COLOMBO Feb 21 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
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
"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
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.
($1 = 127.3500 Sri Lanka rupees)
(Reporting by Shihar Aneez; Editing by Jacqueline Wong)