Sri Lanka private credit sharply up, money printing continues in March
ECONOMYNEXT – Sri Lanka’s credit to private sector surged in March 2016 to 87.8 billion rupees from 53.7 billion rupees a year earlier, on the back of money printing over two months, but credit to state enterprises fell, official data showed.
In March 33.3 billion rupees was given to the central government from the banking system but loans to state enterprises fell 11.5 billion rupees to 514.9 billion rupees, date released by the central bank shows.
Total credit from the banking system including printed money was 109.60 billion rupees, up from 105.3 billion rupees a month earlier.
In March 22.1 billion rupees were printed after 48 billion rupees were printed in February in the wake of failed Treasury bill auctions.
The printed money injected as rupee reserves to the banking system generates domestic credit over and above the deposits raised by the baking system and pushes spending beyond forex inflows and creating currency troubles.
In April and May Treasury bill auctions have been successful, despite overnight cash injections.