Government encourages foreign interest on securities market
View(s):Government will be encouraging foreign interest on the rupee-denominated securities market providing tax and other incentives, State Minister of Finance Ajith Nivard Cabraal told the Business Times.
Investments in Treasury bills and bonds although it is vital to ease the pressure on domestic interest rates and reduce the government funding cost, should be allowed cautiously, he disclosed.
Appropriate action has already been taken to inculcate confidence on the economic revival in the country following COVID-19 among foreign investors, and non-resident Sri Lankan expatriates and investment firms 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.
“At the end of 2014, US$ 3450 million had been invested. This had been reduced to $500 million by the end of 2019,” he said adding that investors leave the country when there is a loss of credibility.
“We are working to bring them back to this country by instilling confidence on the economy,” he added. Economic recovery is to be accelerated with new tools to lure money into Treasury bonds and bills that will boost confidence among local entrepreneurs.
The Finance Ministry has taken measures to lure foreign investors, corporate bodies incorporated outside Sri Lanka, foreign institutional investors including country funds, regional funds or mutual funds through overseas channels and foreign missions, he revealed.
The Monetary Board of the Central Bank (CB) will decide on the increase in the threshold of foreign investments in bonds and bills to 10 per cent from 5 per cent out of the total outstanding stock of bonds and bills, a senior Treasury official said.
The CB will guarantee the future convertibility of these deposits into foreign currency whenever investors desire to do so; he said adding that such deposits will be accepted without any hindrance.
All such forex remittances will be exempted from exchange control regulations and taxes, and will be protected under banking secrecy provisions.
During COVID-19, the intensified global financial crisis will compel foreign investors to move their funds from vulnerable countries to the countries which maintain near normal conditions.
Sri Lanka will have to take advantage of this situation by taking prompt action without missing the bus, Minister Cabraal said.
(BS)