Sri Lanka aims to stop printing money as inflation nears 60%

People waiting to buy kerosene oil due to domestic gas shortage in Colombo, Sri Lanka, on May 24, 2022. PHOTO: REUTERS

COLOMBO (BLOOMBERG, REUTERS) - Sri Lanka, which has run out of dollars to purchase fuel and is printing rupees to pay local salaries, aims to stop injecting local currency to quash Asia's fastest inflation.

The inflation rate is estimated to reach 60 per cent, Prime Minister Ranil Wickremesinghe told Parliament Tuesday (June 5) before a monetary policy review due Thursday.

Sri Lanka will present to the International Monetary Fund (IMF), by the end of August, a plan to restructure its debt, he said.

The country of 22 million people is unable to pay for essential import of food items, fertiliser, medicines and fuel because of a severe dollar crunch.

Consumer prices rose 54.6 per cent in June from a year earlier, with transport surging 128 per cent from the previous month and food 80 per cent amid acute shortages of crops and crude oil.

Speaking after a recent visit by an IMF delegation, the prime minister said the government hoped to get approval for a four-year funding programme, as he outlined a road map to carry the Indian Ocean island out of its crisis.

Last week, the IMF said talks with Sri Lanka had been“constructive”, raising hopes it would soon grant preliminary approval for a desperately needed financial support package.

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