Central Bank bond scam continues to scare away investors

COLOMBO (News 1st): According to the Central Bank, foreign investments in the government securities market recorded a net outflow of US$ 79 million in April 2019. On a cumulative basis, net outflows to the government securities market amounted to US$ 27 million during the first four months of the year. Foreign investments in the Colombo Stock Exchange recorded a net outflow of US$ 24 million in the first four months of 2019. In 2018, the Central Bank recorded a net outflow from the rupee-denominated government securities market of US$ 990 million. This outflow of foreign funds from the government securities market should come as no surprise to observers of the current events in Sri Lanka. Investor confidence in the capital and securities market of Sri Lanka would seek policy stability and accountability as its cornerstones. Sadly in Sri Lanka, we don't see that from the primary cornerstone of financial affairs in the country, namely the Central Bank of Sri Lanka. In February 2015 there was great consternation when there was a significant departure from due process, in the awarding of long term treasury bonds, to raise supposedly at the time much-needed funds for the government and the country's infrastructure development. Nearly two years later, a presidential commission of inquiry, held various people accountable and suggested various investigations and possible legal action. The presidential commission of inquiry also recommended a forensic audit. Nearly two years later, the forensic audits have not been completed, in spite of assurances from the Central Bank that it will be done. Some of those who played a key role, in the flawed process of awarding long term bonds still hold on to power in Sri Lanka. Sri Lanka has not shown the slightest iota of commitment, in addressing what is a serious consideration for potential investors to Sri Lanka. For as long as the Central Bank bond scam, as it has popularly become known, remains unresolved and unaccounted for, it would be safe to infer that investment invitations into Sri Lanka would largely be ignored if not scoffed at by global investors keen to see not only a return for their monies but also keen to ensure that adequate safety and accountability mechanisms and the respect for the law of the land is very much in place.