By Paneetha Ameresekere
The Central Bank of Sri Lanka’s (CBSL’s) lending to the Government of Sri Lanka (GoSL), commonly known as money printing (MP), increased by 36.61 per cent (Rs 32,014 million) to Rs 119,463.60 million since Mahinda Rajapaksa assumed duties as the country’s new Prime Minister and Finance Minister, after markets closed last Friday (26), data showed.
In contrast, a year ago on Thursday, 2 November, 2017, MP was a mere Rs 33,822.04 million; a year-on-year (YoY) increase of 253.21 per cent (Rs 85,641.56 million) since.
In related developments, in the week ended Friday (2 November), week on week, GoSL’s MP borrowing costs (BCs) increased by 24.35 per cent (Rs 550.26 million) to Rs 2,809.66 million. However, a year ago, GoSL’s MPBCs were a mere Rs 805.87 million, a YoY increase of 248.65 per cent (Rs 2,003.79 million).
MP is CBSL’s holding of Treasury (T) Bills. CBSL prints money and lends to GoSL in the absence of adequate revenue. But MP may cause inflationary pressure while increasing GoSL’s debt.