MONETABRIEF – Sri Lanka has announced a domestic 1, 2 and 3 year dollar bond auction for 100 million dollars which can upsized twice if there is strong demand which is open to both foreign and local investors.
Investors can subscribe from October to 19 to 23. Minimum subscription is 10,000 US dollars, the Public Debt Management Office said.
Fixed interest will be decided by competitive bidding.
The auction is open to holders of Personal Foreign Currency Accounts, Business Foreign Currency Accounts, or Accounts related to Offshore Banking Business.
Companies incorporated outside Sri Lanka or partnership registered outside Sri Lanka through IIAs.
Licensed Specialized Banks and Licensed Finance Companies, which have been permitted to accept deposits in foreign currency.
Foreign citizens, overseas Sri Lanka resident, foreign funds, country funds, could also invest through Inward Investment Accounts.
There have been calls for the Treasury to buy dollar in the market like any other importer without getting into a 'debt trap' to settle debt.
The current arrangement of the central bank buying dollars leads to expansion of reserve money though monetizing the balance of payments.
The note issue bank can then drive credit through the excess liquidity, dishonor the notes under 'flexible exchange rate' doctrine when they turn into imports, to depreciate the currency, drive up the cost of living and turn the electorate against a democratically elected government, critics have said.
A purchase of dollars by the Treasury does not leave room to create new credit or artificially depress interest rates with the excess liquidity or prevent further reserve collections as banks loan out the unsterilized liquidity. (Colombo/Oct14/2026)