Posted on July 18th, 2021


Money printing has become a folk story of opposition politicians in Sri Lanka where the story has been popular political rhetoric since the 1970s, and many people and news media in the country use this discourse without a clear understanding of the process of money printing. Is it a process like political leaflets printing in local print shops? When listening to political speeches of the opposition, the public gets an impression that money printing is like death notice printing for funerals.

Why this point has been reiterated on the political platforms? No other reason to show. The economic truth of printed money, which is tangible assets that deteriorate the value of money. When more money is available in the market whilst the supply of goods and services is in a shortage or deteriorating, many negative economic outcomes could be seen in the country. When more money is in the hands of people, prices of goods and services would be skyrocketed. This environment would create hyperinflation the prices of demand and supply will go up. Unless the production process has an increasing trend proportionately to the increase in money supply, inflation will achieve a rising trend. Therefore, it needs to maintain economic stability than printing money (production of paper money). It is observed that when politicians are in the opposition, the rhetoric of money printing uses either to popular on political platforms or attracting clapping of people to the discourse.

Money printing is an economic issue in every country and many countries have not used this as a political issue. Developed countries such as the USA print money, but the political power of such countries, money printing has not become an issue. The purchasing power of the US dollar has radically declined during the last several decades. The major reason for such a situation is they attempt to control the negative effects of money printing with a genuine attempt to maintain the value of money.

Negative effects on money printing peaked when Mr.R.Premadasa was president and International Monetary Fund imposed controls against money printing. However, the weak policy has been continuing in the country as the economic policies used did not support building a production economy. The open economic policy adopted in that period sanctioned imports when shortage incurred in consumer goods with the support of borrowed money. People used to the policy and if there is no borrowed or earned money,  printing has been the popular policy of the government. The technique was to issue bonds when investors have not bought bonds the Central Bank invested with printed money. This has been the popular show of the monetary policy of Sri Lanka.

Money printing is theoretically based on several factors. They are the volume of exports, the volume of foreign reserves, inward foreign investment, inward remittances increasing population, and many other factors. As a member of the IMF, Sri Lanka cannot print money though it wants, IMF monitors the monetary policy of all countries and Sri Lanka cannot overrule the IMF. Neither the opposition nor the public in Sri Lanka knows about this process and they shout like parrots.

The most popular government policy is to present deficit budgets and supplement estimates besides the budget for expenditure. The covering of the budget gap is done printed money by the Central Bank as the investors of government bonds are much less than expected. The truth of the money printing story in the country is this, and people are not explained by the government and money printing rhetoric is continuing. However, the discourse of money printing is bashful, and the situation should explain people using simple examples.

As long as current economic policy is used without deviation, by either government or the opposition, the money printing story remains in the country and the option to get out of the problem is to begin a unity government without opposition and explain the public true economic situation of the country.    

Leave a Reply

You must be logged in to post a comment.



Copyright © 2022 LankaWeb.com. All Rights Reserved. Powered by Wordpress