SL may Cut Rupee Debt

4 November 2010 05:18 am - 4     - {{hitsCtrl.values.hits}}

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Sri Lanka may reduce the amount of government rupee debt available to foreign buyers to channel more overseas funds into private companies, Central Bank Deputy Governor Dharma Dheerasinghe said.

“We want there to be a shift from government debt to corporates issuing debt and subscriptions coming from outside,” Dheerasinghe said in an interview in Colombo yesterday. “We are also now more focused on foreign direct investment and trade inflows.”

Sri Lanka will soon announce easier foreign-exchange rules, to help spur economic growth after the end of the island’s civil war, central bank Governor Ajith Nivard Cabraal said last month. The move will enable foreign investors to buy corporate debt in Sri Lanka, Cabraal said in January.

The easier foreign-exchange rules, together with rising credit demand and imports, will help absorb liquidity in the local money market that has reached 100 billion rupees ($895 million), Dheerasinghe said.

“Much of the liquidity is due to buying foreign currency in the market,” Dheerasinghe said.
The authorities doubled the maximum amount of outstanding treasury debt foreigners can buy to 10 percent in November 2007. They allowed purchases of rupee-denominated treasury bills for the first time in May 2008.

Sri Lanka plans to allow local residents to buy shares of foreign companies and to let Sri Lankan companies list abroad, Cabraal said earlier this year.
Accelerating economic growth and the end of almost three decades of war against separatist rebels in May 2009 has attracted foreign funds to Sri Lanka. The South Asian nation received bids worth $6.3 billion for a global sale of $1 billion in bonds to help repay debt and rebuild after the conflict.

Source: Bloomberg

  Comments - 4

  • kosala Thursday, 04 November 2010 05:59 AM

    It's not going to be easy as they say

    Nilantha Thursday, 04 November 2010 06:14 AM

    Nothing is impossible...!!
    Will achieve what we deserve, very soon

    malithlk Thursday, 04 November 2010 06:28 AM

    Nilantha Nothing is impossible...!! very true. But wit this corrupted government and rajapaksha regime sees impossible.

    Shiran Thursday, 04 November 2010 07:08 AM

    What is the difference. in whatever the type of debt foreiners invest in Sri Lanka, we get foreign currency to the system. When there is a demand for government debt by foreingers, interest rates can come down. in addition, local currency will be available to be channelled to the private sector debt instruments. Further private corporates can borrow at low interest rates. (becus, government securities rates are the benchmark). OK let's assume, government securities were restricted for foreign investors, will the same amount be channelled to the private sector debt. I think government securities should not be restrictive for foreigners, let them come and let them familiar with the Sri Lankan market. them as time passes they will definelty look into private sector debt becus they will be familiar with the Sri Lankan system.


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