FVMP debt upped to Rs 2.784 Trillion

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Government of Sri Lanka’s (GoSL’s) face value money printing (FVMP) debt increased by Rs 17,191 million (0.62 per cent) to
Rs 2,801,198.86 million (Rs 2.8012 trillion) yesterday (Thursday, 19 May 2022).

However, yesterday’s increase was non-demand pull inflationary as it was used to meet an external commitment.

GoSL’s MP borrowing costs (BCs) decreased by Rs 48,561.18 million (28.08 per cent) to Rs 124,393.25 million yesterday. This was due to buying pressure of risk free low returns Treasury (T) Bills and T-Bonds in secondary market trading yesterday, rather than lend to the high returns private sector, the engine of growth, due to sustained uncertainty.

Market’s net shortfall  increased by Rs 20,833 million (2.90 per cent) to Rs 739,078 million yesterday, led by the settlement for the payment of essential imports met from the country’s foreign reserves, consequent to which liquidity  decreased by Rs 20,833 million (US$ 105.70 million) during the course of trading on the same day. Conversions are based on the administered benchmark ‘spot’ value of Rs 359.75 to the US dollar as at Tuesday. CBSL lacks transparency in its open market operations.

GoSL’s FVMP debt has been over Rs two trillion for a record 78 market days to yesterday. The market has been short for a record 168 market days to yesterday. GoSL’s highest to the 172nd highest FVMP debt has been registered for a record 172 market days to yesterday.

By Paneetha Ameresekere