"We always appreciate the contribution given by the Sri Lankans who work and reside outside the country who have remitted around US dollars 3 billion last year. The country benefited immensely from these contributions. Through opening of the Treasury bill and Treasury Bonds market for Sri Lankan Disaspora and Migrant workforce we try to reach the target of 500Mn US$. We have taken measures to promote this in 19 cities in 11 countries in, which will cover almost the entire globe." said Ajith Nivard Cabraal, Governer, Central bank, announcing the opening of the Treasury bill and Treasury Bonds market for Sri Lankan Disaspora and Migrant workforce.

This new initiative was announced in the Central bank ‘Road map: Monetary and Financial Sector policies for 2009 and beyond’. Through this scheme it is expected to widen the investor base, diversify the Government Securities market, make it more convenient for Sri Lankans living abroad to access Government securities, and to create a more stable Government securities market. This will also provide safe and highly liquid investment opportunity for Sri Lankans living abroad, while providing them with an attractive return on their investment.

In his message Mahinda Rajapaksa, Pressident of Sri Lanka noted that over the past three years Government has made significant progress in the security, economic and social areas of the country. Here Government has developed a convenient fiscal instrument, where in Sri Lankans living overseas would have an opportunity to invest in treasury bills and treasury bonds of the government of Sri Lanka. By doing so, one can earn a very attractive return as well as significantly contribute to the development and prosperity of the country. Also in order to continue with these initiatives and projects, the Government need to raise the necessary funding, and it is in that context we believe that the opportunity provided through the investment in Government Securities would be appealing, both from a national as well as a profit point of view.

To facilitate this endeavour which is expected to cover almost the entire globe, seven joint Lead Managers, namely, Bank of Ceylon, Commercial Bank of Ceylon PLC, National Savings Bank, People’s Bank, Sampath Bank, NatWealth Securities Ltd, and HSBC have been appointed. This programme will be launched in selected countries in regions such as Middle East, Europe, North America, Asia and as well as in Australia and New Zealand. Investments in Treasury bills or treasury bonds could be channeled through any of the joint Lead managers, using the Treasury bill/bond Investment External Rupee Account-D (TIERA-D) to be opened by the investor for that purpose. Remittances into and out of TIERA-D accounts would be free from exchange controls. Through this scheme, Sri Lankans living abroad, including: Sri Lankans who have made their permanent residence overseas (Non-residents), citizens of Sri Lanka with dual citizenship living in Sri Lanka or abroad, Sri Lankan professionals living in Sri Lanka or abroad who earn income in foreign currency and Banks acting in a fiduciary capacity on behalf of the above categories, would, from now onwards, be permitted to invest in Treasury Bills and Treasury Bonds, as well as receive interest, capital gains and maturity proceeds to the credit of any bank account in Sri Lanka or abroad.

Explaining the benefits of investing in this scheme, Arjuna W Mohottala, Economist, Central Bank, noted that it has attractive returns; 100% safety with high liquidity, and can be used as collateral etc. the investment is secure since they are default risk free.

You can get an attractive rate of interest as currently, yield rates remain around 15-17%. Exchange rate risk is minimal as Sri Lanka rupee has depreciated by an annual average rate of 3 ½% only during last 3 years. Hence one can obtain instant liquidity by selling the investments in the market. All receipts of interest/maturity proceeds and capital gains are fully repatriable. Investors are not subject to further Taxation, since withholding tax of 10% charged at source is the final tax. Also no Stamp Duty is payable on these securities. One can get the Best Service from the CBSL which maintains the investment in its state of the art, fully automated Central Depository System (CDS) of LankaSecure.

Periodic Statements will be issued by LankaSecure to the investors confirming their holdings and transactions. Also one will be able to check their investment Online through the internet, via a secured and password protected website

The Central Bank has now initiated several measures to promote inward remittances and to build the foreign exchange reserves to a higher level. In order to promote inward remittances, the Government of Sri Lanka has made necessary arrangements to pay a bonus interest in Sri Lanka Rupees on the interest paid by the licensed commercial banks, National Savings Bank, and Lankaputhra Development Bank on Resident Foreign Currency (RFC) and Non-Resident Foreign Currency (NRFC) accounts, with effect from 01st February 2009. This aims to promote inflows of foreign remittances in to Sri Lanka through the banking channels as well as to promote the general public to deposit any foreign currencies held by themselves with aforesaid banks. Such inflows of foreign exchange into the Banking system will make available more resources for the aforesaid banks for their lending operations, thereby effectively utilizing such resources to promote investments. The bonus so paid will be the rupee equivalent of 20% of the foreign currency interest that accrues on deposits from 01st February, 2009 onwards.

The bonus interest will be credited to a rupee account opened in the name of the account holder or to any other account nominated by the account holder. The bonus interest will not be credited to the RFC nor NRFC accounts. The bonus interest calculated using the monthly average exchange rate of the previous month published in the Central bank of Sri Lanka web site, will be paid to the account holder on the same day on which the foreign currency interest is paid. Further, the interest bonus will be exempt from any income tax deductions. The interest paid on RFC and NRFC accounts are already exempt from taxation.