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Govt revising law to allow issuing infrastructure bond and blended financing to facilitate FDI inflow

KATHMANDU, Dec 8: The government is introducing provisions for issuing infrastructure bonds and blended financing, claiming that the move is aimed at attracting more foreign direct investment (FDI) in mega projects.

Finance ministry officials say the ministry has started homework to introduce the provisions by amending the Hedging Related Regulation 2018. This is the second time that the government is revising the regulation.

Hedging is a mechanism that helps minimize the risks for foreign investors, which could take place due to the fluctuating price of the foreign currencies, the US dollar in particular. It ensures the foreign firms with the agreed exchange rate of the foreign currencies while repatriating investment and profits.

Despite enforcing the regulation, the government has been unable to attract a notable amount of foreign investment in the past three years. “We are revising the regulation in line with attracting the foreign investment, mainly in big infrastructure projects,” said Ritesh Shakya, spokesperson for the finance ministry.

The government through the substitution budget this year has stressed arranging investment of private sector and foreign firms to construct the mega projects related to tunnel highway, electricity transmission lines, airports, hydropower projects, hospitals, flyovers and express highways, among others.

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