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Thukten Zangpo 

The government has offered a 12-year bond worth Nu 4 billion (B) for public subscriptions to be allocated using a yield-based auction, the Royal Monetary Authority (RMA) notified on June 10.

This is the fifth time the government has offered bonds to the public and the government has already raised Nu 8.2B from the earlier offer.

The bond offer is expected to help the government to finance the fiscal deficit. According to the budget report for the fiscal year 2022-23, the fiscal deficit for the fiscal year 2021-22 was revised to 9.3 percent of gross domestic product (GDP) at Nu 17.5B.

The finance ministry also projected a fiscal deficit of Nu 22.88B accounting for 11.25 percent of GDP in the next fiscal year 2022-23.



The RMA, as the fiscal agent of the government, administers and manages the primary issuance of the government bond.

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 bonds.

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.

The submission of subscription applications was opened for 10 days from June 11 and will close at noon on June 21 this year.



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 December 23 this year and the second coupon on June 23, 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, it is allocated using a yield-based 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 June 23, 2034, on which the principal amount and final interest will be paid.

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.

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.



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