Central bank to float bonds worth Rs 3 billion

The central bank is issuing development bonds worth Rs 3 billion this week under its calendar of domestic borrowing.

The government has – in the budget for the current fiscal year 2013-14 – planned to borrow Rs 44 billion from the domestic market to finance the budget deficit.

Some 70 per cent of the five-year Rs 3 billion-bond will be auctioned to banks and financial institutions, whereas the remaining has been separated for non-depository institutions like insurance companies and state-owned firms like Employees Provident Fund (EPF) and Citizen Investment Trust (CIT).

The budget has also planned to issue different types of bonds worth Rs 30 billion and treasury bills worth Rs 14 billion, making it a total of Rs 44 billion, according to the government's fiscal policy.

The government will – for the first time – allow the market to determine the interest rate of the bonds.