Over Rs 3T in Money Printing for record 20 days

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Government of Sri Lanka’s (GoSL’s) non- demand pull inflationary face value money printing (FVMP) debt increased by  0.30 per cent (Rs 9,590 million) to Rs 3,162,928.64 million (Rs 3.1629 trillion) on Wednesday (3). GoSL’s FVMP debt has been over Rs 3 trillion for a record consecutive 20 market days to Wednesday due to a perennial lack of revenue.

The country’s foreign reserves bled for the sixth consecutive market day to Wednesday, with  Wednesday’s value alone being US$ 31.82 million (Rs 11,488 million), thereby increasing such haemhorraging  to US$ 252.71 million, in the review period, led by the settlement of payments in relation to making ‘essential’ imports. Central Bank of Sri Lanka (CBSL) lacks transparency in its open market operations.

GoSL’s at least theoretical MP borrowing costs (BCs), fell for the third consecutive market day to Wednesday, with Wednesday’s fall being by 1.52 per cent (Rs 1,952.10 million) to Rs 126,890.29 million, led by persistent buying pressure of riskless, “but low value” Treasury (T) Bills and T Bonds in secondary market trading by investors, rather than invest in the high returns private sector, the engine of growth, due to perennial uncertainty.

Market was short for a record 222 market days to Wednesday, with this shortfall increasing by 0.32 per cent (Rs 1,898 million) to 597,721 million, thereby virtually causing perpetual rate pressure. GoSL’s highest to the 225th highest FVMP debt has been registered for a record 225 market days to Wednesday.

By Paneetha Ameresekere