The Central Bank of Sri Lanka (CBSL) has printed money worth Rs. 14.9 billion as net as of 29 April, from the date Dr. Nandalal Weerasinghe took office as CBSL Governor on 8 April, with a daily average of Rs 1.14 billion, according to CBSL data.
Accordingly, CBSL has printed money totalling Rs. 41.9 billion between 8-29 April, while Rs. 27 billion has been absorbed from the market, resulting in a net printing of Rs. 14.9 billion.
The highest daily money printing during the period was recorded on 19 April, with the printing of money worth Rs. 19.6 billion, while Rs. 21 billion and Rs. 6 billion were absorbed from the market on 20 April and 29 April, respectively.
During the tenure of former CBSL Governor Ajith Nivard Cabraal, net Rs. 432.7 billion worth of money had been printed between 1 January to 7 April 2022, with a daily average of Rs. 4.5 billion.
Thus, between January-April 2022, the CBSL printed money worth Rs. 447.6 billion, bringing the daily average to Rs. 4.61 billion.
In 2021, CBSL printed Rs. 1.2 trillion worth of money, and Rs. 650 billion in 2020.
Most of the money printed in 2020 was used to repay foreign debts, while in 2021, the printed money flowed out of the country as a balance of payment deficit.
Since the current Government came to power, former CBSL Governor Prof. W.D. Lakshman and Cabraal have been following the Modern Monetary Theory of printing money to solve the country’s debt problem and raise production, while keeping interest rates down.
Due to the large volumes of money released to the banking system by the CBSL by printing money to finance credit, the monthly inflation of the country grew from 4% in November 2019 to 29.8% by April 2022.
In 2021, then-State Minister Cabraal said that there is no relationship between money printing and ever-increasing inflation and depreciation of the rupee, as he expected the US dollar to be at Rs. 180 by the end of 2021. However, the dollar was quoted at Rs. 370 by some banks yesterday (4).
When the current CBSL Governor took office, in his first monetary policy review he said that he would control the printing of money with the help of the Treasury, as the interest rates were increased by 700 basis points to discourage credit and encourage savings.