The temporary use of money printing would settle the local debt of the country and would give Prime Minister Ranil Wickremesinghe a fresh start to his journey as the man expected to save the nation, said diverse businessmen and Chairman Ceylon Institute of Builders, Dr. Rohan Karunaratne.
He appreciated the genuine answer given by the PM, in his BBC interview, stating that money printing (although not his long-term term plan) is necessary for the short-term to continue paying government salaries.
“This is in part as the country’s money stock is equal to the total amount of currency available in the Sri Lankan market at any given time. And money printing allows the government to finance itself. By injecting cash into the economy, this helicopter money can help deal with dangerous economic crises.”
With 30 years of experience in Civil Engineering, Building Construction, Engineering Consultancy, Construction Training, and lecturing in Civil Construction, Designing & Planning he said that this monetization is necessary for the following few months given that it is properly controlled by the central bank.
“We believe this benefit must be extended to other sectors, which have been debilitated from the unbearable weight of unpaid government debt and therefore have been unable to pay their employees.”
There are over Rs. 100 billion outstanding debts to contractors. Simultaneously government projects have been halted. Both of these cannot be borne at the same time therefore, firstly, debt should be settled.
Importantly, vital industries such as Pharmaceutical (government is yet to pay an outstanding 34 billion to Pharmaceutical companies), and Agricultural & Other Sectors, which provide essential products and services, should be protected similarly, by settling debt.
Second, essential and partially-completed government projects that have been abandoned should be completed, as the local currency is used for these. If this issue is ignored, 5 to 600, 000 workers who have lost their jobs would be released onto the streets.
Along these lines, banks should not encash bonds and guarantees for contractors as the contractor is not at fault- it is the government that is at fault. So, it is mutually beneficial for banks to keep contractors alive, so they can continue benefiting from them, rather than encashing bonds and guarantees which is a one-off gain for banks, as this would end contractors’ careers and banks would lose repetitive clients.
Another criticism is that more than 60% of construction materials in luxury buildings (high-rises, hotels and so on) are imported items. “Therefore, the focus should be on encouraging the local manufacturing of these, currently imported, items.”