News

Govt. has to stop money printing now, not in 2024: Harsha

Published

3 years ago

2022/07/10

ECONOMYNEXT –Sri Lanka should stop money printing earlier than indicated in a statement by Prime Minister Ranil Wickremesinghe, opposition legislator Harsha de Silva said, though legislators have already given extensive powers to the agency engage in liquidity injections.

“Prime Minister Ranil Wickremesinghe talked about money printing,” de Silva told parliament.

“He said, the inflation is going up and the printing should be stopped. But he also said it can only be stopped by the end of 2023 or in early 2024,” Silva said.

“It cannot happen like that and you have to take a decision right now. We all must understand that if nothing is being done, the inflation will go up until 100 percent from the predicted 60 percent.”

Silva the country has already become an unlivable place for the general public and according to the CBSL data, the food inflation of the country has risen up to 80.1 percent in June, 2022.

Sri Lanka’s central bank has now created the worst currency crisis in its 72-year history.

Sri Lanka’s intermediate regime central bank was set up as a fundamentally flawed Latin America style agency with dual anchor conflicts in 1950 by US money doctor, giving soft-peggers the ability to trigger currency crises and high inflation abolishing a currency board where money printing was outlawed up to then.

However the agency had no active open market operations in the initial stages and it was restrained by a gold peg.

A reserve collecting peg collapses when the central bank prints money to keep rates down. Sri Lanka’s central bank repeatedly prints money whenever domestic credit picks up, regardless of whether state or private credit is picking up including when the US hikes rates under pseudo monetary policy independence, with devastating consequences on the people, critics have said.

However after 2015 with flexible inflation targeting the rupee was hit with extreme open market operations, to target an output gap (printing money to push growth up) creating currency crises and pushing growth down in their wake and impoverishing the people with rupee depreciation.

Under ‘flexible’ inflation targeting a reserve collecting peg was repeatedly bombarded with liquidity injections to manipulate rates down (call money rate targeting) until the currency collapsed.

The currency was depreciated under real effective exchange rate targeting including in 2017 when there was not credit pressure and the rupee was facing upward pressure and large volumes of inflows were sterilized, as growth and private credit slowed.

There is nothing politicians in Sri Lanka can do, whether in power or in opposition when Sri Lanka’s central bank decides to print money to drive interest rates down.

“I don’t know whether you can take that decision now because Nandalal Weerasinghe has been appointed as the CBSL governor,” de Silva told Prime Minister Wickremesinghe perhaps in a reference to central bank independence.

In 2018 as credit recovered, de Silva pleaded with the then leadership with of the central bank in vain to allow rates to go up as the currency was hit with liquidity injections, after giving ‘central bank independence’, to the agency during the ousted ‘Yahapalana’ administration.

Fiscal dominance including de facto fiscal dominance was removed by the Finance Minister Mangala Samaraweera raising taxes, bringing the deficit down and market pricing fuel in 2019.

The central bank printed money anyway ignoring political pleas and busted the currency from 152 to 182 and drove away foreign investors in rupee bond by undermining the credibility of the peg.

However politicians have the legislative power to tame soft-pegging central bank into either hard pegs or true currency boards like Hong Kong, or currency board like pegs like in East Asia and GCC countries with restricted open market operations.

They can also curb flexible pegs with true inflation targeting and a clean floating exchange rate which will also eliminate balance of payments crises and poverty.

Over the past 7 years three currency crises were created in rapid succession under flexible inflation targeting and output gap targeting.

In the 2020-22 crisis, where over 2.6 trillion rupees were printed the rupee has now fallen from 200 to 360 to the US dollar with soft-peggers impoverishing both wage earners and the elderly.

In the 2020-2022 crisis, the banking system was pumped with excess liquidity of up to 200 billion rupees under modern monetary theory up from around 60 billion rupees under call money rate targeting and output gap targeting, which is a milder version of MMT.The entire world is now suffering from liquidity injections made by the Federal Reserve under its dual mandate which is being conveniently blamed on Russia and Ukraine.

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News

Financial contributions received for ‘Rebuilding Sri Lanka’ Fund

Published

15 hours ago

2025/12/22

Priyan

The Government’s ‘Rebuilding Sri Lanka’ Fund, established to provide relief and support to communities affected by Cyclone Ditwah, continues to receive financial contributions on a daily basis.

Accordingly, the Containers Transport Owners Association made a financial contribution of Rs. 1.5 million, while the Association of SriLankan Airlines Licensed Aircraft Engineers contributed Rs. 1.35 million to the Fund.

The respective cheques were formally presented to the Secretary to the President, Dr. Nandika Sanath Kumanayake, at the Presidential Secretariat on Friday (19).

The occasion was attended by W. M. S. K. Manjula, Chairman of the Containers Transport Owners Association, together with Dilip Nihal Anslem Perera and Jayantha Karunadhipathi.

