CBSL rejects Ceylon Today reports on Goverment’s money printing liability

CBSL rejects Ceylon Today reports on Goverment’s money printing liability

Written by Staff Writer

06 Dec, 2018 | 7:21 pm

COLOMBO (News 1st) – The Central Bank of Sri Lanka lent Rs. 15,339 million to the Government to fill in a revenue gap, thereby increasing the Sri Lankan government’s money printing liabilities by 11.37% to Rs 150,275.95 million.

In contradiction to the above, the Ceylon Today reported that since the advent of the political crisis on the 26th of October, the Government’s Money Printing liabilities have increased by 71.84% or by Rs 62,826.35 million, thereby fuelling inflationary pressure and increasing the debt of the Government.

Following inquiries made by News 1st made on the matter, the Central Bank had taken measures to issue a release requesting for a clarification regarding these newspaper articles.

While calling these concepts and facts “grossly inaccurate and misleading” the Central Bank in its release stated that the reserve Money, which was at Rs. 939.8 billion at the end of 2017 and at Rs. 1,010.5 billion at the end of September 2018, was recorded at Rs. 1,020.8 billion on the 2nd of November 2018. This is a year-on-year growth in reserve Money of 11.6% which is well within the CBSL projections for the year.

It added that the rupee liquidity in the domestic money market has been in deficit since mid-September 2018, requiring the CBSL to conduct open market operations to provide adequate liquidity to the market.

In view of the large and long-term shortages of liquidity in the market, the CBSL conducted long-term reverse repurchase auctions and made outright purchases of Government securities mainly from the secondary market. The Central Bank calls them regular monetary operations with market participants, which have however no relevance to the government’s fiscal position or any particular political event.

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