The economic analysts are of the view that the interest rates will rise further if the Central Bank of Sri Lanka suspends money printing against the Treasury’s requests.
So far, the usual process was that the Central Bank printed and supplied the necessary amount of money according to the financial needs of the Treasury.
The analysts said that if this process is suspended, the Treasury will have to look for alternative sources of funds.
The Cabinet last week took a special decision regarding a new law that gives the Central Bank the power to print money to the extent that the country’s economy can withstand.
The relevant Cabinet paper was submitted by the President as the Finance Minister.
With this move, the Central Bank will have the sole authority to not print money no matter how many demands the government makes from the Finance Ministry.
The new regulation has been imposed based on the recommendations given by the International Monetary Fund (IMF) to streamline the economy of Sri Lanka.