Money printing spree ahead of Avurudu
View(s):Sri Lanka has printed currency worth Rs.217 billion to service cash-strapped public finances during the period of January 1 to February 17, official data showed.
The Treasury has found it difficult to maintain the cash flow for the payment of public sector salaries and other state expenditure as government revenue is far below present expenditure, official sources said adding that interest rates in Treasury bill sales have also been increased.
An increase in money printing is normal during the Sinhala and Tamil New Year period, Central Bank (CB) Governor Dr. Indrajit Coomaraswamy at a media conference on Friday acknowledged a cash flow problem in January but that it has been effectively managed.
Precautionary measures were taken against a build-up of adverse inflation expectations and the possible acceleration of demand side inflationary pressures through excessive monetary and credit expansion, he added.
Gross official reserves were estimated at US$ 5.6 billion at end February 2017 compared to $ 6 billion at end 2016 while the Sri Lankan rupee depreciated by 1.2 per cent against the US dollar during the year up to March 22, Dr. Coomaraswamy confirmed.
The aim of the Government is to build foreign reserves to $7.5 billion by end 2017 helped by $1 billion from a syndicated loan and $1.5 billion from a sovereign bond.