The Government of Sri Lanka has printed Rs. 12,574,700 million (Rs. 1,257,470,000,000) during the last 20 months. The relentless printing of money has plunged Sri Lanka into the worst financial crisis in history.
The country's economy is sinking deeper as state property is being sold without seeking help of reputable institutions such as the International Monetary Fund, and the treasury are being emptied, creating sources of wealth for cronies.
According to the statistics of the Central Bank of Sri Lanka, the face value of government treasury bills and Treasury bonds held by the Central Bank of Sri Lanka as at January 1, 2020 was Rs. 74.74 billion. As at September 30, 2021, that figure was 13,332.21 billion rupees. 1,257.47 billion or over Rs. 12,500,000 million has been printed in 20 months. Since the appointment of Ajith Nivard Cabraal as the Governor of the Central Bank, a sum of Rs. 478,400 million or nearly the amount, spent to construct Maththala Airport.
After the 2019 presidential election, the current economic crisis began with a massive drop in government revenue due to tax breaks, granted for the richest businessmen. The country's dollar reserves were used to pay off debts to offset the loss of income due to tax breaks for the rich. Due to the loss of dollar reserves, the government limited the payment of dollars to import fuel. The government has had to stop importing many items, including fertilizers, medicines, food, electronics and agrochemicals, to address the dollar shortage. As a result, queues were seen all over the country.
Agricultural production is declining due to the ban on chemical fertilizers and agrochemicals. Limited resources are being acquired by those in power and wealth. Instead of fair trade competition, money is being exchanged within the power. A black market was created as a result. A black market money market which is outside the banking and financial institutions system is growing rapidly.
Money printing is how people feel about rising commodity prices. Government and the Central Bank press releases or gallery speeches cannot stop the rise in prices of every commodity. The devastating pressure of arbitrary money printing will be felt even more in the next two months.
Lanka Newsweek © 2022