Task force proposes infrastructure bonds for sustainable development
Infrastructure bonds are debt instruments issued by governments, financial institutions, or corporations to raise funds for critical infrastructure projects such as roads, power plants, and airports
The introduction of infrastructure bonds could provide Bangladesh with a sustainable financing mechanism for large-scale development projects, according to a report by a task force on economic reforms.
The report highlights infrastructure bonds as a viable alternative to existing funding models, offering long-term capital mobilisation through public-private partnerships (PPPs).
The report, titled Task Force Report on Re-strategising the Economy and Mobilising Resources for Equitable and Sustainable Development, was handed over by Planning Adviser Wahiduddin Mahmud to Chief Adviser Prof Muhammad Yunus on Thursday (30 January).
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Infrastructure bonds as a financing solution
Infrastructure bonds are debt instruments issued by governments, financial institutions, or corporations to raise funds for critical infrastructure projects such as roads, power plants, and airports.
They are considered a low-risk investment due to government backing and offer tax incentives and fixed returns to attract investors.
The report suggests that Bangladesh could benefit from adopting infrastructure bond models similar to those used in other countries where they have successfully financed major projects.
Global examples of infrastructure bonds
The report cites several countries where infrastructure bonds have played a crucial role in development:
India: The India Infrastructure Finance Company Limited (IIFCL) and Tax-Free Infrastructure Bonds (2011–2016) have contributed to major infrastructure projects.
The National Infrastructure Pipeline (NIP) initiative is driving growth with a $150 billion investment, partly funded through bonds.
China: Special Purpose Bonds (SPBs) have been widely used to finance transportation and urban development projects.
Malaysia: Sukuk Bonds (Islamic Infrastructure Bonds) have financed large-scale projects in accordance with Shariah principles.
Indonesia: Infrastructure Sukuk have attracted both domestic and international investors for public infrastructure projects.
Vietnam: Government-backed infrastructure bonds have focused on mega projects, leveraging PPPs to enhance financial sustainability.
The report suggests that Bangladesh can adopt similar models by implementing a robust regulatory framework and clear investment incentives.
This approach could enhance investor confidence and ensure a steady flow of funds for essential infrastructure development.
Government backing, tax incentives, and structured risk mitigation strategies would make infrastructure bonds an attractive financing option, reducing reliance on traditional funding methods.
The task force recommends this initiative as a means to accelerate economic growth while ensuring financial sustainability in the long term.
