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Sri Lankan Economic Crisis - Government may print money to pay wages

Graham Watson

17th May 2022

It seems that it's Doomsday in Sri Lanka with the Prime Minister stating that the country has one day's worth of petrol left.

Think of this: how would transport being at a standstill affect an economy?

And then there's the admission that, in order to pay public sector salaries, the government are going to have to print money. What are the implications of this for inflation, the value of the Sri Lankan rupee and macroeconomic objectives more generally. And how is this likely to affect investment in the economy?

To many this seems like a financial crisis that has built up since the coronavirus pandemic. To be honest, having lived in Sri Lanka, I'd argue that the roots of the crisis go much, much deeper and reflect the dynastic nature of Sri Lankan politics post-independence.

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

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