Budget 2013: PBJ tells banks: "Show what you've got "
Treasury Secretary Dr P B Jayasundera on Friday urged commercial banks to make use of their balance sheets which they claim to be so good and source foreign funds.
Speaking at a post budget seminar organised by Earnst & Young, he said: "The banks who say that they have good balance sheets should do a bit more in terms of funding small and medium enterprises (SME). If those balance sheets are strong, then they should be able to use their balance sheets and raise funds from (outside) foreign countries. They should be able to borrow money and bring into the country."
He told more than 1,000 participants at the seminar that DFCC and NDB now can raise up to US$ 250 million each to provide development funding. Analysts say that DFCC and NDB will be encouraged to raise over 10 year tenure foreign development finance with this initiative. "With this incentive, the government will underwrite the exchange risk for their borrowings. The interest income from such lending will also be tax exempt," an analyst said.
This year's budget proposal says that the government will facilitate such borrowings by floating domestic bonds enabling these two institutions to invest their surplus funds until loan proceeds are fully utilised. "With this the government solves the long end liquidity mismatch for these two institutions," the analyst added.
Dr Jayasundera added that one cannot expect the Bank of Ceylon to be the bankers to the nation forever.
Interpretation issue
Taking a swipe at the Board of Investment (BOI), he charged that the BOI has an 'interpretation issue' with its two tax regimes. "I can't understand the interpretation problem that BOI has on its two tax regimes," he said, adding that if BOI can't allocate a tax regime for a company which was incorporated in the last tax regime, then it should assign it under the new tax laws. "What's the problem?"
He stressed the importance to deepen the capital market through debenture listings. "It's important for banks to list (go public) with their debentures. And the CPC (Ceylon Petroleum Corporation) boss is here.
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