孟加拉国：本币债券市场发展诊断

BANGLADESH Local Currency Bond Market Development June 2025 Prepared By Arindam Roy, Rose Nyongesa and Mia Pineda (all IMF); Zsolt Bango and Jose Franco Medeiros deMorais (all World Bank); and Elias Kazarian and Guido Della Valle (IMF experts) High-Level Summary Technical Assistance ReportMonetary and Capital Markets Department Bangladesh: Local Currency Bond Market Development DiagnosticPrepared by Arindam Roy, Rose Nyongesa and Mia Pineda (all IMF); Zsolt Bango and Jose Franco Medeiros de Morais (all World Bank); and Elias Kazarian and Guido Della Valle (IMF experts) TheHigh-Level Summary Technical Assistance Reportseries provides high-level summaries of theassistance provided to IMF capacity development recipients, describing the high-level objectives, ABSTRACT: At the request of the authorities, an IMF-World Bank team undertook a technical assistancemission to Bangladesh, from July 5-17, 2023, to support efforts to develop the government local currencybond market. The mission assessed the current stage of the sovereign debt market and formulated policy JEL Classification Numbers: D53, G11, G12, G18, H63 The contents of this document constitute capacity development provided by the staff of the InternationalMonetary Fund and the World Bank to the authorities of the Ministry of Finance of Bangladesh inresponse to their request for capacity development. Under the respective policy frameworks of the IMFand World Bank, with the written authorization of the CD recipient, the Technical Assistance Report (inwhole or in part) or summaries thereof (except high-level summaries (HLS)) may be disclosed to IMFWorld Bank Executive Directors and members of their staff, and to capacity development providers and The analysis and policy considerations expressed in this publication are those of the IMF’s Monetary andCapital Markets Department and World Bank. International Monetary Fund, IMF PublicationsP.O. Box 92780, Washington, DC 20090, U.S.A.T. +(1) 202.623.7430 • F. +(1) 202.623.7201publications@IMF.org Background As requested by the Ministry of Finance (MoF), a joint mission from the IMF and the World Bank visitedBangladesh from July 5 to 17, 2023 to support efforts to develop the government local currency bondmarket (LCBM) and develop a sequenced action plan for LCBM development by the authorities andfuture technical assistance.2The Bangladeshi authorities view the development of the government LCBMas a pivotal source for stable funding and a cornerstone for broader financial market development. This Summary of Findings Bangladesh meets the preconditions necessary for the implementation of policies that candeepen the level of market development from its current developing stage.Although governmentsecurities are mostly oversubscribed in auctions,market clearing prices were not allowed till recentlythrough devolvement to the Bangladesh Bank (BB) due to the dominance of monetary policy aimed at Although the financial market infrastructure (FMI) and legal and regulatory framework areassessed higher at emerging stages, all the other building blocks are assessed at developingstages.While there is no reliable short-term yield curve, the money market is dominated by unsecuredinterbank transactions due to several impediments of the repo market and the evolving monetary policy Despite good transparency on secondary market transactions, the LCBM is illiquid reflecting lowvolume of trades.This is due to fragmented securities issuance structure, a narrow investor base withbuy and hold behavior, the disproportionate application of the withholding tax on interest for securitiestraded and inadequate market making rules of PDs. With a bank dominated system, the institutional Summary of Recommendations Acceptance of market-clearing prices is crucial for LCBM development and requires upholdingelimination of devolvement to the BB and PDs in auctions.As a next step, the underwritingcommitment of PDs should be withdrawn immediately to ensure voluntary participation in the primary The PD system would strongly benefit from a comprehensive reform of its regulatory frameworkaimed at selecting a smaller but active set of PDs.Consolidation of the PD system with committedentities by re-defining the eligibility and minimum performance criteria could ensure a better fit.Recalibration of the balance between their rights and obligations, and the setting of more realistic and Improvements in the money market should be underpinned by a transition to a complete interestrate corridor, complemented by a robust money market yield curve.The BB should desist fromdirectly influencing T-bill rates, instead adjusting policy rates if needed. Fostering a thriving repo marketwould require addressing impediments, the most crucial introducing a master repurchase agreement. The operating framework for issuance of government securities would require more predictability. The authorities should adhere to the issuance calendar for bonds. Increas