Despite the country’s Finance Minister Ravi Karunanayake charging that the Central Bank violated the law in past issuances of treasury bonds, the Central Bank yesterday in a statement stressed it has always complied with the relevant law when issuing such bonds.
The bank said it has followed the Section 4 of the Registered Stock and Securities Ordinance, No 07 of 1937 (RSSO) as amended with regard to the issuance of government securities.
The auction based issuance of treasury bonds by the Central Bank on behalf of the Sri Lankan government commenced in 1997.
With the commencement of the public auction through the primary dealers in treasury bonds, the price and volume of treasury bonds were determined through market forces.
Therefore, the Central Bank said the related gazette notifications were issued after the treasury bond issuances, but on dates and gazette numbers which were pre-reserved. To further comply with the intent of the law, the Central Bank has maintained the borrowings with the limit approved by parliament for a particular year under the Appropriation Act and has published newspaper advertisements in all three languages carrying all information before such bond auctions.
It has also disseminated the results of bond auctions immediately after their conclusions for the knowledge of the general public. In addition to the issuance of new series of treasury bonds, the Central Bank also reopens the existing series of treasury bonds already issued in the past and issues them on the basis of remaining maturity in line with best international debt management practices.
“Therefore, the gazette notification in any given year includes references to treasury bonds, which are newly issued as well as re-opened during the financial year concerned. Accordingly, the Central Bank of Sri Lanka reiterates the view that it has been in compliance with the intent of the said provisions of RSSO,” the Central Bank said. The bank also assured the general public that the treasury bonds issued on behalf of the Sri Lankan government have full legal authority and effect. In addition, the banks said it would be making recommendations to the government on suitable amendments to the RSSO.