After Defaulting Sri Lanka Plans to Print $2.8 Billion Worth of Rupees, Inflation Rate Expected to Top 40% – Economics Bitcoin News

As part of its efforts to placate the rebel population in Sri Lanka, the government is threatening to print more money. However, the government admits that inflation will rise by 40% if more money is printed.

As a solution, print more money

After defaulting on its obligations for the first time, the government in crisis-hit Sri Lanka now expects the country’s inflation rate to top 40%, Prime Minister Ranil Wickremesinghe has said. The country is now in dire need of revenue and authorities say they will print money totaling nearly $2.8 billion (1 trillion rupees) to help partially finance the welfare programs.

According to the Business Standard’s remarks, Wickremesinghe admits that putting one trillion rupees in circulation could lead to greater hardships and more turmoil. The newly elected prime minister insists that the government’s reforms are meant to increase the wellbeing of the people.

Protests are necessary when you consider the difficult days ahead. It’s natural when people suffer, they must protest. We want it to not cause instability in the political system. It is about cutting back expenditures, cutting to the bones where necessary, and moving it to welfare.

According to the Business Standard report, Sri Lanka’s economic woes were triggered by the Covid-19 pandemic, which ruined the country’s tourism industry. Some critics have, however, placed the blame on President Gotabaya Rajapaksa’s government, which approved tax cuts they argue caused the income flowing into government coffers to drop further.

Sri Lanka’s Debt Default

Meanwhile, an Al Jazeera report suggested that the country’s failure to honor its debt obligation relating to coupon payments had led to Sri Lanka’s first default. The 30-day grace period expired on May 18 and the $78 million worth of outstanding coupon payments that were due April 18 had not been paid.

Prime Minister said that Sri Lanka is already in default.

“We are in preemptive default. There can be technical definitions … From their side, they can consider it a default. Our position is very clear, until there is a debt restructure, we cannot repay.”

In addition to printing more rupees, Prime Minister Wickremesinghe’s government is reportedly planning to cut spending on infrastructure. A two-year relief plan will be funded with the funds from spending reductions.

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Terence Zimwara

Terence Zimwara was a Zimbabwe award-winning journalist and author. He is a prolific writer on the economic woes of African countries, as well as digital currencies that can be used to provide an escape path for Africans.