Finance Ministry has today forwarded local currency bond issuance proposal of the International Finance Corporation (IFC) to the cabinet for approval.
Once the cabinet approves, Finance Ministry, central bank and Securities Board of Nepal also need to give approval to the private sector lending arm of the World Bank before issuing the Nepali currency bonds.
IFC will be the first international financial institution to float local current bonds to raise funds for investment in development projects.
The IFC had filed an application at the ministry to issue local currency bonds worth $500 million (around Rs 50 billion) in December.
The approval is expected to send international investor a positive message that Nepal is a potential foreign investment destination.
The money raised from sales of the bonds will be lent to the private sector for investment in projects ranging from infrastructure, banking and telecommunications to agro business and tourism, among others, according to Bagatsing.
The IFC – which has already floated such securities in over 30 countries globally – is planning to issue bonds worth around $500 million within the next five years ‘depending on actual need to disburse funds for relending’.
According to the guideline on local currency bonds, international financial institutions with AAA credit rating from global credit rating agencies can float local currency bonds in Nepal.