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DateLine Sunday, 11 May 2008

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Government Gazette

Govt opens TBs for foreign investors

With the objective of further widening and diversifying the government securities market and enhancing the competition in the Treasury Bill market, the Government opened the Rupee denominated Treasury Bill market for foreign investors from May 6. Such measure will not increase the government’s overall borrowing limit approved by the Parliament with the Budget 2008.

The government opened Sri Lanka’s gilt-edged Rupee securities market for the international market by relaxing capital controls on government securities initially in November 2006 by allowing foreign investors to invest in Treasury bonds.

Foreign institutional investors such as foreign country funds, mutual funds and regional funds, corporate bodies incorporated outside Sri Lanka and citizens of foreign states are now permitted to invest in Treasury bills.

Accordingly, foreign investors will be permitted to invest up to 10 per cent of the value of Treasury bills outstanding at any given point of time through the primary market.

Treasury bills can be purchased by foreign investors through participating agents, i.e., Licensed Commercial Banks (LCBs) and Primary Dealers (PDs).

Foreign investors have to advise a bank in their own country to open a special Rupee account, i.e. Treasury Bill Investment External Rupee Account - 2 (TIERA-2) in an LCB in Sri Lanka.

Foreign exchange brought into the country for the purchase of Treasury bills and all proceeds received by sale or transfer or maturity of Treasury bills are routed through this TIERA-2 account which is free from exchange control.

Participating agents will open securities accounts for foreign investors in the Central Depository System (CDS) maintained by the Public Debt Department of the Central Bank of Sri Lanka (CBSL).

This account is debited/credited simultaneously based on foreign investors trading in the market.

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