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Controversy over media reports of China printing currency notes for Sri Lanka
While the international media gave wide publicity to China’s foreign currency printing contracts with countries in the ‘Belt and Road Initiative’, including Sri Lanka, the Government has still not issued an official clarification despite unofficial denials from Finance Ministry and Central Bank officials.
A report published in the South China Morning Post this week quoted a top Chinese official as saying that the China Banknote Printing and Minting Corporation was also producing currencies for many other countries including Nepal, Thailand, Bangladesh, Sri Lanka, Malaysia, Brazil and Poland.
The Reserve Bank of India promptly denied the media report which has created widespread confusion among those highlighted countries, including Sri Lanka, Indian media reported. The SCMP report claimed that China was printing foreign currencies on a huge scale to widen its influence on the global economy and increase its impact on foreign policy matters.
In Colombo, a senior Government official, speaking on condition of anonymity, told the Sunday Times that one of the Chinese top level delegations visiting Sri Lanka may have submitted this proposal of printing currency notes to the government and it could be in the pipeline for implementation.
The outsourcing of local currency printing to China was a better option for Sri Lanka as money printing in the country had become a costly affair at present, he said. On the other hand, Sri Lanka could not afford to bear the high costs for the advanced technology needed to print the currency, especially for inscribing enhanced security features such as metallic thread and the optically variable ink, he said. China had all the facilities in the money printing business so that it could provide these security inscriptions at relatively lower rates than western printing companies, the official added.
However, a senior Central Bank official noted that De La Rue Lanka Ltd, joint venture involving Sri Lanka, was still the sole authority for printing local currency notes and there was no decision to outsource the currency printing to China.
The Finance Ministry holds 40 percent shares in the De La Rue Lanka joint venture at Biyagama. It has been operating for more than three decades, employing more than 300 highly trained Sri Lankans and producing more than Rs.1 billion bank notes every year for the Central Bank.
He said De La Rue UK was downsizing its overseas operations, setting out plans to cut jobs, merge divisions and shake-up its supply chain in a bid to cope with stiff competition and high printing costs. He added that its Sri Lankan joint venture survived mainly with the income being generated from local currency printing operation.
De La Rue Lanka only exported 20 per cent of its products without much profits, he disclosed pointing out it was not viable for the long-erm sustenance of the company. Denying the Chinese media report of printing Sri Lankan currency notes, a top Finance Ministry official said he was not aware of such a proposal as it had not been discussed at any high level meetings convened to discuss economic policy matters.
However, he said that it was good to have contingency currency printing arrangement without sticking to a single supplier.
But the Government must have considerable trust in the Chinese government to allow it to print Sri Lanka currency notes as currency printing was an icon of a nation’s sovereignty, and such an agreement should be made considering all aspects politically and otherwise while minimising risks.
Reports about any Chinese currency printing corporation getting any orders for printing Sri Lankan currency notes were baseless to the best of his knowledge, he said, adding that Sri Lankan currency notes were being and would be printed only at De La Rue Lanka plant.