Sri Lanka private credit steady in July 2016

ECONOMYNEXT – Sri Lanka’s commercial banks loaned Rs62.80 billion to private businesses in July 2016, down from Rs75.9 billion a month earlier, while state enterprises repaid Rs12.8 billion in debt, official data show.

The government borrowed another Rs26.6 billion in July. There was no Central Bank credit (printed money) injected on a net basis during the period.

Credit extended from commercial banks after the SOE repayment fell to Rs76.6 billion from Rs110.9 billion a month earlier.

Although 12-month credit to private sector accelerated in percentage terms to 28.5 percent from 28.2 percent, net credit to government slowed to 17.1 percent from 19.8 percent.

Sri Lanka’s Central Bank has said it would like to see 12-month private credit growth to fall below 20 percent by the end of the year.

At about Rs50-60 billion a month of net new credit, the target will be reached.

Amid weak oil prices, credit to state enterprises shrank 0.8 percent in July from 12 months ago, showing a steep correction in the finance of energy enterprises in particular.

However, last month, the government raised taxes on diesel, which may reduce the cash surpluses of state enterprises.

Petroleum Minister Chandima Weerakkody has warned that state-run Ceylon Petroleum Corporation will run into losses from this month.

The central government also borrowed Rs26.6 billion, down from Rs39.9 billion a month earlier.  (Colombo/Oct02/2016)

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