Sri Lanka inflation will get worse if money is printed for relief: Harsha | Sinhala News

ECONOMYNEXT – Sri Lanka’s inflation will get worse if money is printed opposition legislator Harsha de Silva said as questions were raised on how 229 billion rupees would be found for handouts announced by Finance Minister Basil Rajapaksa.

“If money is printed to accommodate the salary increases, inflation will go up along with wages,” de Silva said.

He said the intended relief may not be useful.

He also cast doubt on claims that the spending can be met by re-allocating expenses in the budget already passed.

When the budget was passed it was promised that supplementary estimates or mid-term requests to raise spending would not be made, he said.

The spending package included 87 billion rupees in 2022 for salaries, 40 billion for pensions, 31 billion rupees for agriculture subsidies for lands under 10 acres as well as payments for disabled soldiers.

The higher spending requires higher interest rates to finance bond auctions.

Sri Lanka has printed around 1.6 trillion rupees to finance spending , keep interest rates down since February 2020 when liquidity injections were ratcheted up.

Money is now being printed mostly after giving dollars for imports (sterilized forex sales). (Colombo/Jan05/2021)

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