Jun 29, 2021

Sri Lanka listed companies cleared to sell dollar shares and bonds Featured

Sri Lanka’s cabinet of ministers had cleared plan to allow listed companies to issue dollar denominated shares and debt to investors, the state information office said in another step towards dollarization.

“The Colombo Stock Exchange has submitted a proposal to list out the foreign currency denominated shares issued by the Sri Lankan registered companies on the Colombo Stock Exchange with the aim of increasing the ability of local companies to raise foreign funds in Sri Lanka,” the statement said.

“The Monetary Board of the Central Bank of Sri Lanka has recommended the implementation of the proposal submitted by the Colombo Stock Exchange Considering the factors such as increasing the interest of foreign investors in Sri Lankan listed companies, attracting foreign currency into the country and increasing its participation, reducing the pressure on the Sri Lankan rupee…”

Sri Lanka’s rupee has fallen sharply from 2015 after call money rate targeting and excess liquidity hit the island’s non-credible peg and foreign investors have also exited the country in the face of monetary instability.

At the moment Business Foreign Currency Accounts cannot receive dividends or interest from shares.

The cabinet has cleared the required changes to the foreign exchange regulations to be made.

Dollarization protects the holders from depreciation of an unstable soft-peg.

The cabinet had also cleared paying an interest premium to Special Deposit Accounts started in 2020 if they are re-invested beyond the initial 12 months.

Foreign exchange controls started in 2020 which ended in July 02, will also be extended.