Inflationary money printing up Rs 15.4B

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Government of Sri Lanka’s (GoSL’s) demand pull inflationary  face value money printing  (FVMP) debt increased by  Rs 15,373 million on Friday (26) due to a sustained lack of revenue. GoSL’s FVMP debt as a whole increased by 1.12 per cent (Rs 35,305.53 million) to Rs 3,185,059.89 million (Rs 3.1851 trillion).

The country’s foreign reserves on a gross basis haemorrhaged by US$ 42.58 million (Rs 19,932 million) led by the settlement of payments for essential imports on Friday (25), thereby increasing such bleeding in the two market days to Friday to US$ 45.05 million
(Rs 20,822 million).

GoSL’s at least theoretical MP borrowing costs (BCs), relative to the increase in GoSL’s FVMP debt, accelerated by 14.12 per cent (Rs 17,438.74 million) to Rs 140,916.12 million on Friday, led by selling pressure of Treasury (T) Bills and T Bonds in secondary market trading to reinvest in tomorrow’s (30)  Rs 40 billion T Bond auction and at Wednesday’s Rs 67.5 billion T Bill auction on expectations of higher yields as inflation last month soared to a record high 66.7 per cent, according to the Census and Statistics Department.

Market was short for a record 238 market days to Friday, though this shortfall decreased  by 2.44 per cent (Rs 15,373 million) to Rs 614,942 million, nonetheless causing  sustained rate pressure.  GoSL’s FVMP debt has been over three trillion rupees for a record consecutive 36 market days to Friday.  Also, GoSL’s highest to the 241st highest FVMP debt has been registered for a record 241 market days to Friday.

By Paneetha Ameresekere