Money printing passes Rs 150 B

PANEETHA AMERESEKERE- DEC 05 2018

Central Bank of Sri Lanka (CBSL) lent Rs 15,339 million to the Government today (5) to fill in a revenue gap, thereby increasing GoSL’s money printing (MP) liabilities by 11.37% to Rs 150,275.95 million.

Since the advent of the political crisis on 26 October, the Government’s Money Printing liabilities have increased by 71.84% (Rs 62,826.35 million) thereby fuelling inflationary pressure and increasing Government debt.

In related developments, stock market net foreign outflows (NFOs) due to this crisis amounted to Rs 241,812,612 million today, taking NFOs in the calendar year to date to Rs 18,757.03 million and since 26 October to Rs 9,258.46 million, constituting 49.36% of such NFOs in the calendar year to date, recorded in the space of a mere 40 days. Such NFOs are met from the country’s foreign reserves to prevent depreciative pressure on the rupee as Sri Lanka is an import dependent economy.

But despite such a protection, the benchmark ‘spot rupee’ fell by 10 cents to Rs 179.00/30 to the US Dollar in two way today, a sharp fall of between  Rs 6.10-6.30 (3.53-3.64%) since the crisis, and nearly double that of the  market exchange rate’s fall for the totality of last year which was between a mere  Rs 3.25-3.35 (2.16-2.23%).

Further, due to this rupee protection, the country’s foreign reserves in the first 21 days of last month alone fell by US$ 700 million, official records showed. The depreciation of the country’s foreign reserves for the totality of last month would only be known at the latest by next Friday (14 December) in CBSL’s ‘Weekly Economic Indicators’ data. CBSL since March 2015 has been releasing such information by the second Friday of the following month at the very latest.