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Sri Lanka gifted medicines by France after soft-peg collapse

May 28, 2022 4:58:20 AM - economynext.com

ECONOMYNEXT – France has gifted Sri Lanka anesthetics and respiratory medications worth 300,000 Euros, Health Minister Keheliya Rambukwella said as the country fights a medicine shortage coming from a foreign exchange crisis driven by money printing.

“I’m truly grateful for this timely gift and assure the Sri lankan people that no stone will be left unturned in ensuring availability of meds & industry efficiency,” Minister of Health, Keheliya Rambukwella said in a twitter.com message.

Sri Lanka is suffering the worst currency crisis in the history of its 72 year old intermediate regime central bank which triggers currency collapses after printing money to keep interest rates down.

In 2022 the rupee fell from 200 to 380 to the US dollar as an attempt was made to float the rupee with a surrender requirement and without significantly raising rates to limit domestic credit.

Rates were later hiked, but forex shortages still persists amid a surrender rule, interventions and money printed to pay state workers.

Sri Lanka has struggled with the unstable soft-peg where currency crisis have intensified under more activist open market operations and output gap targeting (monetary stimulus) from 2015. In 2019 December taxes were also cut to target an output gap.   (Colombo/May28/2022)