Representing the Association of SriLankan Airlines Licensed Aircraft Engineers were Deshan Rajapaksa, Samudika Perera and Devshan Rodrigo handed over the cheque.

News

UNICEF representatives and PM discuss rebuilding schools affected by the Disaster

Published

15 hours ago

2025/12/22

Priyan

A meeting between Prime Minister Dr. Harini Amarasuriya and a delegation of UNICEF representatives was held on Saturday, (December 20) at the Prime Minister’s Office.

During the meeting, the Prime Minister explained the measures taken by the Government to ensure the protection of the affected student community and to restore the damaged school system, as well as the challenges encountered in this process.

The Prime Minister stated that reopening schools located in landslide-prone areas would be extremely dangerous. Accordingly, the Government is focusing on identifying such schools and relocating them to suitable locations based on scientific assessments.

The Prime Minister further noted that financial assistance has been provided to students affected by the disaster, enabling parents to send their children back to school without an additional financial burden. Emphasizing that school is the safest place for children after their homes, the Prime Minister expressed confidence that the school environment would help restore and improve students’ mental well-being

The Prime Minister also highlighted that attention has been given to several key areas, including the relocation of disaster-affected schools, restoration of school infrastructure, merging and operating certain schools jointly, facilitating teaching and learning through digital and technological strategies, and providing special transportation facilities. She emphasized that the Government is examining these issues and is committed to finding long-term solutions.

The UNICEF representatives commended the Government’s commitment and the initiatives undertaken to restore the education sector and assured their support to the Government. Both parties also discussed working together collaboratively on future initiatives.

The meeting was attended by the UNICEF representatives to Sri Lanka Emma Brigham, Lakshmi Sureshkumar, Nishantha Subash, and Yashinka Jayasinghe, along with Secretary to the Ministry of Education Nalaka Kaluwewa, Director of Education Dakshina Kasturiarachchi, Deputy Directors Kasun Gunarathne and Udara Dikkumbura.

(Prime Minister’s Media Division)

News

NMRA laboratory lacks SLAB accreditation

Published

16 hours ago

2025/12/22

Thilina Walpola

Dr. Sanjeewa

Drug controversy:

“Setting up state-of-the-art drug testing facility will cost Rs 5 billion”

Activists call for legal action against politicians, bureaucrats

Serious questions have been raised over Sri Lanka’s drug regulatory system following revelations that the National Medicines Regulatory Authority’s (NMRA) quality control laboratory is not accredited by the Sri Lanka Accreditation Board (SLAB), casting doubt on both the reliability of local test results and the adequacy of oversight of imported medicines.

Medical and civil rights groups warn that the issue points to a systemic regulatory failure rather than an isolated lapse, with potential political and financial consequences for the State.

Chairman of the Federation of Medical and Civil Rights Professional Associations, Specialist Dr. Chamal Sanjeewa, said the controversy surrounding the Ondansetron injection, which was later found to be contaminated, had exposed deep weaknesses in drug regulation and quality assurance.

Dr. Sanjeewa said that the manufacturer had confirmed that the drug had been imported into Sri Lanka on four occasions this year, despite later being temporarily withdrawn from use. The drug was manufactured in India in November 2024 and in May and August 2025, and imported to Sri Lanka in February, July and September. On each occasion, 67,600 phials were procured.

Dr. Sanjeewa said the company had informed the NMRA that the drug was tested in Indian laboratories, prior to shipment, and passed all required quality checks. The manufacturer reportedly tested the injections against 10 parameters, including basic quality standards,

pH value, visual appearance, component composition, quantity per phial, sterility levels, presence of other substances, bacterial toxin levels and spectral variations.

According to documents submitted to the NMRA, no bacterial toxins were detected in the original samples, and the reported toxin levels were within European safety limits of less than 9.9 international units per milligram.

Dr. Sanjeewa said the credibility of local regulatory oversight had come under scrutiny, noting that the NMRA’s quality control laboratory was not SLAB-accredited. He said establishing a fully equipped, internationally accredited laboratory would cost nearly Rs. 5 billion.

He warned that the failure to invest in such a facility could have grave consequences, including continued loss of life due to substandard medicines and the inability of the State to recover large sums of public funds paid to pharmaceutical companies for defective drugs.

“If urgent steps are not taken, public money will continue to be lost and accountability will remain elusive,” Dr. Sanjeewa said.

He added that if it was ultimately confirmed that the drug did not contain bacterial toxins at the time it entered Sri Lanka, the fallout would be even more damaging, severely undermining the credibility of the country’s health system and exposing weaknesses in health administration.

Dr. Sanjeewa said public trust in the health sector had already been eroded and called for legal action against all politicians and public officials responsible for regulatory failures linked to the incident.

by Chaminda Silva ✍️