Government of Sri Lanka’s (GoSL’s) face value money printing (FVMP) debt decreased by Rs 19,954.60 million (0.71 per cent) to Rs 2,784,007.86 million (Rs 2.784 trillion) on Wednesday (18 May 2022).
Wednesday’s decrease in FVMP debt also partially helped to mitigate demand pull inflationary pressure.
GoSL’s MP borrowing costs (BCs) increased by Rs 43,325.94 million (33.42 per cent) to Rs 172,954.43 million on Wednesday. This was due to selling pressure of Treasury T-Bills and T Bonds in secondary market trading on Wednesday, on expectations that the Monetary Board would increase policy rates at yesterday’s (Thursday, 18 May) meeting due to over 20 per cent inflation. However, the Monetary Board kept rates unchanged yesterday.
Market’s net shortfall decreased by Rs 882 million (0.12 per cent) to Rs 718,245 million on Wednesday, , led by the settlement of essential imports paid for from the country’s foreign reserves, consequent to which liquidity decreased by Rs 20,836.60 million (US$ 57.88 million) during the course of trading on the same day. Conversions are based on the administered benchmark ‘spot, value of Rs 360 to the US dollar as at Friday. CBSL lacks transparency in its open market operations.
GoSL’s FVMP debt has been over Rs two trillion for a record 77 market days to yesterday. The market has been short for a record 167 market days to yesterday. GoSL’s highest to the 171st highest FVMP debt has been registered for a record 171 market days to yesterday.
GoSL’s FVMP debt is equivalent to the totality of CBSL’s T Bill and T Bond holdings. MP is the exclusive right of CBSL. GoSL’s MPBCs are prorated to the results in secondary market trading of T Bills and T Bonds in the reference day.
By Paneetha Ameresekere