 non-demand pull inflationary face value money printing (FVMP) debt increased by Rs 3,825 million;){kind=link}
Government of Sri Lanka’s (GoSL’s) non-demand pull inflationary face value money printing (FVMP) debt increased by Rs 3,825 million; therewith increasing its FVMP debt as a whole by 0.13 per cent to Rs 2,954,115.08 million (Rs 2.9541 trillion) today
Settlement of foreign debt servicing commitments to multilateral donor agencies such as the World Bank, ADB and the IMF resulted in the country’s foreign reserves bleeding by USD 59.96 million (Rs 19,295 million) today Thursday 27 April, interpretation of Central Bank of Sri Lanka’s (CBSL’s) data showed. Conversions are based on Tuesday’s (25 April) administered ‘spot’ value which was Rs 321.80
to the US dollar.
However, CBSL’s daily open market operations (OMO) statistics from where the above figures are extrapolated; lacks transparency. Consequently, market’s net shortfall fell increased by 6.44 per cent (Rs 15,470 million) to Rs 255,632 million today..
GoSL’s direct MP borrowing costs (BCs) sharply decreased for the fourth consecutive market day to today, this time by 2.40 per cent (Rs 1,741.94 million) to Rs 70,974.46 million due to buying pressure of Treasury (T) Bills and T Bonds in secondary market trading, enticed by high yields offered, at the expense of lending to the private sector, the engine of growth.
MP, coupled with being the steward of the country’s foreign reserves and of its debt is the exclusive prerogative of the CBSL. GoSL’s FVMP debt is equivalent to the totality of CBSL’s T Bill and T Bond holdings. Swaps between GoSL and CBSL are foreign reserves neutral.
GoSL’s MPBCs are prorated to the outcome in secondary market trading of T Bills and T Bonds on the reference day. ‘Spot’ trades are settled after two market days from the date of transaction. CBSL, the steward of GoSL debt and its foreign reserves deals in ‘spot.’ The ‘spot’ is administered to minimize GoSL’s foreign debt repayments and foreign debt as a whole in rupee terms.
Issuing of T Bills and T Bonds is a popular way GoSL raises money domestically to meet its local commitments. Investing in T Bills and T Bonds is generally considered as being riskless, because, in the event GoSL is unable to repay such debt, CBSL is normally mandated to print demand pull inflationary money and repay such creditors.