ECONOMYNEXT – Sri Lanka’s private credit surged 107.3 billion rupees, up from 46 billion rupees a month earlier, as central bank injected liquidity (printed money) to keep rates down and sterilize maturing swaps, and credit to the government also rose, official data showed.
Private sector credit rose by 15.4 percent to 5,355 billion rupees accelerating from 14.3 percent a year earlier.
Central Bank credit (printed money) rose by 122.6 billion rupees, 368.4 billion rupees in September from 245.8 billion rupees a year earlier as interventions in forex markets and maturing legacy swaps were sterilized with liquidity injections.
Net foreign assets of the central bank fell by the rupee equivalent of 90.3 billion rupees to 811.2 billion rupees, as the rupee also fell from 161.4 to the US dollar from 169.2 to the US dollar during the month.
Sri Lanka’s rupee came under renewed pressure in August as the excess liquidity was allowed to build up without being mopped up.
Sri Lanka’s credit to government from the banking system rose by 155.1 billion rupees in the month, driven by central bank credit.
Credit to state enterprises rose 15.6 billion rupees to 656 billion rupees in the month. (Colombo/Nov19/2018)