Reserves drained by $ 289M

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The country’s foreign reserves were drained by US$ 289.43 million (Rs 104,167 million) led by the settlement of arrears payable on fuel shipments on Thursday (30 June), data showed.  Conversions are based on the benchmark, but officially administered ‘spot’ which was fixed at Rs 359.90 to the US dollar on Tuesday (28 June).

Government of Sri Lanka’s (GoSL) face value money printing (FVMP) debt increased by 1.70 per cent (49,279 million) to Rs 2,956,316.31 (Rs 2.956 trillion) due to inadequate revenue on Thursday too.  Thursday’s FVMP debt increase was however non-demand pull inflationary as it was used to aid GoSL to repay the above foreign debt.

Despite the increase in GoSL’s FVMP debt on Thursday, GoSL’s at least theoretical MP borrowing costs (BCs) declined by 0.25 per cent (Rs 251.17 million) to Rs 98,527.33 million due to buying pressure in secondary market trading of riskless, but low returns Treasury (T) Bills and T Bonds by investors, rather than lend to the lucrative private sector, the engine of growth, because of sustained uncertainty. Market’s net short fall increased by 9.19 per cent (Rs 54,888 million) to 652,282 million on Thursday, data further showed GoSL’s highest to the 201st highest FVMP debt has been registered for a record 201 market days to Thursday. GoSL’s FVMP debt has been over Rs two trillion for a record 107 consecutive market days to Thursday due to an almost perennial lack of revenue. The market has been short for a record 197 market days to Thursday.

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 outcome in secondary market trading of T Bills and T Bonds on the reference day.

By Paneetha Ameresekere