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%, Prime Minister Ranil Wickremesinghe told parliament Tuesday before a monetary policy review due Thursday. Talks for a bailout from the International Monetary Fund are complicated because the nation is bankrupt, he added.
Wickremesinghe now sees Sri Lanka reaching a staff-level agreement with the IMF in August, delayed from the June deadline provided earlier.
Consumer prices rose 54.6% in June from a year earlier, with transport surging 128% from the previous month and food 80% amid acute shortages of crops and crude oil. The Central Bank of Sri Lanka is on track to print more rupees in a shrinking economy this year than it did when output grew in 2021, which is also fanning costs.
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