Economy
Bangladesh Raises Dollar Bond Rates to Attract Diaspora Investments
The Finance Minister has announced an increase in interest rates for the US Dollar Premium Bond and US Dollar Investment Bond, targeting investments up to $100,000. The move is aimed at attracting funds from the Bangladeshi diaspora and foreign citizens with Bangladeshi origins to bolster the country’s dollar reserves.
As per the recent notification by the Internal Resources Division, interest rates for the premium bond are now 6.50%, 7%, and 7.50% for the 1-year, 2-year, and 3-year terms, respectively. For the investment bond, rates are set at 5.50%, 6%, and 6.50% for the same terms. Buyers can acquire these bonds from authorized dealer branches of banks within the country, Bangladeshi bank branches abroad, and exchange houses.
The finance ministry circular outlines that new investments will be calculated by adding up previous investments, with the interest rate applicable at the time of purchase. Investors can choose to receive reports of their investments in dollars or taka.
Bangladesh Bank data reveals that the net sales of the US Dollar Premium Bond were Tk1.5 crore in FY21, while the US Dollar Investment Bond had a negative net sale of Tk84 crore. During FY22, both bonds showed negative net sales at Tk103 crore and Tk876 crore, respectively. In the July-October period of FY24, the net sales were negative at Tk11 crore and Tk86 crore for the Premium and Investment Bonds, respectively.
Tarek Mohammad Zakaria from the Internal Resources Division explains that the global trend of increasing interest rates, observed in countries like the United States, the United Kingdom, and Europe, has prompted Bangladesh to adjust its rates to attract investment. This move is also aligned with the government’s aim to provide additional benefits to expatriate Bangladeshis.
The Bangladesh Bank had proposed a 2% increase in interest rates on all three bonds, in line with international markets. An expatriate investor mentioned that Bangladesh, contrary to global trends, offered lower rates, contributing to a wider financial account deficit. The investor highlighted that the government’s insufficient marketing efforts and lack of public awareness led to lower-than-expected investments in these bonds.
Despite the potential of the diaspora bonds to alleviate the dollar crisis by encouraging remittances through official channels, inadequate promotion has resulted in less than $1 billion outstanding investment in all three government-issued bonds for non-resident Bangladeshis at the end of FY23, compared to nearly $3 billion in FY22, according to Bangladesh Bank data.
Expatriate Bangladeshis sent approximately US$ 2.11 billion in remittances during the first 28 days of September in the fiscal year 2024-25, according to data released by Bangladesh Bank on 29 September.
Of this total, state-owned and specialised banks handled $679.10 million, while private banks received $1.43 billion in remittances.
Chief Adviser to Bangladesh’s interim government, Professor Muhammad Yunus, has vowed to expedite reforms and hold elections swiftly. Yunus, who recently assumed the role after the collapse of Prime Minister Sheikh Hasina’s 15-year administration, expressed his commitment during an interview with Tokyo-based news outlet NHK WORLD in New York on Sunday. He was attending the United Nations General Assembly at the time.
Following mass student-led protests that ended Hasina’s long-standing rule in August, Yunus stepped in as the leader of the caretaker government. Known for founding Grameen Bank, an institution providing microloans to the underprivileged, Yunus, along with the bank, earned the Nobel Peace Prize in 2006 for his efforts in poverty alleviation.
During the interview, Yunus emphasized that the interim government’s primary mission is to implement reforms promptly and ensure elections are held as soon as the groundwork is complete. He underscored the importance of success, stating, “Failure is not something that we can accept.”
Addressing the pivotal role of students in the ousting of the Hasina administration, Yunus acknowledged the sacrifices made by young people, referring to their involvement as part of a “revolution.” He highlighted his intention to engage the younger generation in shaping policy.
Furthermore, Yunus called for continued support from Japan, Bangladesh’s largest donor, during this crucial transition period. He stressed that Japan’s assistance is vital to stabilizing Bangladesh’s economy and fostering a democratic foundation in the nation.
Syeda Rizwana Hasan, the Adviser for Environment, Forests, and Climate Change, announced today that steps will be taken to restrict the use of polythene shopping bags to safeguard future generations.
Starting from October 1, polythene bags will be banned in shopping malls, followed by a ban in kitchen markets from November 1.
“Everyone must take responsibility and stop using polythene voluntarily. Action against polythene producers will begin from November 1,” Rizwana Hasan stated during a seminar.
The Department of Environment (DoE) organized the seminar to raise public awareness about alternatives to banned polythene bags.
Rizwana Hasan highlighted that the restriction on polythene will be executed in phases according to legal provisions, and discussions with shopping centers and store owners are ongoing to ensure a smooth transition.
She also announced plans to make the government secretariat a plastic-free zone by December.
Other speakers at the seminar included Environment Secretary Dr. Farhina Ahmed, DoE Director General Dr. Abdul Hamid, Director Rajinara Begum, President of the Shop Owners Association Muhammad Helal Uddin, and Md. Arifur Rahman Bhuiyan, Assistant Professor of Environmental Science at BUP. They discussed the harmful effects of polythene and the need for alternative products.
Earlier, Rizwana Hasan inaugurated a fair showcasing eco-friendly alternatives to polythene bags and visited 24 stalls. The fair featured products from government and private entrepreneurs, including reusable bags, jute bags, paper bags, and items made from bamboo and cane.
