MONETABRIEF – Sri Lanka's private credit expanded by 212.4 billion rupees in September 2026, picking up from a fall to 105.7 million dollars in August, official data showed.
The rupee was depreciated to 330 to the US dollar in the spot market from 328 over the month, on top of earlier depreciation which had pushed up inflation over 8 percent.
There has been no accountability for central bank officials for exceeding its controversial 7 percent inflation target, which triggers external crises and political unrest.
Credit to government from the banking system fell 52 billion rupees.
In 2026 the central bank busted the rupee to below 330 from 309 to the US dollar on amid a budget surplus.
From February 1952, when the central bank started to print money and trigger forex shortages, it has escaped accountability by blaming budget deficits and de-liberalizing the economy with trade and exchange controls.
However, in 2026 the rupee was busted in a budget surplus, exposing a 72 year old false narratives, with which exchange and trade controls were imposed on the people.
In 2026 the central bank busted the rupee by dishonoring excess liquidity created by monetizing balance of payment surpluses in earlier months.
Forex shortage and external crises are a consequence of violating the price specie flow mechanism first described in detail by classical economist David Hume in 1972 not trade or current account deficits.
Over 2025 the rupee was mercilessly depreciated by purchasing dollars to create money and not returning enough when they turned into imports through the credit system, effectively dishonoring the note issue.
Before macroeconomics (a revival of Mercantilism by Keynes and post Keynesians in universities like Cambridge, Harvard and MIT) economics was built on moral philosophy not on dishonor.
Credit to state enterprises also fell 32.8 billion rupees in September.
The government market priced fuel early, as prices went up. When fuel prices go up, people have to cut down on other spending and non-oil imports fall.
In the past the rupee had been depreciated by dishonoring note created by Treasury bill purchases, not dollars. There was no accountability for the central bank but peoples' economic freedoms and their EPF and other savings were destroyed.
People have held the government accountable instead. (Colombo/Nov08/2026)