Crisis-hit Sri Lanka is currently not only struggling to raise the money that is required to buy fuel, but also has been printing rupees to pay the locals their salaries.
Following this, the government has decided to discontinue the printing of the currency as the inflation rate is continuously rising and is expected to reach 60%. This has been the highest inflation rate in Asia, according to a Bloomberg report.
The talks for a bailout from the International Monetary Fund (IMF) seem very complex as the nation has already reached bankruptcy, Sri Lanka Prime Minister Ranil Wickremesinghe said in the Parliament.
With Sri Lanka’s monetary policy review due on Thursday, PM Ranil Wickremesinghe is now about to witness the country reach a staff-level agreement with the IMF in August, whereas the deadline was in June.
Speaking of inflation, the country’s consumer prices jumped to 54.6% year-on-year in June, with the transport sector surging 128% from the month of June and the food sector surging to 80% amidst the acute shortage of crops and crude oil.
According to official data, in the first quarter of 2022, Sri Lanka printed about 588 million rupees. The Sri Lankan government has pointed out that this is the worst currency crisis in its 70-year-old history.
It has been noted that, in 2020, almost 505 billion rupees were printed although the year ended with 206 billion rupees in injected liquidity which was left as excess reserves which were then counted as printed money for the next year.
From January 2020 up until March 2022, the reserve money has grown by 49%, broad money by 52%, and the food price index by 51%.