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POSTED AT 10:08 AM 03-01-2019

US$ one billion sovereign bond could be settled - Governor

Sri Lanka would have to settle a US$ one billion sovereign bond soon for which a programme is in place, Central Bank Governor Dr.Indrajit Coomaraswamy said unveiling the ‘Road Map: Monetary and Financial Sector Policies for 2019 and Beyond’ yesterday.

He said US$ 650 million is already available which was a left over from the leasing of the Hambantota Harbour to a Chinese company.

“In addition we are confident that a further US$ 350 million could be raised before the deadline.”

He said that due to the Political uncertainties, especially during the last quarter of 2018, three global agencies Moody’s S&P and Fitch downgraded Sri Lanka’s rating which foiled their plan to raise the US$ 350 million via People’s Bank, National Savings Bank and Bank of Ceylon.

“However we have now come up with an alternative plan to raise the balance US$ 350 million through several other financial instruments on time.”

In particular, following the recommendations of the Presidential Commission of Inquiry to Investigate, Inquire and Report on the Issuance of Treasury Bonds, measures are being taken to strengthen several laws applicable to the Central Bank. Measures were also taken to reform the operations relating to the issuance of government securities, introduce a new investment policy framework for the EPF, strengthen internal audit and introduce the code of conduct for employees and the members of the Monetary Board. The procurement process for several forensic audits is underway, and forensic audits are to be conducted by entities with global practice.

Governor also said that although the developments over the past weeks have delayed the progress that Sri Lanka has been making under the IMF Programme, they hope to keep the IMF Programme on track this year.

“While this will categorically support the country’s external sector, the reforms would also help boost investor confidence and productivity of the economy. These are key drivers in enhancing growth of the economy.”

Commenting on the depreciation of the rupee he said that it would take a further time to settle. “The increase hydro power generation and lower global oil prices will somewhat help to stabilize the Sri Lanka rupee soon.”

He also said that in order to strengthen the legal and regulatory framework of the financial institutions, a new Banking Act is being drafted, while also initiating amendments to other legislation related to the financial sector.

In particular, following the recommendations of the Presidential Commission of Inquiry to Investigate, Inquire and Report on the Issuance of Treasury Bonds, measures are being taken to strengthen several laws applicable to the Central Bank. Measures were also taken to reform the operations relating to the issuance of government securities, introduce a new investment policy framework for the EPF, strengthen internal audit and introduce the code of conduct for employees and the members of the Monetary Board. The procurement process for several forensic audits is underway, and forensic audits are to be conducted by entities with global practice.

Shirajiv Sirimane

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