Thukten Zangpo 

The government has offered a bond worth Nu 1.5 billion (B) for public subscriptions to be allocated using a yield-based auction, the Royal Monetary Authority (RMA) notified yesterday. 

It is expected to help the government to finance the fiscal deficit. 

According to the finance ministry, the fiscal deficit for the fiscal year 2021-22 is expected to remain at 8.6 percent of gross domestic product with the total budget outlay expected to increase by 4.4 percent (Nu 73.92B) from the FY 2020-21. 

With a maturity period of seven years, the submission of subscription applications will be open from April 11 and will close at noon on April 26. 




“Any Bhutanese persons including Bhutanese citizens, firms, companies, corporate bodies, financial institutions, trust funds, and non-governmental organisations incorporated or registered under the existing laws can subscribe to the bond,” RMA stated. 

The application must submit the bid by using a web-based application link provided on RMA’s website. 

While the bonds will be listed with the Royal Securities Exchange of Bhutan Limited to facilitate secondary market transactions. 

This is the fourth time the government has offered the bonds to the public and the government has already raised Nu 6.7B from the earlier offer. 




The first one was issued in September 2020 with a bond worth Nu 3B for three years, a bond worth Nu 700 million for 10 years tenure was offered for the second time in January 2021. In January this year, the government offered a bond with a 10-year term worth Nu 3B. 

Bonds are a secure investment option for those who are looking for a regular return, as the finance ministry pays coupons (interest) on a half- yearly basis. 

The ministry will pay the first coupon on October 26 this year and the second coupon on April 26, 2023, into the bank account that a bondholder has registered for receiving the payment. 

However, the annual coupon rate of the bond is to be determined at the auction. 




The face value of the bond has been fixed at Nu 1,000 and the minimum subscription amount was Nu 10,000 (10 units) while the maximum limit has not been specified. 

The interest earned from the bonds is non-taxable for personal income tax. However, the interest income from the bond is taxable income (5 percent as tax deducted at source) for the business income tax and corporate income tax-paying entities. 

The maturity date is on April 26, 2029, on which the principal amount and final interest will be paid. 

A government bond or sovereign bond is a debt obligation issued by the government to support government spending. It generally includes a commitment to pay periodic interest, called coupon payments, and to repay the face value on the maturity date. 




As per Section 126 of the Public Finance Act 2007, the finance ministry can borrow money to finance fiscal budget deficits, refinance maturing debt or a loan paid before the redemption date, maintain credit balances in the bank accounts, and on- lending to state enterprise and other legal entities, on- lending to state enterprises and other legal entities, or any other purposes approved by the Cabinet.