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Govt. has to stop money printing now, not in 2024: Harsha
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.
ECONOMYNEXT –International assistance for forensic analysis of the remains unearthed at the Chemmani mass grave will be sought when the need arises, Sri Lanka’s Minister of has Justice said after opposition legislators urged the government to seek help.
“We have spoken to embassies, we have made all the local finances necessary for excavation. But when it comes to DNA analysis, depending on the type and nature we will definitely have to go for internationally recognised places,” Harshana Nanayakkara said in response to a query in Parliament.
Nanayakkara said that request for international expertise is dependant on the direction the courts give on what needs to be done, after which they will decide which agency best suits the proceedings.
The minister also recognised that local expertise is lacking in the forensic department, and the need to train local staff with the help of international experts.
Opposition MPs argued that the present need is direct help in forensics from international entities, rather than the longer term need to train the staff on analysis.
Currently, the investigation is in the excavation and exhumation stage, conducted by archaeologist Raj Somadeva and his team.
The existence of the Chemmani mass grave was first brought to light in 1998, during the trial of the rape and murder of schoolgirl Krishanti Kumaraswamy.
In February 2025, construction workers found remains near the Sinthupathy Cemetery, and following investigations ordered by the Learned Magistrate, the mass grave was discovered.
412 bodies have been discovered, with 409 bodies recovered as of 23 June 2026. According to the Office on Missing Persons, this is the 17th recorded mass grave in Sri Lanka.
The Asian Development Bank (ADB) has approved a $57.4 million financing package to help Sri Lanka expand access to affordable clean energy and reduce greenhouse gas emissions through a large-scale rooftop solar aggregation and virtual net metering programme.
The financing comprises a $35 million concessional loan, $16.9 million in grants from the European Union and $5.5 million from the Japan Fund for the Joint Crediting Mechanism. With additional contributions from implementing agencies, the total estimated cost of the project is $80.5 million.
Under the Rooftop Solar Aggregation and Virtual Net Metering Project, two state-owned utilities — Electricity Distribution Lanka (Private) Limited and Lanka Electricity Company (Private) Limited — will introduce a scalable model to collect electricity generated from large rooftop solar installations and allocate the benefits virtually among eligible consumers.
The initiative will allow consumers to access solar power benefits without having to install individual rooftop solar systems.
ADB Country Director for Sri Lanka Shannon Cowlin said the project would broaden access to affordable renewable energy while strengthening the resilience and inclusiveness of the country’s power sector.
She said the initiative would also support grid modernisation and digital transformation, while creating employment opportunities and encouraging greater participation of women and youth in the clean energy sector.
The project is expected to benefit micro, small and medium enterprises and community organisations that face financial or space constraints in installing their own rooftop solar systems. Through a social compensation mechanism, eligible groups will receive reductions in electricity costs under the virtual net metering system.
The programme will support around 25 megawatt-peak of rooftop solar capacity while strengthening distribution networks, improving digital capabilities and preparing the national grid to accommodate higher levels of distributed renewable energy.
A dedicated training facility will also be established under the project to develop green skills, enhance women’s participation in the sector and build technical expertise in advanced low-carbon technologies.
The Colombo High Court on Friday ordered that proceedings in the case filed against 11 defendants, including former Central Bank Governor Arjuna Mahendran and former Finance Minister Ravi Karunanayake, over alleged irregularities in the Central Bank bond auction be taken up again on July 22.
The case was called before Colombo High Court Judge Manjula Thilakaratne, who informed court that the Trial-at-Bar bench appointed to hear the matter had not been properly constituted.
Accordingly, the judge directed that the case be recalled on July 22 for further proceedings.
The Attorney General has filed indictments under the Public Property Act against 11 accused, including Mahendran, Karunanayake, Perpetual Treasuries Limited and its directors Arjun Aloysius and Geoffrey Aloysius.
The accused have been charged over alleged irregularities connected to a Treasury bond auction conducted by the Central Bank in March 2016.
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