Non-resident ownership of Government Treasury Bond

COLOMBO: The Government has decided to permit non-residents to hold up to 5% of the Government Treasury Bonds with the remaining maturity of two years and above, a Central Bank release said yesterday. This will give further freedom in capital account transactions.

The new measure is aimed to further enhance the capital market development by increasing foreign exchange inflows and increase resources in the domestic money and capital markets.

The release: The non-residents at present are permitted to make investments in shares of rupee companies upto 100 per cent, subject to conditions as set out in the Gazette Notification dated June 24, 1992.

They are also permitted to invest in Sri Lanka Development Bonds denominated in foreign currency as set out in the Gazette Notification dated November 1, 2001.

As a measure of granting further freedom in capital account transactions, the Government has now decided to permit non-residents to hold up to 5 per cent of the Government Treasury Bonds with the remaining maturity of two years and above.

Non-resident investors will be required to hold these Treasury Bonds for a minimum period of one year from the date of purchase before selling or transferring the Bonds to a resident and will be permitted to trade among themselves during such period.

Bonds could be purchased from authorised foreign exchange dealers, (i.e. banks) and primary dealers. The terms and conditions will be published in a Gazette Notification shortly. Total outstanding Treasury Bonds with the remaining maturity of above two years is Rs. 476 billion as at October 16, 2006.

Accordingly, the amount now offered to non-residents will be Rs. 24 billion or approximately US dollars 230 million.

As and when new Treasury Bonds are issued, 5 per cent of such new Bonds would also be offered to non-residents.

Further information may be obtained from C. Premaratne, Superintendent/Registrar of Public Department on 2477277, Fax: 2477718-9 or email - [email protected]