Monday, 13 March 2017
The Central Bank’s funding of the Government budget is highly undesirable since such funding would be in the form of creating seed money – known as base money or reserve money – that would generate money supply increases in multiple terms. The resultant inflation would then put pressure for the exchange rate to depreciate as inflation acts as a tax on exports and an incentive for imports. This will in turn further worsen the fiscal situation trapping the country in a vicious cycle of getting into further economic crises
An inconclusive IMF staff review
An IMF staff mission headed by Jaewoo Lee to make the second review of Sri Lanka’s progress with respect to its obligations under the ongoing three-year Extended Fund Facility or EFF has completed its mission and issued a press statement (available at: http://www.imf.org/en/News/Articles/2017/03/07/PR1775-Sri%20Lanka-IMF-Staff-Concludes-Visit-to-Discuss-Progress-of-Economic-Reform-Program).
An IMF staff mission headed by Jaewoo Lee to make the second review of Sri Lanka’s progress with respect to its obligations under the ongoing three-year Extended Fund Facility or EFF has completed its mission and issued a press statement (available at: http://www.imf.org/en/News/Articles/2017/03/07/PR1775-Sri%20Lanka-IMF-Staff-Concludes-Visit-to-Discuss-Progress-of-Economic-Reform-Program).
