In an effort to encourage foreign remittances and investments, the Bhutanese government is exploring the possibility of introducing special government-backed securities known as Green Bonds. The Finance Minister, Namgay Tshering, revealed this initiative aimed at providing additional incentives and attracting funds from Bhutanese residing overseas.
Currently, when Bhutanese individuals send money through the banking system, the Royal Monetary Authority (RMA) offers a 2 percent incentive in the exchange rate. However, beyond this, there are limited options for maximizing returns on their hard-earned money. By introducing government-backed Green Bonds, Bhutanese citizens abroad will have an opportunity to invest in secure bonds and benefit from the coupon rates associated with them.
Bonds are financial instruments used by governments and companies to raise funds from the market. These bonds carry a coupon rate or interest rate, allowing investors to earn annual interest. Furthermore, bondholders have the option to sell their bonds to others. Government-backed bonds are considered extremely secure as they are guaranteed by the sovereign authority of the government.
Minister Tshering acknowledged that the money sent by Bhutanese individuals abroad is often intended for social obligations, such as supporting family members or participating in annual rituals. This is mainly due to the limited investment options available. By launching the Green Bonds, the government aims to redirect the funds raised towards commercial projects.
The government is currently contemplating various projects, including renewable energy initiatives like small hydro projects, wind farms, and solar energy projects. Lyonpo expressed that Bhutanese citizens will have the opportunity to earn returns on their investments while contributing to these projects.
Minister Tshering highlighted the dilemma faced by countries like Australia, where bank deposit interest rates are considerably low. In comparison, Bhutanese individuals can potentially achieve higher returns through these Green Bonds.
Although the implementation of Green Bonds will take time, they form part of a broader strategy to strengthen Bhutan’s foreign currency reserves and attract funds for investment.
By introducing the concept of Green Bonds, the government aims to provide Bhutanese abroad with an attractive investment opportunity while also addressing the country’s need for foreign currency reserves. This innovative financial instrument holds the potential to foster economic growth and sustainability, allowing citizens to play an active role in the development of Bhutan’s renewable energy sector.