by Hiran H. Senewiratne
If the country’s inflation exceeds 50%, it will face a hyperinflationary situation. Sri Lanka is currently facing preliminary stages of hyperinflation, similar to those achieved in Zimbabwe and Indonesia, said University of Colombo economics professor Sirimal Abeyratne.
“This type of situation is created not only by money printing, but also by the global economic situation, exchange rate pressure and supply chain disruptions,” Abeyratne said. The Island Financial review recently.
Abeyratne added: “The country is facing a shortage of essential raw materials and high prices, so it is opportune to control money printing without allowing it to increase inflationary pressure.”
Meanwhile, other economic experts have warned that continued extreme money printing in Sri Lanka from 2020 till now is putting severe pressure on the exchange rate and inflation and it is high time that the Central Bank slows down this process.
The BC printed 2 trillion rupees in the period from January 2020 to March 2022, 23 times more than the money printed in the 62-year period from 1952 to 2020, according to BC data .
It had resorted to record money printing of Rs. 188.61 billion in 18 days during the period of February 28, 2022 to March 18, 2022.
These figures clearly indicate the massive amount of money printed under the current regime, a senior economist has said, adding that if money is printed and released beyond the required amount, the result will be increased demand for goods and services. creating inflationary pressures in the country. economy.
Experts have noted that the reckless printing of money can lead to a hyperinflationary situation where people will have to face an unbearable increase in the prices of goods and services.
“In such a situation, a large amount of money is needed to purchase goods and services and to meet other payment obligations,” they said, adding that “the Central Bank should only print money than to match the value of aggregate transactions in the economy”.