Central Bank of Sri Lanka (CBSL) expects the government’s appetite for monetary financing, which is loosely known as money printing to reduce significantly in the period ahead as a result of fiscal consolidation measures alongside with the planned reforms in state-owned enterprises.
As of August 17, CBSL’s holdings of government securities only increased by Rs.2.57 billion when compared to a record Rs.150 billion increase in July. On an average, the CBSL printed at least Rs.100 billion for the government’s financing requirements except in February.
“Need for further monetary financing is expected to be low in the period ahead, supported by fiscal consolidation measures that have already been introduced, alongside the implementation of cost-reflective pricing by major state-owned-business enterprises,” the CBSL said.
