With the government having to deal with paying employment salaries of public sector employees and the containing the spread of the pandemic in the island the Central Bank of Sri Lanka has injected LKR 23 billion worth of liquidity last Friday bringing the total stock to LKR 900 billion.
Since the near lockdown from the 21st of May, 2021 to June 18th, 2021 the Central Bank brought the total outstanding currency stock to LKR 896.24 billion. As of June 25th the total holdings had increased up to LKR 919.22 billion.
By Early April the total stock was at LKR 904.02 billion while the stock had decreased by early June to record LKR 856.65 billion.
While printing fresh currency may be considered necessary under these special circumstances it must be noted that the government cannot print money excessively as it may lead to inflation and the balance of payment deficits. Inflation in the country has spiked by 6.1% in May and food inflation is up by 10%
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