Suspension of purchasing Sri Lanka International Sovereign Bonds (ISBs) for LCBs and NSB to continue for another three months

Sri Lanka adopted many actions to curtail the foreign exchange outflow during early stage of COVID19 in March 2020. CBSL suspended licensed commercial banks and National Savings Bank to purchase of Sri Lanka International Sovereign Bonds (ISBs) for a period of three months unless such purchase of ISBs is funded by using new foreign currency inflows to the banks. That was laps on 19th and it was extended for further three months with immediate effect. The Sri Lanka ISBs are trading at a steep discount as low liquidity and unclear fundraising plan to repay USD 1Bn maturing in October 2020. As per the EconomyNext, many analysts have pointed out " Not only domestic banks but the Treasury itself would benefit from early buybacks of ISBs which would save hundreds of millions of dollars for the Treasury generating instant profits".