Bangladesh government plans to raise Tk 50 billion through Sukuk bonds in the new fiscal year to supplement traditional bonds. High interest rates on conventional bonds have made government borrowing increasingly costly, prompting a shift towards Islamic bonds, which offer lower yields. The Ministry of Finance aims to reduce interest spending by leveraging Sukuk bonds. A recent Sukuk auction received bids five times the offered amount, highlighting strong investor interest. The government has been issuing Sukuk bonds since December 2020, raising Tk 190 billion for various projects. The strategy includes allowing conventional banks and financial institutions to participate in Sukuk auctions if Islamic banks cannot meet the subscription targets. This move is part of the Bangladesh Government Investment Sukuk Guidelines 2020, aimed at diversifying fundraising methods and reducing dependence on high-interest conventional bonds.

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