ECONOMYNEXT – Sri Lanka has raised 600 million rupees in through the sales of 15 May 2030 bonds from a post-auction direct sales (tap) up to the settlement day at 10.23 percent, the debt office said.
The post-auction sales takes the money raised from 2030 bonds to 10.6 billion rupees in the auction settling on October 01, and the total with 2023 bonds up to 17.4 billion rupees.
The bonds were sold mostly to raise bonds.
Money raised from bonds via bonds, from private savings transfer spending power to the budget allowing state workers to be paid without printing money.
About 6.0 billion rupees were printed after the bill and bond auctions last week taking the central bank’s Treasury bill stock up to 1,336 billion rupees from 1,332 billion a week earlier.
However there is a liquidity short that money can be absorbed.
Money is printed in Sri Lanka largely to pay state worker salaries which has not been cut in line with lower revenues, unlike private sector salaries, which has created forex shortages as the printed money is printed and state workers buy up goods, pushing the country into a note-issue banking crisis.
Coupled with price controls as the rupee fell and the US Federal Reserve fired a Powell Bubble, shortages of several foods have emerged.
Newly appointed central bank Governor Nivard Cabraal has allowed rates to go up, but bond and forex markets crippled by central bank money printing to suppress rates are still not fully operational.
Analysts have called for central bank reforms to cut the room for activist central bankers to print money and suppress interest rates triggering frequent currency crises, possible sovereign default and social unrest.(Colombo/Oct04/2021)