July 18, Colombo: A senior Sri Lankan minister has defended the move by the Central Bank to invest country's reserve money in Greek bonds.

Senior Minister for International Monetary Cooperation Dr. Sarath Amunugama has told parliament that the investment in Greek bonds was carried out in line with the country's monetary regulations.

The Minister has made this statement in response to a statement made by Opposition Leader Ranil Wickremasinghe in the House over the investment in Greek bonds.

The main opposition United National Party (UNP) accuses the Central Bank of investing public monies in collapsing economies without heeding to Auditor General's advice.

Dr. Amunugama has said that losses that could have been incurred by the Central Bank had been avoided and that some profits had been made.

He has explained that the Central Bank has made a Rs. 430 billion profit by investing in the international market.

The Minister has noted that the bonds were issued in Euros by an agent named by the Greek Government.

"All bonds were issued by The Hellenic Republic Ministry of Economy and Finance Public Debt Management Agency on behalf of the Government of Greece. This is the official agency for issuing government bonds in Greece similar to the function of Central Bank in Sri Lanka," he has said.

According to Dr. Amunugama, the Central Bank had decided to dispose of the bonds at a loss of US$ 5.5 million in November 2011 when it became evident that the uncertainty was impacting on the Euro bonds in general and Greek bonds in particular.

The minister has informed the house that the loss to the government in 2011 on account of the Greek bonds was US$ 6.6 million.

The Central Bank has said the investments in Greek Bonds were a small fraction of the Central Bank total Europe portfolio and the loss of the Greek bonds was comfortably offset by higher returns from other investments.