Government of Sri Lanka’s (GoSL’s) face value money printing (FVMP) debt increased by 2.53 per cent (Rs 71,586.20 million) to a record high Rs 2,895,851.60 million (Rs 2.8959 trillion) due to a persistent lack of revenue on Friday.

GoSL’s previous highest FVMP debt was recorded a week ago on 20 May with a figure of Rs 2.8610 trillion.   However, Friday’s MP increase was non-demand pull inflationary causing, as it was used to meet an external commitment.

Subsequently, GoSL’s MP borrowing costs (BC) increased by 2.15 per cent (Rs 2,670.73 million) to
Rs 126,770.5279 million on Friday. Further, market’s net shortfall increased by 19.77 per cent
(Rs 63,921 million) to
Rs 718,117 million on Friday, led by a liquidity fall of Rs 135,508 million (US$ 377.06 million) during the course of trading for the third consecutive market day, due to the settlement of meeting the payments for ‘essential’ imports like fuel and cooking gas from the country’s foreign reserves. Conversions are based on the administered benchmark ‘spot’ value of Rs 359.38 to the US dollar as at Wednesday.

GoSL’s FVMP debt has been over Rs two trillion for a record 84 consecutive market days to Friday due to an almost perennial lack of revenue. The market has been short for a record 174 market days to Friday. GoSL’s highest to the 178th highest FVMP debt has been registered for a record 178 market days to Friday. 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 generally prorated to the results in secondary market trading of T Bills and T Bonds on the reference day.

By Paneetha  Ameresekere