Sri Lanka frozen out of IMF meeting

ECONOMYNEXT – Meetings between top Sri Lanka finance officials and the International Monetary Fund has been delayed amid heavy snow in the US capital Washington.

Economic Policy Minister Harsha de Silva, said in a that meeting have been re-scheduled after bad weather, closed the capital.

Finance Minister Mangala Samaraweera was also due to meet IMF Managing Director Christine Lagarde on Monday which falls on nighttime in Sri Lanka.

Sri Lanka has seen balance of payments trouble due to maintaining a soft-pegged exchange rate, as the credit system picked up in the first quarter of 2018.

Sri Lanka runs a soft-peg with multiple convertibility undertaking and periods of pressure is coming more often after the central bank stopped selling its own sterilization securities to mop up inflows, analysts have said.

Sri Lanka’s Finance Minister or State Minister of finance has not put any pressure on the central bank to print money to finance the deficit, which is admitted by the central bank.

All money has been printed for ‘monetary policy purposes’ or following independent monetary policy.

Any country that tries to follow independent monetary policy (printing money to target interest rates) with a peg (target the exchange rate) runs into balance of payments trouble, according to classical economic analysis. (Colombo/Jan14/2018)

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