The yield rates on government savings instruments should be rationalised to help develop long-term securities markets in Bangladesh, experts said Thursday.
They also recommended developing pension funds for all government employees along with issuing the housing mortgage bond.
The suggestions came at a session on 'In Search for Long-Term Financing Instruments: The cases for Corporate Bonds, Infrastructure Bonds and Housing Finance' held at a city hotel.
The session was organised on the sidelines of Bangladesh Long Term Finance Conference 2018.
Dr. Ahsan H Mansur, executive director of the Policy Research Institute (PRI) of Bangladesh, presided over the session.
The rates of return on national savings instruments should be rationalised immediately, Dr. Mansur said.
Regarding pension fund for the government employees, the PRI executive director said currently, there was no pension fund. "It should be developed for future generation," he said.
Talking to the FE after the session, the senior economist said the fund should be transformed into a bond, which will be traded in the secondary market.
A government agency needs to be formed to manage the pension fund properly, he added.
He said that a large amount of money will be needed to meet the pension obligations in the next two to three years, which is not be sustainable.
No markets will be developed if the existing trend in yield rates on the government savings certificates continues, he added.
While presenting a paper, Shrey Kohli, financial officer of the International Finance Corporation (IFC), said it would be difficult for Bangladesh to achieve its growth potentials without the development of long-term debt instruments.
Markets are built in partnership with the government, regulators, investors and the private sector, said the IFC official.
"Coordinated regulatory steps and predictability of the same are crucial," the official said.
The IFC executive also said local currency instruments could help companies get access to funding for projects from investors.
Farhad Ahmed, executive director of the Bangladesh Securities and Exchange Commission (BSEC), identified higher yield rates on the government savings certificates as a problem, saying that it has created obstacles to the development of long-term securities market.
The BSEC executive director also underlined the importance on developing the pension fund in the country.
Among others, Md. Minhaz Zia, chairman of the Asian Tiger Capital Partners, and Adil Islam, managing director and chief executive officer of the Meghna Bank Limited, took part in the discussion.
