Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.

Thank You

Join the forum, it's quick and easy

Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.

Thank You
Would you like to react to this message? Create an account in a few clicks or log in to continue.

Encyclopedia of Latest news, reviews, discussions and analysis of stock market and investment opportunities in Sri Lanka


Submit Post




View results

ශ්‍රී ලංකා මූල්‍ය වංශකථාව - සිංහල
Submit Post


Send your suggestions and comments

* - required fields


Latest topics

» The war in Ukraine is no longer shocking the wheat market
by ResearchMan Yesterday at 12:44 pm

by cseguide Yesterday at 11:34 am

» Analysis: China casts giant shadow over emerging nations' chase for debt relief
by ChooBoy Yesterday at 7:38 am

» In STOCK MARKET despite all odds, there is always hope. Never ever give in nor give up.
by atuts Sun Jul 03, 2022 2:14 pm

» India raises import tax on gold to support rupee and amid trade deficit
by ResearchMan Sat Jul 02, 2022 2:09 pm

» When will supply chain disruptions ease?
by ResearchMan Sat Jul 02, 2022 9:57 am

» Expolanka to continue its winning streak
by samaritan Fri Jul 01, 2022 4:12 pm

» Govt gets its priorities wrong
by samaritan Fri Jul 01, 2022 10:25 am

» Ambassador assures U.S. support to Sri Lanka to find solutions to economic issues
by samaritan Fri Jul 01, 2022 10:16 am

» IMF-Sri Lanka bailout talks end without a deal
by ChooBoy Fri Jul 01, 2022 9:16 am

» Sri Lanka Breaks Into Hyperinflation Zone Amid Dollar Crunch
by CHRONICLE™ Fri Jul 01, 2022 8:11 am

» Sri Lanka needs to do more on debt restructuring before a bailout package is finalised, says IMF
by CHRONICLE™ Fri Jul 01, 2022 8:06 am

» Global COVID cases rise as BA.4 and BA.5 expand
by samaritan Fri Jul 01, 2022 7:04 am

» We’re seeing a shift toward international and value stocks, says Schwab’s Kleintop
by target1 Wed Jun 29, 2022 2:40 am

» Wall Street stumbles as consumer pessimism stokes growth fears
by target1 Wed Jun 29, 2022 2:34 am

» Free Market Capitalism vs. Crony Capitalism
by target1 Wed Jun 29, 2022 2:30 am

» Sri Lankan corporations reap large profits as workers and rural toilers face poverty and starvation
by CHRONICLE™ Tue Jun 28, 2022 6:37 pm

» අද රාත්‍රියෙන් පසු, යක්ෂයාගේ හෝරාව ඇරඹේ!
by God Father Tue Jun 28, 2022 6:13 pm

» Derana 360 with Minister Dhammika Perera
by samaritan Tue Jun 28, 2022 1:07 pm

by LHW Tue Jun 28, 2022 9:24 am








You are not connected. Please login or register

FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ »  Banks seen raising funds for government

Banks seen raising funds for government

2 posters

Go down  Message [Page 1 of 1]


Director - Equity Analytics
Director - Equity Analytics

The Sri Lankan government appears to be using both state and private sector banks to raise funds on its behalf to fulfill funding needs, without directly accessing international capital markets.

According to a recent research report by JP Morgan, Sri Lanka’s National Savings Bank (NSB), a quasi sovereign is expected to raise issue a US $ 1 billion bond with several other private banks to follow suit, as the government is not inclined to issue a new dollar bond in 2013.

Mirror Business a few days back reported that National Development Bank (NDB), a designated development financier which also carries out operations of normal licensed commercial banks, is planning to raise US $ 250 million via a corporate bond issue shortly.

The Budget 2013 proposed a window for NDB and DFCC, the other designated development financier in the country, to raise long term foreign development finance up to US $ 250 million each, to provide long term funding for Small and Medium Enterprises (SMEs), plantations, construction industry and other manufacturing industries.

President Mahinda Rajapaksa as the country’s Finance Minister stated that the underwriting foreign exchange risk of such bond issues will be borne by the government.

JP Morgan forecasts that several of the bond issues are likely to hit the market over the next 1 to 2 months, before Sri Lanka faces the United Nations Human Rights Council in March.

According to analysts, it is unlikely that the private sector in the country will have the appetite for the large sums of funds raised from overseas sources, and predicts that majority of the money would likely to be channeled to the government mainly by way of swap arrangements.

However, some analysts are of the view that banks raising dollars through bond issues would mitigate the crowding out effect in the private sector to a certain extent if these funds were drawn by the government through investments in treasury bills and bonds with the forex risk being underwritten by the government until these funds were put in to intended use.

This is particularly important at a time when the total domestic financing of the Budget 2013 is estimated to rise 62 percent Year-on-Year to Rs.421 billion probably due to non-bank borrowings (consisting largely of Treasury bonds and bills) of Rs.289 billion (vs. an avg. of Rs.62bn over the past two years) indicating the government’s desire to rely more on domestic financing to bridge the deficit.

Responding to a question raised by Mirror Business,the IMF last week said the achievement of the projected budget deficit of 5.8 percent of GDP for 2013 would be extremely challenging amidst overly optimistic and the falling revenue targets currently at the lowest in the region at 11.5 percent of GDP.

Early part of this month, the government turned down an IMF-follow up program amounting to over US $ 1 billion as a result of IMF’s refusal to provide funds as budget support.



Foreign holdings of Sri Lankan government securities have exceeded the Central Bank’s maximum limit of 12.5 percent of total outstanding Treasury bills and bonds, the monetary authority’s latest data showed on Thursday.

The Central Bank’s latest weekly economic indicators showed total foreign holdings of government securities was at 471.1 billion Sri Lanka rupees ($3.70 billion) as of Feb. 13, which was 13.85 percent of the total 3.4 trillion rupees.

Net foreign buying in government securities increased by 18.7 percent or 74.2 billion rupees ($582.65 million) in the first seven weeks of this year through Feb. 13, the data showed.

Sri Lanka’s central bank has in the past raised the foreign holding limit in government securities when the island nation struggled for foreign inflows to boost reserves and bridge budget deficits.The International Monetary Fund did not agree to a budget support loan last week.

The 2013 budget had planned on borrowing 62 billion rupees through foreign investments in T-bills and T-bonds, to finance a 507.4 billion rupee budget deficit, which is estimated to be reduced to 5.8 percent of gross domestic product this year.

Nandalal Weerasinghe, deputy governor of the central bank, said the central bank has been accommodating foreign investments into T-bonds and T-bills in line with total requirements for 2013.

“As a policy, we haven’t increased the limit. This is due to accommodating huge foreign demand.

The 12.5 percent will be maintained based on the full year,” Weerasinghe told Reuters.

Sri Lanka’s government securities offer an attractive return of around 10 percent annually.

In Mumbai, Central Bank Governor Ajith Nivard Cabraal said on Thursday Sri Lanka was unlikely to relax foreign investment limits in government securities as the current level is appropriate.

The IMF said last week that Sri Lanka’s economy was facing risks of slower growth, high inflation, lower tax revenue and slow structural reforms.

(Source : REUTERS)

Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum