Nov 04, 2010 – (LBO) – Sri Lanka is not looking to increase Treasuries sales to foreigners but would like them to buy private debt once capital markets are opened further, central bank’s deputy governor Dharma Dheerasinghe said. Sri Lanka’s rupee market has more than a 100 billion rupees as excess bank reserves which are being deposited with the monetary authority at 7.25 percent by banks. Sri Lanka’s entire reserve money is about 350 billion rupees.
Sterilizing excess rupee reserves to lock up foreign reserves is costly to a central bank. Governor Nivard Cabraal said the central bank has too much foreign reserves at the moment.
“With the sovereign going to the market and striking a benchmark, one of the objectives was that private corporates would also go to the market,” Dheerasinghe said.
“We are shifting from government debt to corporate debt. We do not mind corporates issuing debt and subscriptions coming from outside buying corporate debt.”
He said there were no plans to increase a 10 percent cap on rupee denominated government debt sales to foreigners but may allow the total outstanding to go down as securities mature.
Sri Lanka central bank said in a roadmap for 2010 that foreign investors will be