Apr 22, Colombo: Sri Lanka's Central Bank, responding to the Opposition's charge that the Rs 1.3 trillion private sector retirement fund, Employees' Provident Fund (EPF) has lost billions due to the stock market manipulation, said today in a statement that the fund had gained over Rs. 550 billion over the last five years.
The Central Bank, which manages the retirement fund, said some media reports which highlighted that the fund has lost billions in investing in the stock market are misleading and erroneous.
The fund administrator explained that such losses reported by some media and politicians are not realized losses, but are marked-to-market unrealized losses, arising from variations in market prices of stocks and these unrealized losses/gains do not increase or decrease the benefits distributed to the members.
Sri Lanka's main opposition United National Party (UNP), economist Dr. Harsha de Silva recently charged that the elements manipulating the stock market have sold shares at highly inflated prices to the EPF and become billionaires while in the process EPF was losing billions. Most of these rackets took place between 2010 and 2012, according to the MP.
According to the Central Bank, the EPF has gained Rs. 558 billion from 2009 to 2013.
The Central Bank explained that due to the EPF's prudent investments and sound management, the fund has been able to declare impressive rates of return of 13.75 percent in 2009, 12.5 percent in 2010, 11.5 percent in 2011, 11.5 percent in 2012 and 11 percent in 2013 out of profits earned by the Fund.
In absolute terms, the Fund has made profits of Rs 101.7 billion, Rs 111.5 billion, Rs 107.5 billion, Rs 111.8 billion and Rs.125.6 billion in the years 2009, 2010, 2011, 2012 and 2013 respectively, to its members.
Recently the Colombo Stock Exchange had experienced a bearish trend, where prices of a majority of the shares have been trading at lower rates than those that prevailed previously causing some unrealized losses.
However, such losses would be realized only if such shares are sold and there have been no realized losses to the EPF, the Bank assured.
The Central Bank expects most shares to gain in future and accordingly the fund is expected to record reasonable gains.