Fertilizer importers in Bangladesh finally received long-awaited payments from the government.

In a move to settle outstanding arrears, the finance ministry issued special bonds worth Tk 30.16 billion to two banks.

This marks the second time the government has resorted to bonds to clear debts, with the previous instance occurring in 2012-13. Today’s disbursement targeted Sonali Bank (Tk 25.57 billion) and IFIC Bank (Tk 4.59 billion), both covering dues incurred by public and private fertilizer importers.

The bonds carry an interest rate equivalent to the current repo rate (7.75%) and mature in three different terms: eight, nine, and ten years. This scheme forms part of a larger plan to settle Tk 260.00 billion in total across fertilizer importers and independent power producers.

Bangladesh Bank confirmed that interest on the bonds will be paid bi-annually, and the banks can even include them in their statutory liquidity ratio calculations. Clearing these debts also improves the overall financial health of the banking sector.

While this marks a positive development, it’s worth noting that it’s not the first time such measures have been employed.

In 2012-13, similar bonds were issued to settle outstanding subsidies owed to Bangladesh Petroleum Corporation, as per an IMF loan condition.