COLOMBO (EconomyNext) – Sri Lanka’s bank credit to the central government and state enterprises topped 100 billion rupees for the second month in a row in February 2015, while private credit also grew 24.5 billion rupees, official data show.
The Central government borrowed 87.90 billion rupees from the banking system, including 4.9 billion rupees in central bank credit.
In January government borrowings from the banking system rose to a historic high of 121.6 billion rupees, as foreign reserves were appropriated to repay a 500 million US dollar bond.
State enterprises borrowed another 12.8 billion rupees in February 2015, down from 22.9 billion rupees in January.
With 24.50 billion rupees disbursed to the private sector, total credit from the banking system were 124.60 billion rupees.
Total loans from the banking system rose above 100 billion rupees from September 2014 largely driven by state credit, through in December private credit rose to 76.50 billion rupees.
Monthly credit disbursements are now around the levels seen during the last balance of payments crisis.
Since September as credit picked up sharply, the rupee has come under pressure and Sri Lanka has lost reserves as the banking system was unable to generate enough deposit to meet the credit demand.
Instead the Central Bank has released previously sterilized cash in the banking system, generating foreign reserve losses.
Though interest rates rose in March, in April there was a cut in the policy rate despite rising state borrowings and pressure on the balance of payments