Monday, 15 February 2021 10:26

Two leading state banks under pressure to sacrifice foreign reserves Featured

Two leading state owned banks have been pressurized to swell the country’s foreign reserves sacrificing 15 to 45 percent of its foreign currency assets, including deposits and inflows

.Despite Central Bank Governor Prof W.D Lakshman’s talking on closely guarded negations with overseas agencies for foreign funding, Peoples Bank and Bank of Ceylon (BOC) have been directed to transfer 15 and 45 percent of their dollar reserves respectively to state coffers.

In addition all commercial banks will have to transfer US dollar remittances being received by it from overseas customers to the treasury by giving them a high interest 3 percent more than the current interest rate , official sources said.

Sri Lanka’s official reserves were 4.8 billion US dollars (USD 4,814.6mn) by the end of January 2021, down from 5.7 billion US dollars in December last year, the latest Central Bank data showed.

Without considering the reality and actual facts, Central Bank Governor told a news conference that “negotiations are being going on with undisclosed overseas agencies to raise some of the required foreign exchange inflows.

Without revealing the identity of those foreign agencies he said foreign funding of 5 billion US dollars will be raised through swaps, loans and other sorts of mechanisms; Central Bank officials said.

Negotiations are underway with overseas central banks, banks, and other agencies, multilateral agencies but IMF is not there in the list yet, he added.

He said required foreign exchange would be sourced from the market and gaps would be filled with swaps and loans. “This we have been doing several days over the last week,” he added.

 

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