Reserves bleed $274M

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Government of Sri Lanka’s (GoSL’s) non- demand -pull inflationary face value money printing (FVMP) debt increased by  0.22 per cent (Rs 7,077 million) to Rs 3,170,005.64 million (Rs 3.1700 trillion) on Thursday (4 August). GoSL’s FVMP debt has been over Rs three trillion for a record consecutive 21 market days to Thursday due to a perennial lack of revenue. Thursday was the third consecutive market day to date that GoSL’s FVMP debt has increased.

The country’s foreign reserves bled for the seventh consecutive market day to  Thursday, with  Thursday’s value alone being US$ 20.91 million (Rs 7,550 million), thereby increasing such haemhorraging  to US$ 273.62 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 fourth consecutive market day to Thursday, with Thursday’s fall being by 0.40 per cent (Rs 502.04 million) to Rs 126,388.25 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 223 market days to Thursday, with this shortfall increasing for the second consecutive market day, with Thursday’s increase being by 0.08 per cent (Rs 473 million) to 598,194 million, thereby virtually causing perpetual rate pressure. GoSL’s highest to the 226th highest FVMP debt has been registered for a record 226 market days to Thursday.  

By Paneetha Ameresekere