ECONOMYNEXT – A Sri Lanka minister has proposed that cars with less than three passengers should be banned from roads to save imported fuel as money printed to keep interest rates low amid a soaring budget deficit created foreign exchange shortages.
“If a car is put to the road, a law should be brought that a minimum of three to four passengers should be in the car,” Handloom and Batik Minister Dayasiri Jayasekera told reporters.
“At the moment there is a situation where one person is going in a car. As a result large volume of fuel s burned.
“This burns up a lot of fuel.
Sri Lanka has already banned batik and handloom imports
In Sri Lanka most minister and legislators own diesel driven SUVs with 3 to 4 litre engines imported tax free. Diesel is subsidized and taxed at a lower rate than petrol. Most ministers and legislator drive around in SUVs the size of a small truck.
“We take the position that everyone should use fuel sparingly,” Minister Jayasekera said.
Sri Lanka was given a Latin America style central bank by the US in 1950 which created foreign exchange shortages and led to a complete closure of the economy as the Sterling and then the US dollar collapsed in 1971 taking the Bretton Woods system of soft-pegs with it.
The US is now again printing money driving up global commodity prices while Sri Lanka is also printing money, amplifying the effects of US printing.
The central bank also printed money during the ousted ‘Yahapalana’ administration shattering its free trade agenda and imposing trade control every time money printing created forex shortages and the currency collapsed.
The US in 1971 had also imposed trade controls called the ‘Nixon’s shock’ and then floated the dollars to end a sterilization trap (intervening in forex markets to lose reserves and then injecting money overnight to maintain reserve money).
There have been calls to reform the central bank to restrain the Monetary Board from printing money or to abolish it in favour of an East Asia style currency board or a GCC style currency board like system or a clean floating exchange rate without foreign reserves and a low inflation target. (Colombo/Nov22/2021)