Driven by the need for more foreign direct investment, resultant of the significant outflow on account of market intervention, the Sri Lankan Central Bank will raise from 10 per cent to 12.5 per cent FDI in treasury bills and bonds
The Monetary Board of the Bank, which met on December 5, approved the decision to raise the current threshold for foreign investments in Treasury bills and Treasury bonds from 10 per cent of the outstanding Treasury bill and Treasury bond stock to 12.5 per cent. The Bank said that this was to support the growth momentum of the economy by enhancing resource availability, while also easing the domestic savings-investment gap and thereby mitigating any pressure on interest rates.
“The robust growth of credit extended by commercial banks as seen so far during the year is expected to continue, while the Sri Lankan economy grows at a healthy pace. At the same time, both headline and core inflation remains subdued. Nevertheless, the diminished level of excess liquidity in the domestic money market has caused an upward movement in short-term market rates in recent weeks. Meanwhile, foreign investors have expressed continued interest in investing in the Government Securities market, as a result of growing uncertainties in advanced economies and greater prospects in emerging economies,” it said in a release on Tuesday.