Sri Lanka will honour all government bonds: Finance Minister

ECONOMYNEXT – Sri Lanka will honour all government bonds issued by the government, Finance Minister Ravi Karunanayake said after amid questions whether the specified legal procedure has been followed in selling the bonds.

"All bonds issued will be honoured," Finance Minister Ravi Karunanayake said.

He said the question of legality will be gone into later, but the government will confirm the trust placed by investors who had bought the bonds.

The controversy arose after it came to light that the Central Bank has been in the habit of issuing a gazette notice on bond auctions after their sale, when the underlying law required a gazette to be issued before the auction, during a commission of inquiry in to frauds in bond auctions.

Central Bank Governor Indrajit Coomaraswamy, said a public advertisements were placed in newspapers and also the central bank website, to inform the public, in the spirit of the law and the auctions were substantially in compliance.

However the government would look to either amend the underlying law which was enacted in 1937, or change the procedure in the future he said.

Last week ex-President Mahinda Rajapaksa, who was finance minister only until January 08, said he did not sign a gazette notice published in his name on November 2016 related to bonds issued in 2015.

Minister Karunanayake said he had halted the publication of another gazette that was in the process of being published regarding bond sales in 2016 under his name, of which he also had no knowledge.

The gazette itself indicated that bonds were issued by auction, raising questions over past bonds.

But Karunanayake said during the administration of Mahinda Rajapaksa, large volumes of bonds had been privately placed.

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Private placements left room for irregularities unlike transparent auctions.

Karunanayake said the government however stood behind the bonds since Sri Lanka had never defaulted on any money lent to the government since independence. (Colombo/Feb27/2017 – Update II)
 

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