Central Bank way to curb illegal remittances

The Central Bank (CB) is targetting foreign investors and Sri Lankan expatriates to invest in Sri Lanka Development Bonds (SLDB) worth US$ 200 million in the coming year.

The move is partly devised to curb illegal channelling of remittances from expatriates. An estimated 30 – 40% of remittances from expatriates come into the country through unofficial channels causing concern to a foreign cash-strapped government.

Ranjani Weerasinghe, Deputy Superintendent of Public Debt at the CB told The Sunday Times FT that under the dollar-denominated SLDB's the minimum investment is US$ 100,000 and in multiples of US$ 10,000.

Eligible investors include citizens of foreign states, whether residents in Sri Lanka or outside the island as well as citizens of Sri Lanka who have made their permanent abode outside Sri Lanka.

Weerasinghe added that investors also comprise BOI-approved companies who have entered into agreements in terms of Section 17 of the BOI Act with full exemption from the provisions of the Exchange Control Act provided that all purchases of SLDBs are made against debits to foreign currency accounts maintained only for the purpose of crediting earnings from exports of such companies.'

She said the first ever issue of SLDB's was conducted back in 2001 and were subsequently issued in 2002, 2004 and 2006. "All SLDB auctions conducted so far were over-subscribed," she said. In 2001, the amount in US dollars was US$158.5 million while in 2006, it had risen to US$580 million. The outstanding balance at present is US$580 million. (NG)