Wednesday, 23 September 2020 17:04

CB facilitates non-resident investors to invest in government securities

Government will be renewing foreign interest on the rupee-denominated securities market providing tax and other intensives to encourage foreign investors, State Minister of Finance Ajith Nivard Cabraal said.

Appropriate action has already been taken to inculcate confidence on the economic revival in the country following Covid-19 set back among foreign investors, and nonresident Sri Lankan expatriates and investment firms in overseas to invest in Treasury bills and Rupee bonds.

Regulations will be eased to provide flexibility for Investors to withdraw their funds at any risky situation and the country is bound to provide the funds upon their request.

The Central Bank has identified the need to facilitate non-resident investors to enable to invest in government securities and other sectors to encourage the inflow of foreign currency into the country, the state information office said.
Accordingly, approval has been given to introduce US Dollars/Sri Lankan Rupee buying and selling exchange facilities for one or two years by the Monetary Board of the Central Bank.

Hence, the Cabinet of Ministers approved the proposal presented by the Finance Ministry to take the following measures to minimize the foreign exchange risk that may occur to Licensed Commercial Banks.

It will be conducting the initial foreign exchange transaction and subsequent exchange transaction at the same exchange rate.

Concerning the foreign exchange transactions prior to the maturity of the investment, The CB will grant permission to exchange at the same foreign exchange rate subject to a penalty.

This facility is applicable only if there is foreign exchange inflow to the country and subject to a minimum investment of US$ 25 million and a maximum of US$ 1000 million.

In the case of depreciation of the exchange rate of the US Dollar against the Sri Lanka Rupee during the applicable period, the Central Bank will compensate the loss incurred when transferring its dividends to the Treasury in the future.

This is because any loss that could be incurred to the Central Bank is considered as a cost to the Treasury.


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