MB Subba

The Royal Monetary Authority (RMA) has offered Treasury Bills (T-Bills) worth Nu 3 billion (B) for sale on behalf of the government.

T-Bills are a debt instrument issued by the government to mobilise fund from the market and can be negotiated and traded freely in the market.

The T-Bills, which have a maturity period of 91 days, are being auctioned and issued through the RMA.

Any Bhutanese person, firm, company, corporate body, financial institution and trust, among others, can subscribe the Bills. But the RMA will have the full discretion to accept or reject any or all the bids either wholly or partially, without assigning any reason, the central bank notified.

The sale of Treasury Bills comes at a time when the government is reportedly facing shortage of funds amid the Covid-19 pandemic. T-Bills can be used for financing temporary revenue shortfalls in the government budget.

However, Finance Minister Namgay Tshering downplayed the sale of T-Bills saying that issuing of Treasury Bills is a regular practice.

“This is issued to ensure un-disrupted cash flow in the market. This will help the economy,” he said.

According to the finance ministry’s Operation Guidelines for T-Bills, the Bills shall be listed and issued through the Royal Securities Exchange of Bhutan. The Public Finance Act authorises the Ministry of Finance to raise loan from any person, organisation, or government, either within or outside Bhutan.

The government estimates the domestic borrowing for fiscal year 2020-21 at Nu 13.604B, which will be financed through issuance of T-Bills and long-term government bonds in the domestic market.

As of today, the government has been using T-Bills for deficit financing and cash management. However, the government plans to raise financing through long-term bonds of different maturity, according to the finance ministry.

The Act also allows the ministry to borrow money to finance budget deficits, to refinance maturing debt and to maintain credit balance in the bank accounts by way of issue of public securities such as bills, bonds or commercial paper.