By Kevin Brown | The Financial Times
.............................................................................................................................................................................................
Ajith Nivard Cabraal told the Financial Times that the country's reform "roadmap" would be "almost 100 per cent" completed in the budget due on November 22.
The reforms are intended to loosen controls on outward capital flows and pave the way for easier inward investment.
They include allowing foreigners to invest in local currency corporate debentures and open business offices and bank accounts.
Residents will be allowed to open bank accounts abroad and invest in foreign listed companies, while domestic companies will be allowed to list overseas and insurance companies will be able to invest part of their reserves in foreign assets.
Mr Cabraal said the bank's financial reform programme for 2011, which is to be published in January, would include "exciting" measures "for investment to flow in fast, for investment to go in the directions that we need".
The central bank is believed to be preparing to allow foreigners to invest in the corporate bond market, which would deepen the investor base in the primary market and help improve thin liquidity in the secondary markets.
The governor said he expected to see strong growth in the corporate bond market. It has lagged well behind both the sovereign debt market and equity capital raisings, which have shown robust growth over the last year.
"It will happen soon, and when it happens there will be a substantial appetite for it," he said in an interview in Singapore. "For a while we had very few initial public offerings, but now more and more are coming forward."
However, he did not specifically confirm that the corporate bond market would be opened to foreign investment next year.
Sri Lanka's moves to ease capital flows contrast with moves in some other emerging Asian countries to impose fresh controls on capital inflows, mainly to reduce currency volatility.
Thailand recently imposed a tax on foreign holdings of Thai bonds, Taiwan placed restrictions on foreign funds buying government debt, while Indonesia and South Korea are also considering measures.
Sri Lanka's growth rate has rebounded sharply since the end of the country's civil war in May last year, with annual growth in gross domestic product expected to reach between 7.5 per cent and 8 per cent this year, compared with 3.5 per cent in 2009. Local stocks have soared, with the all share index on the Colombo Stock Exchange up from below 3,000 after the war to above 6,500 on Monday. Total market capitalisation is up 130 per cent over the 12 months to October at $19.7bn, according to the World Federation of Stock Exchanges.
Mr Cabraal said average GDP growth of 8 per cent a year was achievable over the next five years, faster than some independent forecasters expect. The Asian Development Bank is predicting growth of 6.5 per cent this year and 7 per cent in 2011.
Mr Cabraal also said that the central bank was holding between 10 per cent and 20 per cent of its reserves in gold, which it started to buy in 2009. He said the bank kept part of its reserves in a trading account, and had made profits on sales.
© Yahoo! Finance
No comments:
Post a Comment