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A Brief Colonial History Of Ceylon(SriLanka)
Sri Lanka: One Island Two Nations
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Saturday, April 2, 2016
Depreciation of the rupee: Abolish the central bank
Apr 01, 2016
The
editor of the “Economist Next” Asantha Sirimanne said due to
inefficient fiscal management it would be a recommendable to abolish the
Central Bank which caused the depreciation of the rupee and plunged the
country in to a serious economic crisis.
He
said there was no Central Bank in Sri Lanka before 1951 and stressed
the rupee did not depreciate when the country functioned under a
financial board during the time.
He pointed out when the credit amount goes high the interest also rise up and if we try to reduce the interest rate artificially by printing notes the rupee would depreciates. He said the then financial board caused the rupee to be stable by not printing notes.
Printing money
“The central bank by printing money anticipates stopping the rising interest rates. The central bank in order to cover the budget deficit printed 200 billion notes at a time which caused impact to the rupee” said Asantha sirimanne.
When the rupee depreciated foreign investors leave the country with their money, said Asantha Sirimanne.
When Sandeshaya inquired does using the money to pay foreign debts caused the rupee to depreciate, he said when the country takes foreign or local loans the country’s interest rate also rise but country’s economic activity should come down but by printing money nothing as such happened.
Weak economic policies
“When unlimited money is printed the local expenditure and the local credit rise fast. Sometimes foreign debts are also paid by this printed money. If this happen the foreign reserve drops and the rupee depreciates” said Asantha sirimanne.
Giving a solution for the current financial crisis the editor of the economist Next magazine Asantha Sirimanne said if the exports, the foreign investments and the foreign credits increase the money flowing to the country will rise up and the expenditure amount would increase.
He said despite the imports are rising parallel to exports and labour market the rupee will not be affected but when money is printed and when the total imports exceeds the total exports and labor, it would be a weak fiscal policy.
He pointed out when the credit amount goes high the interest also rise up and if we try to reduce the interest rate artificially by printing notes the rupee would depreciates. He said the then financial board caused the rupee to be stable by not printing notes.
Printing money
“The central bank by printing money anticipates stopping the rising interest rates. The central bank in order to cover the budget deficit printed 200 billion notes at a time which caused impact to the rupee” said Asantha sirimanne.
When the rupee depreciated foreign investors leave the country with their money, said Asantha Sirimanne.
When Sandeshaya inquired does using the money to pay foreign debts caused the rupee to depreciate, he said when the country takes foreign or local loans the country’s interest rate also rise but country’s economic activity should come down but by printing money nothing as such happened.
Weak economic policies
“When unlimited money is printed the local expenditure and the local credit rise fast. Sometimes foreign debts are also paid by this printed money. If this happen the foreign reserve drops and the rupee depreciates” said Asantha sirimanne.
Giving a solution for the current financial crisis the editor of the economist Next magazine Asantha Sirimanne said if the exports, the foreign investments and the foreign credits increase the money flowing to the country will rise up and the expenditure amount would increase.
He said despite the imports are rising parallel to exports and labour market the rupee will not be affected but when money is printed and when the total imports exceeds the total exports and labor, it would be a weak fiscal policy.
