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Tuesday June 18th, 2024

Sri Lanka CB sees private sector credit growth at 14-pct by end 2021

ECONOMYNEXT – Sri Lanka’s private sector credit growth is expected to slow to around 14 percent year-on-year from August’s 15.1 percent, a top central bank official said on Thursday, after the central bank left the key monetary policy rates unchanged following the rate hike in August.

The 15.1 percent year-on-year private sector credit growth in August was the highest percentage growth since January 2018 and banks have lent 134.1 billion rupees in the month, highest since the central bank data available from August 2016.

“We have seen a substantial increase in the private sector credit,” Chandranath Amarasekara, the director at the central bank’s economic research department, told reporters Thursday.

“By the end of this year, we expect the banking sector to release about 850 billion rupees as private sector credit and the credit growth is expected to be about 14 percent by end of this year.”

The central bank maintained record low policy rate regime printing large volumes of money since mid last year to stimulate the Covid-19 pandemic hit

When the printed money turns into imports through private credit, forex shortages take place. By July 2021, imports were higher than 2019, when Sri Lanka also got tourism receipts.


Sri Lanka imports soar to 17-month high in July 2021 amid money printing, exports

Te central bank held its policy rate, at which money is injected to the banking system at 6.0 percent on Thursday after raising it by 50 basis points in August, as the balance of payments shattered from the liquidity injections, triggering record deficits.

Central bank governor Ajith Nivard Cabraal said the policy rate decision on Thursday was to keep the credit growth momentum going.

“We don ‘t need to dampen that. Neither do we want to stimulate it any further,” Cabraal told reporters.

“That’s the reason we at the Monetary Board decided to keep the rates steady and we believe that’s the most appropriate stance for the time being.” (Colombo/Oct14/2015)

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Sri Lanka’s Ceylon Chamber links up with Gujarat Chamber

ECONOMYNEXT – The Ceylon Chamber of Commerce has signed an agreement with the Southern Gujarat Chamber of Commerce and Industry (SGCCI) to increase trade cooperation between India and Sri Lanka.

The MOU was signed by CCC CEO Buwanekabahu Perera, SGCCI President Ramesh Vaghasia, in the presence of Dr Valsan Vethody, Consul General for Sri Lanka in Mumbai, India.

“With the signing of the MoU, … the Ceylon Chamber of Commerce and SGCCI aim to facilitate trade between the two countries via initiatives such as trade fairs and delegations, business networking events, training programmes,” the Ceylon Chamber said in a statement.

“This partnership will open doors for Sri Lankan businesses to explore opportunities in Surat’s dynamic market and enable the sharing of expertise and resources between the two regions.”

Established in 1940, SGCCI engages with over 12,000 members and indirect ties with more than 2,00,000 members via 150 associations. It promotes trade, commerce, and industry in South Gujarat.

The region’s commercial and economic centre Surat has risen to prominence as the global epicenter for diamond cutting and as India’s textile hub, and is ranked the world’s 4th fastest growing city with a GDP growth rate of 11.5%

Surat’s economic landscape is vibrant and diverse. As India’s 8th largest and Gujarat’s 2nd largest city, it boasts the highest average annual household income in the country.

The nearby Hazira Industrial Area hosts major corporations like Reliance, ESSAR, SHELL, and L&T. (Colombo/Jun18/2024)

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Sri Lanka telecommunications bill some clauses ruled unconstitutional by SC: Speaker

ECONOMYNEXT – Sri Lanka’s Supreme Court has found a number of clauses in a proposed amendment to the Telecom Telecommunications Amendment bill unconstitutional, speaker Mahinda Yapa Abeywardana said.

“Clause No 8, proposed section 9A 2 of the bill is inconsistent with Article 12 1 of the constitution, however this inconsistency shall cease if word ‘may’ will be replaced with word ‘shall’ as set out in the determination of the supreme court.”

“Clause No 9 is inconsistent with Article 12 1 of the constitution and only can be passed with special majority required under paragraph 2 of the Article 84. However, the inconsistency shall cease if clause is amended as set out in the determination of the supreme court.

Clause No 12, proposed section 17 10 of the bill is inconsistent with Article 12 1 of the constitution and can only be passed with special parliament majority required under Article 84 paragraph 2. However, the inconsistency shall cease if clause is amended as set out in the determination of the supreme court.”

Sections of clauses 13, 18, 20, 33 and 35 were also in violation of the constitution, and could only be passed by a special majority of parliament. (Colombo/Jun18/2024)

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Sri Lanka to exempt one house from imputed rent wealth tax: President

ECONOMYNEXT – Sri Lanka will exempt one house from a proposed wealth tax outlined in an International Monetary Fund program, President Ranil Wickremesinghe said.

About 90 percent of the people’s houses are likely to be exempt from the proposed tax, he said.

“[O]ne house will be exempt from this,” President Wickremesinghe told parliament Monday.

“It is going to have a very high threshold and I do not think the vast majority of the people in this country should even be worried about their house

“Don’t worry your house will be safe.”

The IMF program document however did not mention an exempt on one house, but did mention a threshold.

Taxing houses and thrift in general could have detrimental effects on people’s well-being housing stock and their willingness to remain in the country without migrating, critics say.

Related Sri Lanka to tax imaginary rents on houses under IMF deal

The mechanism of imputed rents was used because rates on houses was assigned to provincial councils and courts could strike it down.

Opposition legislator Harsha de Silva said the Samagi Jana Balwegaya welcomed President Wickremesinghe’s statement. (Colombo/June18/2024)

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