Although Sri Lanka has lost money on investing in Greece bonds, the losses incurred were comfortably offset by higher returns from other investment, the Central Bank said.

The bank also said that at the time the Greek investments were made, Greece had the backing of the European Financial Stability Fund (EFSF) which had AAA rating.

“...therefore Greek Bonds were considered sound even though Greece rating itself was lower than the investment rate,” a statement by the bank said.

Though exact losses were not specified, Ravi Karunanayka, an opposition Parliamentarian was quoted as saying that a parliamentary committee was informed that the Central Bank had lost Rs.2.2 billion on Greek bonds.

The Central Bank in its statement stressed that it manages foreign reserves in order to safeguard and enhance the value of its overall reserves and to generate a reasonable income for its investments. It also noted that returns generated by such reserve management activities in the past two years had been well above the benchmark of US Fed Fund rate.

According to a table attached to the Central Bank statement, the bank received a 6.56 percent return or US$ 430.2 million for its foreign reserves of US$ 6.5 billion. In 2010, the rate of return stood at 6.16 percent or US$341.2 million. Meanwhile, the Central Bank noted that in a wide portfolio which includes inter alia, US dollars, Euro, Japanese Yen, Australian Dollars, Sterling Pounds and Gold as well as different types of instruments such as fixed income, money market and treasuries, there are fluctuations that occur in real-time.

“Whilst such fluctuations pose significant challenges to all reserve managers, the Central Bank has been able to deliver higher than average returns and consistent enhancement of value of its reserves in the past, and it is confident that it can do so in the future as well, in keeping with its policy guide lines,” the bank said.